The Environmental Protection Agency (EPA) wants Americans to pay more for their groceries. That’s the only way to explain the agency’s decision to mandate the use of corn-based ethanol in our gas supply.
The decision comes as part of the EPA’s adherence to the Renewable Fuel Standard, a law that requires U.S. transportation fuels to be blended with biofuels, the most common of which is ethanol. The new rule calls for refiners to add more of these renewable fuels this year — 18 billion gallons more.
Like much of the RFS’ history, this is a mistake. The RFS has plagued the country for years by jacking up food and fuel costs. What’s more, it’s outdated and offers zero environmental benefits. Congress should nix this standard before it wreaks more havoc on the country.
Congress passed the RFS in 2005. The goal was to decrease America’s dependence on foreign oil by mixing biofuels, such as ethanol, into our nation’s gasoline supply. Their inclusion would allow the United States to import less oil from abroad.
But the United States no longer depends on oil from foreign producers. Thanks to an explosion in shale exploration, the country recently passed Russia as the world’s top oil and natural-gas producer. In 2014, the nation produced more oil than ever before, increasing its output by 1.6 million barrels a day.
There’s no evidence that the use of ethanol actually lowers oil imports.
Between 2008 and 2014, net oil imports dropped by more than 6 million barrels a day. But that’s largely because domestic production increased by more than 3.5 million barrels a day. Meanwhile, ethanol production increased by a negligible 328,500 barrels a day over that same period — comparatively, a drop in the bucket.
Ethanol has also caused domestic food prices to skyrocket. To meet the growing demand for ethanol, farmers have chosen to produce corn over pork, beef, poultry and other agricultural products.
That’s costing American families dearly. In 2012 alone, the average American family spent an additional $2,000 on groceries thanks to the RFS.
This price spike is also hurting businesses. So far, the RFS has cost chain restaurants an additional $3.2 billion per year — about $18,000 per restaurant — according to a study by the National Council of Chain Restaurants.
Drivers have fallen victim to the RFS as well. Ethanol is less efficient than regular gasoline, so motorists must purchase more to go the same distance. In fact, from 2007 to 2014, motorists spent an extra $10 billion each year — a total of $83 billion — than they would have with non-mixed gasoline.
Some argue that these costs are worth it for ethanol’s environmental advantages. But research shows there’s hardly anything “green” about it.
To get a full sense of environmental effects of ethanol production, it’s necessary to take into account not just tailpipe emissions, but all emissions associated with growing corn for fuel. That includes those from farm equipment used to clear land, plant seeds, irrigate and harvest crops. Don’t forget the pollution emitted hauling ethanol from factories to refineries to gas stations.
In short, ethanol isn’t nearly as clean as its proponents suggest. Indeed, a study by the Texas-based Baker Institute discovered that the greenhouse gases produced during a fuel cycle for ethanol are roughly the same as that produced by petroleum-based fuels.
These emissions add up. A recent study published in Science magazine estimated that “corn-based ethanol nearly doubles greenhouse emissions across the world over a 30-year period.”
The RFS has lost support from even those who benefit from it. My own organization recently commissioned a poll in Iowa — the state that produced the most corn in 2015. The poll found that half of the state’s voters either don’t care much or at all about the law. Six in 10 Iowans don’t want presidential candidates to talk about it, period.
Clearly, the EPA’s new rule is a step in the wrong direction. To stop this from happening again, Congress should finally trash the outdated Renewable Fuel Standard.
• George David Banks is the executive vice president for the American Council for Capital Formation.