The worst drought in recent memory is having an impact on several industries besides agriculture. The ethanol industry is also expected to suffer from rising corn prices.
According to the Energy Information Administration, U.S. ethanol exports will drop this year because of the weak corn crop. However, the E.I.A. also says, the supply of corn isn't expected to effect gas prices. Currently most gasoline in the United States contains about 10% ethanol.
Officials at Guardian Ethanol in Lima agree with both statements. Livestock farmers are also petitioning the Environmental Protection Agency to waive requirements for corn-based ethanol. Government mandates require 13.2 billion gallons of corn based bio fuel to be made in 2012. The goal was to reduce pollution and dependence on foreign oil. However, some livestock producers say competing with ethanol producers for corn is too expensive. Estimates vary, but studies from economists in Iowa show removing the quota would decrease corn prices by less than 5%.
On the other hand, ethanol backers say, ethanol blends reduce gas prices between 75 cents and a dollar per gallon.