One could not have conjured up a more odious and counterproductive policy than taking 40% of our corn supply and using it to dilute our fuel, thereby increasing the cost of both food and gas. Yet not only has the Biden administration declined to repeal the ethanol mandate during this unprecedented period of inflation and supply shocks, he will increase ethanol use in a way that will further deplete gas mileage for many motorists and place a greater demand on corn, which is the antecedent to the entire chain of food costs, with prices approaching record highs,
Ever since the pathetic mandate was implemented in 2005 and expanded in 2007, oil refiners couldn’t meet the arbitrary sum of billions of gallons of biofuels to blend into the nation’s fuel supply, even if they wanted to. For 2022, the mandate stands at 36 billion gallons. It’s not safe for engines to have a fuel blend of more than 10% ethanol, but for years the corn lobby was suggesting, in a quite self-fulfilling way, that the way to meet the mandate is by allowing more flexibility to blend “E15” all year round with no restrictions from the Clean Air Act. The real solution, though, is to abolish the original mandate.
Ideally, we should offer “E0.” We should repeal the mandate, which will save independent refiners, alleviate the artificial demand on corn prices and land use, and enjoy more miles per gallon of unadulterated fuel. Instead, the Biden administration has chosen to allow gasoline that uses a 15% ethanol blend, which is typically banned during the summer, to be sold throughout this year. Liberal Republicans like Iowa Sen. Chuck Grassley always pointed to the right to choose and be free to sell E15, but he and the corn lobby forget that we should be free to choose zero ethanol, and oil refiners shouldn’t be forced to blend it into the mix. If Grassley and his lobbyists want ethanol, they are welcome to blend E99 with their own refineries and sell it to people who want it without government intervention.
At a time when we should be allowing people to purchase fuel that achieves more miles per gallon, we are inevitably creating greater demand on gas and food at the same time! According to the Department of Energy, “Vehicles will typically go 3% to 4% fewer miles per gallon on E10 and 4% to 5% fewer on E15 than on 100% gasoline.” So that will wipe out any gain in price from using ethanol, which, for once, is slightly cheaper than gasoline, but only because of the war on fossil fuels. Also, because of the corrosive nature of ethanol, a higher blend will inevitably force gas stations to retrofit their pumps with new fuel dispensers and new underground storage tanks. Guess who will pay for that? What about when all the car owners who are tricked into using E15 blow through their warranties and public clamor forces us to bail them out?
And speaking of car owners, as our government makes oil refiners blend more ethanol, another equally absurd and harmful mandate runs head-first into the ethanol mandate: namely, the Corporate Average Fuel Economy (CAFE) standards. In order to serve the gods of the climate and limit the use of fossil fuels, Congress dramatically expanded the CAFE standards in 2007, forcing auto manufacturers to make expensive cars with paper-thin steel in order to comply with the green energy agenda and increase their miles per gallon (mpg) from 27.5 to 35. This was part of Energy Independence and Security Act of 2007, the same bill that expanded the ethanol mandate, which would later run into problems with the CAFE standards. Just as with the ethanol mandate, the EPA has created a trading credit system in which manufacturers can buy credits from competitors in exchange for not complying with the standard. According to the Heritage Foundation, “a 1 mpg tightening of the standard would cost consumers $7.81 billion annually.”
Fast-forward to last month, and the Biden administration announced its intent to increase the standard to 49 mpg by 2026, essentially barring non-electric cars. So not only will this make cars too expensive for the non-latte-sipping crowd, but it will run into the renewable fuels standard, because there won’t be enough demand for fuel to even meet that standard.
Meanwhile, independent refiners continue to get hammered, as the EPA just denied all of the 36 petitions from small refiners to exempt them from the biofuels standard for the 2018 compliance year. This is done by design to ensure that we don’t create more oil refineries. One could not possibly have conjured up a worse confluence of policies to increase the cost of food, fuel, and cars and destroy jobs in the energy sector. Yet that is likely a feature, not a bug, of their plan. Fewer cars and more expensive food and fuel grease the skids for more dependence on government and less freedom.
Another peculiar thing about the E15 decision is that the reason why the EPA typically bans its sale in the summer under the Clean Air Act is over concern that the higher blend creates more smog. Isn’t it interesting how environmental regulations can be waived to please the corn engine gods, but no such waivers are issued for oil, gas, and coal permitting, the Keystone pipeline, interstate pipelines, transporting liquid natural gas by rail, or drilling in the Gulf of Mexico? In fact, just as the energy crisis was reaching its climax, the Securities and Exchange Commission (SEC), without the approval of Congress, issued a rule that will require all publicly traded companies to disclose the effects of their operations on “climate change.” This rule will make Dodd-Frank and Sarbanes-Oxley look easy and is designed to cripple the fossil fuels business.