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Answers to Questions for the Record following a Hearing on the Renewable Fuel Standard Conducted by the Subcommittee on Environment and the Subcommittee on Oversight of the House Committee on Science, Space, and Technology 1 (December 17, 2015)

handle is hein.congrec/cbo2704 and id is 1 raw text is: DECEMBER 17, 2015 Answers to Questions for the Record Following a Hearing on the Renewable Fuel Standard Conducted by the Subcommittee on Environment and the Subcommittee on Oversight of the House Committee on Science, Space, and Technology On November 3, 2015, the Subcommittee on Environment and the Subcommittee on Oversight ofthe House Committee on Science, Space, and Technology convened a joint hearing at which Terry Dinan, Senior Advisor at the Congressional Budget Office, testified about the Renewable Fuel Standard. After the hearing, Chairman Smith ofthe Committee and Chairman Bridenstine ofthe Environment Subcommittee submitted questions for the record. This document provides CBO 's answers. Chairman Smith Question. CBO's analysis concluded that the RFS has had a minimal impact on the price of food over the 10 year lifespan of the law, and repeal of the law would not significantly reduce food prices. During the hearing, Mr. Ed Anderson raised the issue of corn crop yields as related to the current price of corn, which are significantly lower than the price in 2012. Mr. Anderson linked this price drop to three record corn crops, and stated that this trend was unlikely to continue. Do you agree with this statement? If so, would more typical, lower yields of corn in the future be likely to significantly impact the price of food? Mr. Coleman also stated that the agriculture market is influenced heavily by the price of oil, with the price of corn dropping with lower oil prices. Do you agree with this statement? If so, could the current drop in oil prices be impacting the price of corn? Answer. The Renewable Fuel Standard (RFS) affects the price of corn and thus the price of food. At present, roughly 40 percent of the U.S. corn supply is used to make ethanol. To the extent that changes in the RFS raise or lower the demand for corn ethanol, the RFS will raise or lower corn prices. However, because corn and food made with corn account for only a small fraction of total U.S. spending on food (roughly 1.5 percent in 2015), the effects of the RFS on overall food prices are small. For example, CBO estimated that food prices would be only slightly lower in 2017 (by less than 0.1 percent) if the RFS was repealed than they would be if the volumes of biofuels required under the RFS in 2017 were the same as those proposed for 2016.' 1. Those standards, which the Environmental Protection Agency (EPA) proposed on September 29, 2015, were somewhat lower than the 2016 volumes that EPA mandated in its finalized rule, published on November 30, 2015. See Renewable Fuel Standard Program: Standards for 2014, 2015, and 2016 and Biomass-Based Diesel Volume for 2017, 80 Fed. Reg. 33100, 33105 (proposed June 10, 2015), and Renewable Fuel Standard Program: Standards for 2014, 2015, and 2016 and Biomass-Based Diesel Volume for 2017, EPA-HQ-OAR-2015-0111, Fed. Reg. - (August 30, 2015) (to be codified at 40 C.ER. pt. 80) (Final Rule to be published in the Federal Register).

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