In the next few weeks, the Environmental Protection Agency is expected to rule on a proposal to increase from 10 percent to 15 percent the amount of ethanol that may be blended into gasoline. If the EPA approves the move, the U.S. motor-fuel market would yet again become the victim of misguided federal intervention.
Since the 1970s, Congress has justified subsidies to the corn ethanol industry with the oft-repeated claim that boosting domestic production of ethanol will increase America's energy security by reducing U.S. oil imports.
That claim has no basis in fact.
Between 1999 and 2009, U.S. ethanol production increased seven-fold, to more than 700,000 barrels per day (bbl/d). During that period, however, oil imports increased by more than 800,000 bbl/d. (In addition, U.S. oil exports—yes, exports—more than doubled, to about 2 million bbl/d.) Data from the U.S. Energy Information Administration show that oil imports closely track domestic oil consumption. Over the past decade, as oil demand grew, so did imports. When consumption fell, imports did as well. Ethanol production levels had no apparent effect on the volume of oil imports or on consumption.