Waiver on ethanol limit sustains a costly boondoggle

Bob Tippee

A partial waiver in the US of a 10% limit on the ethanol content of gasoline serves two masters: the ethanol lobby and Democratic lawmakers who can’t admit mistakes. For all other Americans—tough.

The Environmental Protection Agency has decided to allow the sale of gasoline containing 15% ethanol in vehicles with model years 2007 and later. It says engines of that vintage can handle the extra alcohol. It will require that pumps dispensing the 15% blend, E15, be clearly labeled.

Automakers and equipment manufacturers worry that the new fuel will find its way into engines not made for the fuel and hamper performance.

EPA acted under pressure from the ethanol lobby, which worries about the looming blend wall, when the market won’t be able to absorb ethanol at mandated levels. That will happen in the next year or so.

A sensible solution is to ease the mandates. But then Democratic lawmakers would have to admit they erred with their energy bill of 2007. They misread the gasoline market, set unreasonably high mandates for renewable fuels, overestimated the use of 85% ethanol-gasoline blends in flex-fuel vehicles, and failed to account for predictable economic adjustments, such as corn-price jumps.

Those are the small errors. The big mistake occurred in 2005, when Congress, with Republicans in control, set ethanol mandates in the first place. In 2007, Democrats were just trying to show up the other party.

So now the blend wall looms, corn prices are higher than they should be, and subsidies are flowing from productive parts of the economy to sustain an industry whose struggles worsen as public assistance grows.

And, just before an election, EPA jams yet another strut beneath this boondoggle, acting earlier than necessary and before comprehensive tests of the effects of E15 on engines are complete. It’s a very costly cycle.

Politicians can solve the problem by admitting they erred and easing or—better yet—removing the ethanol mandate. But they won’t. Americans should heed those labels.

(Online Oct. 15, 2010; author’s e-mail:

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