Draining the swamp in Washington, as President Donald Trump pledges to do, should start with pumping out the ethanol. The federal mandate for blending the corn-based fuel into gasoline represents the worst sort of special-interest policy making.
Touted as a way to stretch oil reserves and reduce emissions, the benefits of ethanol-blended fuel have been thoroughly debunked, and they now serve just one purpose: propping up the economy of the corn belt.
Sen. Chuck Grassley, R-Iowa, acknowledged as much last week when he argued rolling back the proposed targets for the amount of biofuels blended into gasoline would result in job losses in his home state. Grassley forced Trump to back off plans to reduce the targets by threatening to block his appointments to the EPA.
The senator didn’t make a case based on the need to reduce petroleum consumption or limit carbon emissions. His defense of the mandates was as a jobs program.
That’s a poor basis for energy policy, and the president was wrong to cave..
EPA Administrator Scott Pruitt had proposed only a modest reduction in the ethanol targets in response to pleas from oil companies to ease mandates for using ethanol made from soy beans and corn.
The blending raises costs and complicates the refining process, leading to higher prices at the gasoline pump.
Instead of bowing to Grassley’s self-serving threat, Trump and Pruitt should have taken a much bolder step and dumped the mandates altogether.
Laws passed in 2005 and 2007 established and strengthened the mandates, which by 2022 demand that there will be 15 billion gallons of corn-based ethanol and 21.5 billion gallons of non-corn biofuels in the nation’s fuel supply.
The renewable fuel standard guarantees that nearly every available acre of corn ground in the Midwest is planted with crops destined for refineries. It also gives a tremendous boost to the cellulosic industry, which makes ethanol from wood fiber and other plants.
The targets have held firm even as overall gasoline consumption has declined in the United States. So to meet the targets, refiners have to figure out how to add more ethanol to a gallon of gasoline. That’s a problem, since the fuel tanks in many vehicles can only contain gasoline blended with 10 percent ethanol. Many newer models can handle a blend of 15 percent.
Refiners can meet their quotas by buying quotas, which do nothing for the environment but do drive up the cost of gasoline. The forced purchase of those credits costs consumers an additional $13 billion a year, or roughly 10 cents a gallon, according to estimates from the Heritage Foundation.
The basic issue is that there is no justification for the Renewable Fuel Standards in terms of energy policy.
Improved extraction techniques and new-found reserves have produced a glut of oil on the market. And any benefits ethanol-blended gasoline may deliver at the tailpipe are wiped away by the carbon intensive process of growing corn and turning it into ethanol.
Federal law should not so heavily distort the free market. Without the mandates, it is unlikely oil producers would find blending ethanol a sound business practice.
Ending the ethanol boondoggle would send a clear message that the president is serious about draining the Washington bog of politically motivated handouts.