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The Hidden Corn Ethanol Tax - How Much Does the Renewable Fuel Standard Cost Motorists?

issue brief

The Hidden Corn Ethanol Tax - How Much Does the Renewable Fuel Standard Cost Motorists?

March 10, 2015
Energy & EnvironmentOther

Abstract

Federal legislators are considering an increase in the federal gasoline tax, from the current 18.4 cents per gallon to 33.4 cents per gallon. Before legislators consider raising the gasoline tax, they should first repeal a hidden tax on gasoline: the Renewable Fuel Standard (RFS).

Key Findings

  • Since 2007, the RFS, which requires fuel retailers to blend corn ethanol into the gasoline they sell, has saddled American motorists with more than $10 billion per year in extra fuel costs above what they would have paid if they had purchased gasoline alone.
  • The RFS is a de facto tax on motorists because it requires them to consume ethanol, which, on an energy-equivalent basis, is significantly more expensive than gasoline. Since 1982, on average, ethanol has cost 2.4 times more than an energy-equivalent amount of gasoline.
  • For eight full years—1986, 1987, 1988, 1989, 1992, 1994, 1997, and 1998—ethanol cost at least three times more than an energy-equivalent amount of gasoline.

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