Facing the chance to exercise bipartisan judiciousness, US lawmakers should remember that the problem with ethanol in vehicle fuel isn’t the substance but rather volumetric requirements for it.
Ethanol has value as a gasoline additive. It boosts octane. It adds oxygen. It extends supply.
But Congress set mandates for fuel ethanol far in excess of what the market safely and economically can use.
It did so under political pressure from agricultural interests. The ethanol mandate has been great for growers and distillers of corn.
For anyone else who buys fuel or food, it costs too much. And it will get worse.
The statutory requirement for ethanol from grain soon will exceed the gasoline market’s capacity to use it at normal blending levels. Refiners and other blenders must buy credits to make up the difference. Prices of the credits are rising.
Meanwhile, a requirement for ethanol from cellulose is phasing in, although that material remains scarce. Blenders unable to meet sales mandates must pay fines.
Producers of gasoline thus face rapidly rising costs and have a growing incentive to export product rather than sell it domestically. Rising costs and diminished supply promise increasing prices at the pump.
And these vexations develop within a broader biofuels program quite likely to push up the price of diesel, too.
The program is a disaster—and not because ethanol is bad stuff. It’s a disaster because Congress, in order to make those grain growers and distillers happy—meaning rich—tried to outwit the market.
This never works. And it’s inevitably corrupt.
A bipartisan bill to repeal the Renewable Fuel Standard, as this fiasco is known, was introduced in the House in April. Now a group of Democrats and Republicans has introduced similar legislation in the Senate.
With consumers in jeopardy, the end of the RFS can’t happen soon enough.
It won’t remove ethanol from gasoline. It will, however, bring the amount of food burned in US vehicle engines back to rational and affordable proportions.
(Online June 24, 2013; author’s e-mail: [email protected])