Governor M. Jodi Rell Urges Relief on Spiraling Food and Energy Prices

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Governor Rell Submits Testimony to U.S. Senate Urging Relief on Spiraling Food and Energy Prices

Governor M. Jodi Rell

The Office of the Governor

May 10, 2008

Governor M. Jodi Rell. . . submitted written testimony to the U.S. Senate Homeland Security Committee urging Congress and the President to lift an import tariff on ethanol and temporarily waive the federal Renewable Fuel Standards to ease the vise-like pressures of spiraling gasoline and food prices.

"Connecticut families and businesses are getting bruised by the soaring cost of everyday necessities like gas and groceries," Governor Rell said. "One major factor in this unhappy duet is the price of corn - demand for the crop as a source of ethanol is competing fiercely with demand for corn as food, additives in products such as soft drinks and animal feed.

"Not only are those price pressures playing havoc with consumers, but the demand for corn is also driving up prices for other major crops like rice, wheat and soybeans," the Governor said. "Farmers looking for a good price are opting for corn instead of other crops or altering their crop rotation patterns, so production of other grains is affected.

"I believe urgent national action is needed to relieve some of these demand pressures so consumers can catch a break on prices," Governor Rell said. "Encouraging more imports of ethanol from Brazil - where ethanol is made from sugar rather than corn - will ease some of the pressure. So will temporary relief from the mandates in the Renewable Fuel Standards, which require billions of gallons of ethanol to help stretch supplies of gasoline and reduce our dependence on imported oil."

The Governor's testimony noted that neither of these steps is likely to have a long-term negative effect on U.S. energy goals, the environment or farmers. Demand for ethanol will undoubtedly continue to rise, meaning investment in domestic ethanol production will not be lost; federal requirements for ethanol use in cities where smog is a problem will not be affected; and demand for corn for uses other than ethanol production is so high that American farmers should have no trouble selling their crop.

"Ultimately, however, the most persuasive argument must be the competing pressures on American family budgets," Governor Rell told the Senate committee, chaired by U.S. Sen. Joe Lieberman (D-Conn.). "The twin hammer blows of energy price increases and food price increases warrant this action."

The Governor also reiterated her recommendation for a second national stimulus package to help families. The first stimulus, now being distributed, is likely to be consumed as taxpayers cope with debts and staggering price spikes.

"We need help now," Governor Rell said. "Congress and the President must review current policy and take effective action on a national scale to address these problems."