By masking the costs of ethanol, certain wealthy biofuel investors advance ideas and polices that line their pockets at the expense of average Americans.
An enlightening example of how this occurs is revealed by the way a green energy mogul lashed out at an organization named Intellectual Takeout (ITO) for publishing data from Just Facts about the cost of ethanol.
In December 2013, Just Facts commissioned a nationwide scientific poll to determine what voters understand about public policy issues. This poll contained 19 questions dealing with voters' knowledge of nine major issues, one of them being energy. Among the energy-related questions was this:
"Without government subsidies, which of these fuels is least expensive for powering automobiles? Gasoline, ethanol, or biodiesel?"
The correct answer is gasoline, which only 46 percent of voters answered correctly, even though the unsubsidized costs of ethanol and biodiesel substantially exceed that of gasoline. As calculated with data from the U.S. Department of Energy and U.S. Energy Information Administration, without federal subsidies, the average nationwide retail price for ethanol in 2013 was 22 percent more than gasoline, and biodiesel was 41 percent more than gasoline.
This July 11, 2012, handout photo provided by the Renewable Fuels Association shows a Lawrence, Kansas, fueling station pump with various grades of fuel, including E15, which contains 5 percent more ethanol than the current 10 percent norm sold at most U.S. gas stations. (AP Photo/Renewable Fuels Association, Robert White)
In the documentation for the poll, Just Facts originally double-counted a biofuel subsidy, thus greatly overstating the cost differential between gasoline and biofuels. Just Facts first reported that without federal subsidies, ethanol and biodiesel were respectively 42 percent and 64 percent more expensive than gasoline. In reality, however, these figures are 22 percent and 41 percent.
The results of the poll—along with the documentation of the correct answers—were published by various organizations and media outlets that syndicate articles from Just Facts. One of these is ITO, which soon received an email from Eric McAfee, the Founder, Chairman and CEO of Aemetis, a company that manufactures ethanol, biodiesel, and other products. McAfee, whose biography states that he "has founded and funded more than 30 companies," wrote:
• "Are you being funded by the oil industry and merely a front for there [sic] $100+ million annual budget to protect the 90% gasoline monopoly in the US?"
• "In July 2013, E85 ethanol (97 octane) was sold for $2.99 per gallon retail in the high-cost California market, compared to $3.99 per gallon for premium gasoline (91 octane). Ethanol has traded wholesale at a $0.20 to $1.10 discount to gasoline for many years."
• "Please publish a retraction of the error in the same manner as the original article. If you fail to do so, please consider renaming your website 'Intellectual Fast-Food', focusing on quick bites of erroneous 'facts' that have enormous impacts on government and financial policy."
In the exchange that followed, ITO president Devin Foley replied that his institute is not funded by oil companies and offered McAfee the opportunity to write a rebuttal, which Foley pledged to publish "so long as the tone and tenor is civil and within reason."
On January 15, McAfee replied, "We would like to respond to the article, as you suggest."
However, after nearly eight weeks and multiple follow-ups by Foley, McAfee has yet to provide it.
In this July 20, 2013, photo, a plant that produces ethanol is next to a cornfield near Coon Rapids, Iowa. (AP Photo/Charlie Riedel)
Regardless, McAfee's email to Foley employed a common ruse used by biofuel proponents to understate the costs of these fuels.
This involves comparing the prices of a gallon of ethanol and a gallon of gasoline, even though a gallon of ethanol has 31 percent less energy than a gallon of gasoline. In practical terms, this means that a car fueled with E85 (a mixture of 70-85 percent ethanol and 15-30 percent gasoline) will get 25-30 percent fewer miles per gallon than the same car when it is fueled with gasoline.
That is why the poll question was worded to ask which fuel is "least expensive for powering automobiles," not which fuel is "least expensive per gallon." This question reflects the actual value of a fuel to consumers, not its price for a given volume.
McAfee is not the only person to use this distorted measure of ethanol costs.
For example, a recent article published by both Bloomberg News and the Washington Post contained the same canard. After comparing the price of a gallon of ethanol with a gallon of gasoline, the reporters quoted Todd Becker, CEO of the multi-billion dollar Green Plains Renewable Energy Inc., who said that ethanol is "the cheapest molecule in the fuel tank." What Becker and the reporters fail to mention is that a molecule of ethanol "gives off significantly less energy on combustion than petroleum," as detailed by a Western Oregon University physics course.
This photo taken June 20, 2013, shows a sign advertising no ethanol gasoline available at a station in Oklahoma City. A high blend of ethanol gasoline, E15, which contains 5 percent more ethanol than the 10 percent norm sold at most U.S. gas stations, is sold in just 20 stations in six Midwestern states. (Photo: AP/Sue Ogrocki)
Furthermore, Americans have no choice but to purchase ethanol, because the federal Renewable Fuel Standard effectively requires that almost every gallon of gas sold in the U.S. contains about 10 percent ethanol by volume. Because ethanol is more costly than gasoline, this drives up the price of gas.
Consumers and taxpayers ultimately bear the financial burden of these cost premiums, which drain household budgets and harm the broader economy. As the EPA's National Center for Environmental Economics explains, "Biofuels also tend to require subsidies and other market interventions to compete economically with fossil fuels, which creates deadweight losses in the economy."
Likewise, as explained by the Institute for Plasma Physics in the Netherlands, the U.S. Department of Agriculture, the Congressional Budget Office, the Congressional Research Service, and the U.S. Government Accountability Office, higher energy costs drive up unemployment, drive down wages, and cause other harmful economic effects. Furthermore, these effects tend to be harsher on poorer nations and individuals, because they spend a greater portion of their incomes on energy than wealthier people.
There are obviously environmental issues to consider, and some argue that the environmental benefits of biofuels outweigh their added costs. However, there can be no rational basis for such claims unless all of the relevant factors are honestly discussed and critically weighed. Without such clarity, citizens and policymakers will inevitably develop opinions and make decisions based upon half-truths and outright lies that can cause real harm to real people.
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