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Energy interests question Bush's proposal

WASHINGTON - A panel of key energy and agribusiness executives invited to the Agriculture Department's annual Agriculture Outlook Forum March 1 all declined to endorse President Bush's proposal that the U.S. gasoline supply contain 35 billion gal...

WASHINGTON - A panel of key energy and agribusiness executives invited to the Agriculture Department's annual Agriculture Outlook Forum March 1 all declined to endorse President Bush's proposal that the U.S. gasoline supply contain 35 billion gallons of renewable fuels by 2017.

Archer Daniels Midland CEO Patricia Woertz, Cargill incoming CEO Greg Page, American Petroleum Institute CEO Red Cavaney and CHS President John Johnson all expressed enthusiasm for Bush's goals of energency independence and diversifying the energy supply, but said they questioned whether the ambitious goal could be reached.

Concerns

ADM's Woertz, whose company makes both food and ethanol from corn, expressed the most enthusiasm for the future of renewable energy but said that while it is clear that corn can be used to produce up to 14 million to 15 billion gallons of ethanol per year, it is not clear how the other 20 billion gallons will be produced.

Cargill's Page, whose company produces some ethanol but is mostly in the food and grain trade business, was the least enthusiastic, saying he worries that renewable fuels production will raise the cost of food to the world's poor in developing countries. Page noted that White House economics adviser Allan Hubbard had told the conference that Bush's proposal would give the secretaries of agriculture and energy and the EPA administrator authority to waive the ethanol mandate in case of shortages because of drought or other factors, but he asked whether that waiver authority would include considering the impact on people in other countries.

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"Inflexible government mandates risk creating inefficiencies," Page said.

Johnson, whose cooperatively-owned Minnesota-based company trades grain, refines oil and produces renewable fuels, said people expect him to be "overflowing with enthusiasm" about the renewable fuels boom, but that he and his colleagues are "cautious." Johnson said he was "very surprised at the extent of the mandate and the timetable. Mandates alone are not a clear path to energy independence." Johnson also said the country needs to put more emphasis on conservation.

Cellulosic fuelsAPI's Cavaney, who represents the nation's largest oil companies, said not enough attention has been to the point at which the use of corn for ethanol has been exhausted and the commercialization of cellulosic fuels has not been achieved.

Page also described the current expectations about cellulosic ethanol as an "obsession" and said other sources of fuel such as algae also need to be considered.

The panel seemed to agree that agricultural commodity prices are reaching higher levels that are likely to be sustained in the future. But Johnson warned that while energy independence is a worthy goal, both food and fuel industries have to make the businesses work on an economic basis.

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