Washington: The Obama administration is reviewing the country’s ethanol policy as calls to suspend the program come from both political parties and the United Nations, citing the effects of the worst drought in 56 years on corn prices.

Twenty-five US senators, both Republican and Democrat, in an August 7 letter asked US Environmental Protection Agency Lisa Jackson to halt or lower the nation’s ethanol targets. That repeated an August 1 petition from a bipartisan coalition of 156 legislators in the House of Representatives.

“I would simply say that the EPA, in consultation with the Department of Agriculture, is looking at this,” Jay Carney, the White House press secretary, said today. “I don’t have a statement one way or the other predicting what the experts are going to say.”

The Agriculture Department reduced the US corn harvest estimate 13 per cent to 10.78 billion bushels, the least in six years. Ethanol will consume about 4.5 million bushels, or 42 per cent of the crop.

Corn for December delivery slid 14.75 cents, or 1.8 per cent, to $8.09 a bushel at 2:54pm on the Chicago Board of Trade. Prices yesterday settled at a record $8.2375.

Denatured ethanol for September delivery fell 1.7 cents, or 0.6 per cent, to settle at $2.609 a gallon in Chicago. One bushel of corn makes at least 2.75 gallons of the fuel.

Ethanol Mandate

A 2007 energy law known as the Renewable Fuels Standard, or RFS, mandates the use of 13.2 billion gallons of renewable fuels such as ethanol this year, and 13.6 billion in 2013.

A smaller US corn crop doesn’t justify calls for Obama to suspend the mandate, according to the Renewable Fuels Association, a Washington trade group. It said refiners can meet the targets by drawing from ample stockpiles and utilizing excess credits that can be submitted in lieu of physically blending a gallon of ethanol.

Ethanol production was 817,000 barrels a day last week, down 15 per cent from a record in December. Stockpiles sank 3.9 per cent to 18.7 million barrels, the biggest decline since December 9 and the lowest level since December 30, Energy Department data show.