Louisiana Requires Ethanol Costs to Beat Those of Conventional Gasoline

July 01, 2006

Louisiana Governor Kathleen Blanco signed the "Renewable Fuels Production Accountability Act," Senate Bill (SB) 454, on June 29 that delays the implementation of the state's new renewable fuels standard until the cost of ethanol produced in Louisiana is less than the cost of conventional gasoline. According to SB-454, the price of ethanol must remain lower than the price of gasoline for 60 days before the state's renewable fuel standard can take effect. A committee consisting of representatives from the Louisiana Farm Bureau Federation, the Louisiana Oil Marketers and Convenience Store Association, and a member of a college faculty will compile data and meet every three months to determine when Louisiana-produced ethanol has reached the cost threshold needed for the renewable fuel standard to begin. Read SB-454 (PDF 33 KB).

Earlier in June, the Louisiana Legislature passed the Alternative Fuel Law, which requires that 2 percent of all gasoline sold in Louisiana is produced from biomass or farm crops when annual ethanol production in Louisiana reaches 50 million gallons or annual biodiesel production reaches 10 million gallons annually. For details about Louisiana's renewable fuel standard, read a June 21 news story published on the EERE State Activities & Partnerships Web site.

According to the Associated Press (AP), the governor had received criticism that the Alternative Fuel Law would increase prices. Therefore, the legislature passed and the governor signed quickly SB-454. AP also noted that plans are under way to construct several ethanol plants in Louisiana.

Governor Blanco has touted the Alternative Fuel Law as being good for both agriculture and consumers. And she had promised the renewable fuel requirement would not raise prices to consumers during a speech to the Louisiana Legislature at the close of the 2006 Legislative Session in mid-June. Blanco said, "We invested in clean energy sources by enacting an ethanol bill. We did this to benefit our farmers and make us a leader in energy innovation. And we will do this without raising prices for consumers. Louisiana will be at the forefront of not only the oil industry, but also the emerging industry of alternative fuels."