Column: Fuel standards impede free market
The more than decade-old federal corn ethanol mandate, which picks winners and losers and harms American consumers, is broken beyond repair. It’s a textbook example of how politicizing energy policy – rather than letting the free market work – will always fail.
The EPA’s most recent proposal seeks to increase the amount of renewable fuel – mostly corn ethanol – in our nation’s gasoline supply. This proposal, which is being discussed today in Ypsilanti, represents a further expansion of a broken policy that drives up prices at the pump for American families and small businesses by creating artificial and costly mandates on the energy industry that don’t make economic or environmental sense.
Free market competition and private sector ingenuity over the past decade have transformed our nation’s energy outlook – creating enormous economic, environmental and national security benefits. Yet the federal renewable fuel standard (RFS), passed in 2005 and expanded in 2007, continues to inflict pain on American consumers, family farmers and the refining industry.
Like other government policies that pick winners and losers, the RFS creates many more losers than so-called winners. At the time of its initial passage — several years before the first iPhone was launched — America’s energy outlook was much different, with higher prices at the pump, limited access to domestic supplies, and a deepening reliance on foreign energy sources to meet our increasing demand.
Given the perceived domestic energy scarcity and rising consumer costs, politicians of both parties vowed to “grow” more of our energy from corn. But the days of American energy scarcity, thankfully, are now consigned to history.
Today, America is a global energy player, poised to become a net exporter. This has all happened in spite of the failed RFS, not because of it.
The RFS, as we all know, is bad for America’s economy and especially bad for working families. It’s also bad for our environment. When the full life-cycle emissions are considered, any weakly supported environmental argument for corn ethanol collapses, according to University of Michigan’s Energy Institute research.
Faced with these facts and growing frustration from American consumers who are tired of politics as usual and shouldering higher energy costs, the Trump administration and some in Congress have recently considered options – like expanding the corn ethanol mandate – to prop up certain handpicked industries when they should be finding ways to end it.
That’s not real reform. It’s simply an attempt by politicians and an army of special interests to further distort energy and fuel markets. There’s no rationale or economic justification to maintain this outdated and failed mandate.
We are seeing some encouraging signs. Acting EPA Administrator Andrew Wheeler recently said that federal policies should not “pick winners and losers between the different fuel sources,” and that the “we should let the marketplace do that.” Mr. Wheeler emphasized that “we shouldn’t have regulations that benefit one fuel source over another.”
Ultimately, real reform requires congressional action. For the sake of family farmers, refiners and the American public, Washington should end this failed policy once and for all before it does any more harm.
Democrats and Republicans both bear responsibility for this disaster. Too many in Washington listen to a small but powerful group of special interests rather than the American people. Fortunately, an opportunity exists for both parties to listen and be responsive to the American people.
It’s time for Washington to finally repeal the RFS, get government out of the business of picking winners and losers and let the free market move our energy economy forward. Enough is enough.
Thomas J. Pyle is president of the American Energy Alliance.