Washington (Platts)--23Jun2008

US Senator John McCain, Republican-Arizona, called Monday for changes to
the country's biofuels and fuel economy policy that he said would help "break
the back of our oil dependency."

McCain, who is the Republican presumed nominee for president, did not
renew his call last week for Congress to ease access to oil and natural gas
reserves on the US Outer Continental Shelf.

His speech instead focused on non-production themes, like the need to
remove tariffs on Brazilian and other imported ethanol. McCain argued this
would give US customers better access to cheap, high octane sugar-based
biofuels. The tariff requires purchasers to pay 54 cents/gallon for imported
fuel.

"Corn-based ethanol, thanks to the money and influence of lobbyists, has
been a case study in the law of unintended consequences," he said. He argued
that US taxpayers are paying to keep their fuel costs high.

The lawmaker's presidential election opponent, Illinois Democrat Barack
Obama, supports preserving the tariff and a blenders' tax credit to protect
the US corn-based ethanol industry.

He also proposed a $300-million prize for any innovator who created a
vehicle battery that could "leapfrog" existing technology to provide a
cheaper, higher-performing car battery.

He proposed a $5,000 incentive for every zero-emission vehicle sold by US
automakers, and additional incentives for low-carbon technologies.

McCain said that the fines levied against automakers for failing to meet
corporate average fuel economy standards were inadequate to compel them to
reach those standards.

"Instead they just write a check to the government and pass the cost
along to you," he said.

The candidate stopped short of explicitly calling for tougher fines,
however. His views on the need for tougher efficiency mandates contributed to
his Michigan primary loss to former Massachusetts Governor Mitt Romney earlier
this year.

--Jean Chemnick, jean_chemnick@platts.com