Your car will get better mileage if the price of your
Thanksgiving turkey goes down, and my chain saw will start more
easily. It all comes down to the price of corn, and how much
ethanol the federal “Renewable Fuel Standard” mandates to be
blended in gasoline.
The price of corn is going to go up sharply in the coming months
because the worst drought in fifty years has brought disaster to
corn farmers. According to the EPA, which has control of the
Renewable Fuels Standard created by the 2005 Energy Policy Act,
America grew about ten billion bushels of corn in 2000, almost half
of the world’s production of 23 billion bushels. Corn was plentiful
and cheap, so congressional “experts” mandated that a minimum of
7.5 billion barrels of ethanol be included in gasoline sold in
2012. (It takes about one bushel of corn to produce a gallon of
ethanol.)
The actual production of ethanol in 2011 topped 11 billion
gallons, more or less all of which was included in gasoline,
according to an April 2012 Congressional Research Service report.
Last week, the Agriculture Department lowered its projection of the
2012 corn crop by 12%.
Since 2005, the ethanol mandate has driven the average price of
corn from about $2 per bushel to almost $8 per bushel, according to
a January 23, 2012 CRS report. But all of the supposed benefits of
the mandate have not appeared. According to that same report, our
dependence on foreign oil hasn’t been reduced at all, and there is
no evidence that the ethanol mandate has driven energy prices
down.
If those benefits were going to happen, they would have in times
when the corn crop was plentiful. But now because of the drought,
only about 40 percent of the 2012 corn crop is being rated “good to
excellent,” i.e., worth harvesting. The rest may have to be
abandoned. Corn futures prices are rising, which means the cost of
the most-used feed for chicken, cattle, and other livestock will
rise as much or more than the price of feed corn.
The arithmetic is simple: the more feed corn is used to produce
ethanol, the less is available to feed those chickens, cattle, and
turkeys. About 40 percent of our corn crop is used for ethanol, not
for feeding livestock or people. Simply put, the ethanol mandate is
forcing the prices of protein foods to rise and will continue to do
so as long as it exists. And the mandate costs the federal
government billions because gasoline blenders are given a reported
45 cents per gallon tax credit for using ethanol in their
gasoline.
Last week, a broad coalition of meat and poultry producers
petitioned EPA administrator Lisa Jackson to waive the ethanol
mandate, saying the Renewable Fuel Standard “directly affected the
supply and cost of feed in major agricultural sectors of this
country, causing the type of economic harm that justifies issuance
of an RFS waiver.”
If only facts mattered, the EPA would waive the ethanol mandate
for this year and Congress would kill it for the years that follow.
There is no good reason for it: the price of corn will drop
slightly, but every American who buys corn for food or to feed his
livestock will benefit. And all of us who have to use gasoline
containing ethanol will find that our machinery works better and
more efficiently.
Ethanol is corrosive and has a lot of water in it, so you can’t
leave your gas-powered mower or generator filled over the winter
unless you want the inevitable ethanol sludge to destroy its
carburetor. Ethanol cannot be shipped by pipeline as pure
petroleum-based fuels can, making it still more expensive.
The EPA is considering raising the ethanol mandate to require 15
percent ethanol in gasoline sold, which will bring another problem
to everyone who drives. Few cars can handle the 85-15 gas-ethanol
mix, resulting in reduced performance and possibly damaging
high-performance car engines.
Ethanol is less dense than gasoline, so your chain saws and
lawnmowers will start more easily if ethanol is eliminated.
Moreover, your car’s gas mileage will rise if ethanol is
eliminated. There is no evidence that ethanol reduces emissions
from cars in a measurable way, so the greenies shouldn’t’ be upset.
But they, and their EPA allies, won’t admit that. Politics will
dominate the decision.
The EPA is as political an agency as has ever been incubated in
the Executive Branch. It not only controls the Renewable Fuel
Mandate but also the “corporate average fuel economy” standards for
cars and trucks. Last year, EPA announced a hike in the “CAFE”
standards to double them — to 54.5 miles per gallon — by 2025. If
that new standard is established — at the same time EPA continues
to insist on the mileage-reducing ethanol mandate — a lot of cars
and small trucks will simply be regulated out of existence. Ford,
planning ahead for the new CAFE standard, has already canceled
production of the popular (and enormously useful) Ranger small
pickup. (The Ranger I own gets poor mileage, but every larger truck
is as bad or worse on fuel consumption.)
Obama’s energy agenda is the same as the Global Warmists: drive
down the use of petroleum-based fuels by making them so expensive
as to be financially unfeasible. EPA control of both the CAFE
standard and the Renewable Fuels Mandate enables it to put so much
pressure on the car and fuels markets that the expense of operating
a car — or a truck or a lawnmower — will be too much for our
economy to bear.
The Obama administration’s decimation of our economy won’t stop
there. If the ethanol mandate is not waived, the price of food —
for everyone, not just for the “1%’ers” — will rise
dramatically.
Getting rid of the ethanol mandate is part of the answer, but
will Congress step up to the challenge? Probably not, and certainly
not before the election. Ending the ethanol mandate will probably
be just as easy as reducing the other farm subsidy programs that
are as sacrosanct as Social Security and Medicare. Oil companies
won’t willingly give up the complex system of financial incentives
that prop up their use of ethanol. But it needs to be done.
You can count on EPA to refuse a waiver of the ethanol mandate
and to push the higher CAFE standards for cars and trucks. Despite
the increases in gasoline and food prices caused by ethanol, you’ll
often hear that Obama has reined in the cost of living. The simple
reason is that the Bureau of Labor Statistics doesn’t count food or
energy prices in computing the government’s cost of living
index.
American consumers know more about their cost of living than the
BLS does. Politicians like to talk about “kitchen table” issues
that families take to heart. If ever there were one, ridding us of
the Renewable Fools Mandate is it.
