Ethanol in gasoline rips off consumers
U.S. oil and natural gas producers are shattering records — recently overtaking Saudi Arabia and Russia to lead the world in crude oil production.
Fueled by advanced technology, the American energy resurgence is paying off for consumers and shielding U.S. markets from instability overseas.
But drivers may need extra cash to pay the mechanic if federal regulators keep forcing more ethanol into the fuel supply.
Multiple industries have long warned about the risks of higher-ethanol fuels like E15 (15 percent ethanol), which extensive testing shows can damage engines and fuel systems.
Nearly three out of every four vehicles on the road today are not designed for E15 gasoline, and a number of automakers have even said that E15 may cause damage that is not covered by warranties.
It’s not just cars. Consumer groups warn that E15 is incompatible with lawnmowers, motorcycles, ATVs, power equipment and boats, and many of these consumers opt for fuel that is entirely ethanol free (E0).
With so many drawbacks, who’s asking for more ethanol in fuel? Not consumers.
The Society of Independent Gasoline Marketers of America and National Association of Convenience Stores say “most retailers that sell E15 or E85 have seen minimal sales of these products.”
By contrast, “there’s a significant demand in the market” for “non-blended gasoline” or E0.
Availability of consumer-preferred lower ethanol fuel is at risk due to the Renewable Fuel Standard (RFS).
Finalized in 2007, before the U.S. energy revolution took off, the RFS requires the fuel industry to add more and more ethanol to the fuel supply each year, regardless of market demand.
The idea was to encourage a cheaper, local alternative to reduce reliance on fuel imports from overseas. Ten years and one U.S. energy revolution later, surging domestic crude oil production has taken care of the reduced imports goal.
As for cheaper energy, the math doesn’t add up for a higher ethanol mandate. Ethanol has less energy than gasoline, forcing drivers to fill up more often when using higher ethanol blends.
On top of that, the Congressional Budget Office projects gasoline prices could jump substantially unless the RFS mandate’s market-distorting impacts are reined in.
The RFS is more complicated than just warning drivers to stick with standard E10 fuel. For now, yearly ethanol volume requirements can be met while still leaving room — just barely — for E10 and E0.
Without reform, the RFS will eventually require more gallons of ethanol than the fuel supply can accommodate as E10.
In the nation that leads the world in oil and natural gas production, restricting consumer choice does not make sense.
It makes even less sense when you factor in the broad swath of collateral damage unleashed by government ethanol policy.
Higher ethanol blends from corn generate unintended consequences at every step from the farm to the fuel tank.
Environmental organizations, anti-hunger groups, wildlife protection activists, grocers, restaurant owners and producers of poultry, pork and beef — all have spoken out against the RFS with concerns ranging from environmental and habitat protection to increased food prices and elevated costs for farmers and ranchers.
The outdated, bureaucratic boondoggle that is the RFS should be a prime target for the White House, which has energetically pursued regulatory reforms, achieving real benefits for families and businesses.
But the Trump administration may be headed in the wrong direction on ethanol, supporting policies that would push even more E15 ethanol into gas tanks.
To its credit, the White House is taking a close look at ethanol policy, convening several stakeholder meetings to find compromise reforms that will satisfy ethanol supporters and everyone else.
Boosting prospects for success is the fact that RFS reform is one of the rare issues that enjoys support from both Republicans and Democrats in Congress.
But when it comes to smart ethanol policy, political parties shouldn’t matter. The only label that matters is “consumer.”
Are policymakers changing ethanol policy to protect consumers’ engines, wallets and fuel choices?
If the answer is “no,” Washington should go back to the drawing board. It’s time to stand up for consumers and fix the broken RFS once and for all.
Frank J. Macchiarola is Group Director of Downstream and Industry Operations for the American Petroleum Institute.