Remember back in June of last year Congress voted to end the billions of dollars of ethanol subsidies, which were to be effective January 1, 2012? Some of us naively thought this would be the end to the nonsense use of corn, food for livestock and humans, would finally come to an end. Silly us.
You see, the ethanol producers didn’t really need those subsidies in the first place. Thanks to two Bush era laws, they have a guaranteed growing market for their product. In 2005, Congress passed the Energy Policy Act creating the first renewable fuel volume mandate. Then in 2007, Congress passed the Energy Independence and Security Act (EISA), which increased the volume of renewable fuel required to be blended into transportation fuel from 9 billion gallons in 2008 to 36 billion gallons by 2022.
Although we are blaming our higher gasoline prices on tensions in the Middle-East and higher demand in developing countries, some part of the increase was due to ending the subsidies for ethanol. I would guess it also resulted in higher food prices. Don’t get me wrong. I am glad we ended the unneeded subsidies to the ethanol producers. But, the EPA, acting under the power granted them by EISA is about to make matters worse. American Thinker has the story:
Last week, “an unelected group of people” over at the Environmental Protection Agency revised our national energy policy, approving a new gasoline blend with up to 15% ethanol, known as E15, which may be available in pumps this summer. Currently, most gasoline sold in the U.S. is E10, containing a maximum of 10% ethanol.
The president termed the vote to end subsidies “ill-advised.” Funny how he rails against “giveaways for the oil companies” — which turn out to be tax write-offs afforded to most businesses — yet had no compunctions about paying out 45 cents per gallon to ethanol producers. Rather than an “all of the above” energy policy, Obama seems to be pursuing “nothing from below.”
Current levels of ethanol production are around 900,000 barrels per day, or 17 billion gallons per year. Thus, by law, ethanol production must double in the next decade, regardless of whether this is a sensible energy policy and regardless of the changing economics brought on by the fracking revolution that is supplying cheap natural gas and shale oil.
An obvious way to accommodate this mandate is to increase the ethanol percentages in gasoline. The recent EPA press release reports that the E15 waiver was “in response to a request by Growth Energy and 54 ethanol manufacturers under the Clean Air Act.” “Growth Energy” is shorthand for the “Renewable Fuels Association/Growth Energy” (RFA/GrE), self-identified as “a trade association for the U.S. ethanol industry.” In other words, a lobbying group.
Yes, those pesky lobbyist and crony capitalist win again and we, of course are the perpetual losers. Americans can look forward to higher cost to operate the automobiles and higher food prices as more corn is diverted from feeding livestock and people. All of this of course is for our own good. All green energy is for our own good. So say our fearless leaders. Why, when Congress was striking down the ethanol subsidies , didn’t they strike down the Bush era mandates on ethanol? Your guess is as good as mine.
Today’s story is but one example of the thousands or hundreds of thousand of laws and regulations that are on the books that no longer serve our needs. Will we ever find the means to clear all the debris from our government? Not likely. This is the nature of government.
Well, that’s what I’m thinking. What are your thoughts?