The new year brings bad tidings to corn. The Midwestern states have been harvesting bushels of cash from the 2007 congressional directive requiring gasoline refineries to adulterate the fuel with corn, but the good times may soon end. This reform is possible now that certain liberal dreamers acknowledge that the scheme serves neither an economic nor environmental purpose.
Sen. Dianne Feinstein of California has introduced the Corn Ethanol Mandate Elimination Act, with the support of a highly endangered Democratic colleague, Kay R. Hagan of North Carolina and Joe Manchin III of West Virginia. Her bill would delete the ethanol mandate from the law books. Sen. Tom Coburn of Oklahoma is rounding up Republican votes. Momentum is gathering.
For the first time ever, the Environmental Protection Agency has relaxed the amount of corn in the formula, recognizing “the practical limits on ethanol blending, a limit called the ethanol “blend wall.” Only so much corn can be forced into the recipe for gasoline. Congress established the requirement that Americans buy 15 billion gallons of ethanol in 2014, a target that could only be reached by pumping enough of the corn extract into automobile and truck fuel tanks to make engines fail. Automobile manufacturers, foreign and domestic, balked, suggesting that the government would have to pay the repair bills of automobile owners. Unwilling to face the inevitable lawsuits from warranty claims, the EPA zealots blinked.
The Renewable Fuel Standard won’t go away easily because it’s the crown jewel of corn-crony government. Politicians of both political parties depend on the support of the agribusiness firms that benefit most. This generosity to the farm states comes at a high price for the public. Consumers aren’t merely paying for the ethanol they don’t want, but they suffer higher prices for just about everything else.
With an artificial market with guaranteed buyers for corn, farmers assign land that would otherwise be used for other food crops and convert it to corn production. Some 44 percent of the corn crop becomes ethanol. The reduction in the supply of corn drives up the price of other foods. The price of corn flakes rises. Feeding cattle becomes more expensive. Refining is more expensive, and it’s more expensive to deliver products by truck. It cost more to fly. Delta Air Lines was so concerned about the rising cost of aviation fuel that it bought a refinery in 2012.
Delta doesn’t have the capability to blend biofuels at its new Pennsylvania refinery, so it joined a number of companies in seeking a waiver from the EPA mandate. If the waiver is not granted, the airline must purchase “credits” from biofuel companies, a wealth transfer from one company to another that exists to sell something that nobody but the environmental bureaucrats want. “A corn ethanol mandate is simply bad policy,” Mrs. Feinstein succinctly puts it. Bad policies can be corrected. From the gasoline pump to the checkout line, ethanol has been a disaster.