Should the U.S. End the Ethanol Mandate?

Detractors say it’s bad for both consumers and the environment. Supporters say it’s needed for the continued development of alternative fuels.

YES: It Hurts Consumers, Adds to Pollution And Hasn’t Cut Oil Imports

Congress approved a 40-cent-per-gallon subsidy for corn ethanol way back in 1978, the same year the Bee Gees were topping the pop charts with their disco hit “Stayin’ Alive.” Paying to support corn ethanol was a bad deal then. It’s an even worse deal now.

Taxpayers are no longer directly subsidizing ethanol producers, but the Renewable Fuel Standard requires retailers to blend about 13 billion gallons of corn ethanol a year into the gasoline they sell to the public. That mandate hurts consumers, is bad for the environment and does effectively nothing to reduce America’s need for foreign oil.

Paying at the pump

Ethanol costs motorists at the pump. The ethanol claque frequently claims its fuel is cheaper than gasoline. While that may be true by volume, the posted price doesn’t reflect ethanol’s lower energy density. It takes about 1.5 gallons of ethanol to produce the energy contained in a gallon of gasoline. Data collected by the state of Nebraska (the country’s second-largest ethanol producer, behind Iowa) since 1982 shows that when measured on an energy-equivalent basis, ethanol has always been more expensive than gasoline.

ENLARGE

 

As I showed earlier this year in a report for the Manhattan Institute, the ethanol mandate is now imposing $10 billion a year in additional fuel costs on motorists, compared with what they would have paid for gasoline alone—about $47 a year for the average driver.

The ethanol mandate also results in more greenhouse gases. In May, Emily Cassidy, a research analyst at the Environmental Working Group, issued a report that found that corn ethanol emits 20% more carbon dioxide per unit of energy produced than standard gasoline. In 2014, domestic corn ethanol consumption “resulted in 27 million tons more carbon emissions than if Americans had used straight gasoline in their vehicles,” the report said. In August, John DeCicco, a research professor at the University of Michigan’s Energy Institute,found that greenhouse-gas emissions from corn ethanol are as much as 70% higher than those from standard gasoline.

The imports story

Now, let’s look at oil imports. Since the 1970s, ethanol boosters have been using the boogeyman of foreign oil to justify subsidies and mandates for their fuel. The result: Ethanol distilleries are now consuming nearly 40% of all domestic corn output to produce fuel equivalent to about 600,000 barrels of oil a day. And it took nearly four decades of federal subsidies and mandates to get the ethanol sector to that size.

Meanwhile, domestic oil production has increased by more than 3.6 million barrels a day since 2006. Thus, in less than a decade, the oil sector has increased production by six times the total output of every ethanol distillery in America. That’s why we’re importing less foreign crude.

The always-distant dawn of “advanced” biofuels is no reason to keep the Renewable Fuel Standard alive. We’ve been enduring the hype about them since the days of Donna Summer, Studio 54 and “Saturday Night Fever.” Yet, despite lavish federal subsidies and mandates, those next-generation biofuels have yet to be produced in significant quantities at competitive prices.

If gasoline retailers want to add ethanol to their fuel, it should be their prerogative, not a federal mandate. It’s time for Congress to pull the plug on this disco-era energy policy.

This piece originally appeared in The Wall Street Journal

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Robert Bryce is a senior fellow at the Manhattan Institute. Follow him on Twitter here.

This piece originally appeared in The Wall Street Journal