The Environmental Protection Agency wants to dump more corn into your fuel tank this summer, and it’s going to cost more than you think.
The agency is expected to approve a request from 52 ethanol producers known collectively as “Growth Energy” to boost existing requirements that gasoline contain 10 percent ethanol to 15 percent. The change means billions more in government subsidies for companies in the business of growing corn and converting it into ethanol. For the rest of us, it means significantly higher gasoline and food prices.
It’s time that this shameless corporate welfare gets plowed under.
In 2007, members of Congress joined with the Bush administration in mandating by government fiat the annual sale of 36 billion gallons of ethanol by 2022. To meet the ambitious sales targets, the EPA has little choice but to approve the 15 percent ethanol fuel blend. Big Corn’s advocates claim that forcing Americans to use this renewable fuel would reduce dependency on Mideast oil and lead to cleaner air. It’s just as likely, however, that they want to get their hands on the $16 billion a year from the 45-cent-per-gallon “blender’s tax credit” - in addition to the various state and federal mandates giving us no choice but to pump their pricey product into our fuel tanks.
The benefits are overstated. According to the EPA, reduction in foreign imports will result in $3.7 billion in “energy security benefits” at the expense of $18 billion in increased fuel costs by 2022. Environmental testing has proved inconclusive, as certain types of pollutants increase when ethanol content increases. It should be noted that the EPA’s track record on “environmental” gasoline additives includes Methyl Tertiary Butyl Ether (MTBE), a possible carcinogen whose once-mandated use has contaminated groundwater across the country.
Ethanol’s environmental credentials are further weakened by its inefficiency as a fuel. Higher ethanol concentration will reduce the gas mileage of America’s cars across the board by 5.3 percent. In addition to the pain that adds at the pump, repair bills will mount when engines not designed to handle 15 percent ethanol run lean and suffer increased wear and misfires. Because vehicle warranties specifically exclude damage from the use of unapproved fuels, the additional price for this boondoggle will fall on drivers.
The same problem hits gas stations where pumps and underground storage tanks are not certified for use with elevated ethanol levels. The cost of replacing perfectly good equipment will, once again, be passed on to the consumer.
Even those who do not own automobiles will begin to feel the pinch as more and more farm land is shifted towards taking advantage of government-subsidized ethanol production instead of food. Groups as diverse as the Grocery Manufacturers Association, the National Chicken Council and the American Meat Institute realize that this policy is distorting the market for food prices.
According to the University of Missouri’s Food and Agricultural Policy Research Institute, the ethanol tax credit increases corn prices by 18 cents a bushel, wheat by 15 cents and soybeans by 28 cents. That means higher prices for most food items at the grocery store and restaurants.
There simply is no justification - environmental or otherwise - for this interventionist scheme. With the economy reeling, consumers can no longer afford to bankroll the politically connected agricultural lobby. The EPA should reject the 15 percent ethanol requirement and Congress should send Big Corn’s rent seekers elsewhere with the repeal of all ethanol subsidies.