California Governor Delays Ethanol Mandate

Raising the ire of both ethanol producers and environmental groups, California Governor Gary Davis issued an executive order delaying the abolishment of MTBE in all fuels used in that state until Jan. 1, 2004. Governor Davis said the 12-month delay will give California refineries time to better prepare for the switch to ethanol and would prevent a strong runup in gasoline prices. The order was issued after the California Energy Commission released a report that concluded eliminating MTBE at the end of this year would seriously reduce California gasoline supplies.

The ethanol industry if fuming over Davis' decision because plans to ramp up Midwestern production to meet California's needs are already well underway. The corn market is likely to feel an impact, especially if farmers plant an additional 3 million acres to corn this spring as expected.

Editors note: Richard Brock, Soybean Digest's Marketing Editor, is president of Brock Associates, a farm market advisory firm, and publisher of The Brock Report.

To see more market perspectives, visit Brock's Web site at www.brockreport.com.