Ethanol Mandate Hoses You at the Pump

Member Group : Jerry Shenk

If you pay taxes and buy groceries, every time you insert the nozzle to fill your tank with ethanol-blended fuel, you get hosed six ways.

Federal crop subsidies and ethanol mandates shower tax and household dollars on corn growers and ethanol refiners to produce a product we are forced to purchase, that increases fuel prices, provides less energy for our money, adds water to our gas tanks, raises food prices, and degrades the environment.
Most gasoline sold in America contains up to ten percent ethanol, a product primarily refined from corn. The inclusion of a prescribed total volume of ethanol in the national supply of motor fuel is mandated by the federal government’s Renewable Fuels Standard program.

Motor fuel containing ethanol is called E-10 for the maximum percentage of ethanol currently allowed. The Energy Department is considering an increase, so E-15 could be in your gas-burner’s future. Never mind that auto makers have said they will void the warranties of cars using gas with more than 10 percent ethanol. As the federally-mandated volume of ethanol usage increases and motor fuel consumption declines, to avoid lawsuits, gasoline refiners must purchase federal renewable "credits" to make up for the ethanol they don’t blend, causing higher gasoline prices even in periods of lower demand.
Ethanol’s a political scam.

As they tell it, adding ethanol to fuel is meant to satisfy politicians’ desire to cut air pollution and reduce the nation’s dependency on foreign oil. Ethanol does neither.

What politicians are actually doing is meddling in multiple markets for their own and the benefit of generous special interests that fund campaigns, all at the expense of taxpayers and consumers.

The Renewable Fuel Standard Act directed the Environmental Protection Agency, the Department of Energy, the Department of Agriculture "and stakeholders" to design and implement the program. The "stakeholders" included agricultural interests and renewable fuel investors and refiners, but no taxpayer or consumer watchdogs.

Because ethanol producers and the food industry use the same commodity, the ethanol mandate increases the total demand for corn and, accordingly, food prices. Because the poor spend a larger portion of their income on food and fuel, the ethanol mandate levies a highly-regressive tax on consumers. Increasing ethanol mandates will produce even higher food prices and more world hunger.

The energy value of ethanol is only about 70 percent that of an equivalent volume of petroleum-based motor fuel. A full E-10 blend reduces mileage on a tank of gas by about 3 percent while driving up the effective cost of every fill. Ironically, that’s the same percentage by which, in 2008, then-candidate Barack Obama said drivers could improve gasoline mileage by properly inflating their tires.

Corn ethanol may require more energy to produce and transport than it releases when burnt.

It’s impossible to distill all the water out of corn to produce ethanol. Water’s corrosive properties require different materials to transport ethanol, so it can’t be put into pipelines like oil. Corn must be truck-transported to ethanol refineries, and refined ethanol must be transported in stainless steel tankers to blending stations. The trucks burn mostly diesel fuel, and distilling ethanol also involves burning conventional fuels like coal or natural gas, both cheaper than ethanol.

Not only does ethanol lack an environmental benefit, but burning it may actually damage the environment. Ethanol evaporates more quickly than gasoline, so it increases smog emissions. The EPA admits that burning ethanol significantly increases ozone precursor emissions. Furthermore, farming of marginal land and the overuse of farm fertilizers, pesticides, and water encouraged by crop subsidies and ethanol mandates increases agricultural runoff, corrupting rivers and streams and straining limited water resources.
The agricultural lobby is among America’s most powerful. Farm interests have been receiving crop subsidies for corn since the 1930s, so the ethanol mandate increases subsidy opportunities for large farmers. Ethanol refiners get their cut, too. A cents-per-gallon federal credit to refiners expired, but, as offset, the lobby received an increase in the aggregate volume of ethanol mandated in fuel supplies – but at a higher price to the consumer. Ethanol is all about producing cash, not energy.

Whoever develops the next practical fuel source will make the Sultan of Brunei look like a pauper. But there are limits on campaign contributions. Why settle for one mega-billionaire when politicians can hand out taxpayer-funded benefits to hundreds or thousands of corn-growing and ethanol-refining millionaires who’ll pony up the maximum allowable every election cycle? After all, it’s only taxpayer money.

Politicians and the interests that fund them will not permit market forces to sort out ethanol’s fate. That should be decided by market decisions made by producers and consumers based on the best interests of each rather than on government mandates.

Allowed choice, I’d recommend only single-batch, barrel-aged Kentucky ethanol.