• Just Wrong in Old Ways and New: Washington’s Corn-Based Ethanol Mandates Poorly Timed

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    Surge Summary: The common practice of mandating corn-based ethanol from motor fuel refineries has been a bad idea for a long time. It is particularly bad this summer as food prices have already been rising – and this will probably make it worse.

    by Dr. Mark W. Hendrickson

    Recently, President Joe Biden flew into Iowa—our country’s leading corn-producing state—to announce to appreciative farmers that the Environmental Protection Agency will require American motor-fuel refiners to increase the amount of corn-based ethanol (CBE) that must be blended into motor fuels this year.

    The new regulations include authorization for the production and consumption of more E15 (fuel that is 15 percent, rather than the usual 10 percent ethanol content). At first glance, we can say that we have seen this move before this presidential trip to Iowa. Former President Donald Trump, in a transparent political move, did so in October 2018—the month before crucial mid-term elections were to take place. (The Trump plan, incidentally, was blocked in 2019 by the D.C. Circuit Court of Appeals as an impermissible circumvention of the Clean Air Act.) Upon reflection, though, there is a huge—and hugely significant—difference this time.

    Before commenting on the difference, let us state for the record that the practice of using corn-based ethanol as part of our nation’s motor-fuel supply will have the same negative environmental and economic effects that it always has. Environmentally, using millions of acres of land to grow corn for fuel reduces wildlife habitat, accelerates the depletion of water tables, and increases pollution due to extra use of fertilizers (resulting in such side effects as the grim “red tide” that plagued Florida a few years ago).

    Actually, there is one noticeable addition to the list of negative environmental impacts this year: Normally, the EPA bans the refining and distribution of E15 in the summer months because burning that much ethanol in the summer heat causes smog. The Biden administration has pointedly shelved that restriction. Why? What is so urgent about adding more ethanol to the national fuel supply now that it justifies a policy known to increase visible air pollution? The logical explanation is that the Biden administration is so obsessively anti-fossil fuels that the ethanol mandate is just one more step in forcing American motorists to use less petroleum.

    There is another difference in Biden’s call for increased production of E15 from Trump’s similar call four years ago: President Trump exempted approximately 70 smaller refineries from having to produce E15 because of the potentially crushing costs involved in changing fuel blends at refineries. President Biden has granted no such exemptions. Chet Thompson, CEO of the American Fuel & Petrochemical Manufacturers, says that not exempting small refineries threatens their viability. Indeed, there are reports that some smaller refineries are shutting down already, and that others will go out of business as a result of the new E15 regulations. The last thing American motorists need at a time of soaring gas prices is for the supply of gas to decline. Nobody I know wants $8.00 per gallon gasoline.

    The negative economic impacts of using federal mandates to increase the amount of ethanol being blended into motor fuels are already known. The National Academy of Sciences has found that such increases typically raise corn prices by approximately 30 percent and the prices of other crops (the supply of which contracts to the extent that farmers switch to growing corn) almost as much. But that implies “normal times.” Today, we have anything but normal times.

    The Russian rape of Ukraine (exacerbated by unusual heat waves in India and droughts in other parts of the world) is threatening to drastically reduce the amount of grain available for human consumption this year. Tens of millions of millions of Americans are hurting from soaring inflation every time they shop for groceries. Diverting massive amounts of food from stomachs to gas tanks will jack up food inflation ever more.

    In even more dire straits are the hundreds of millions of human beings in poorer countries who are at risk of starvation or severe undernourishment. A global humanitarian crisis is unfolding before our eyes. And what is the official response of the United States of America—historically, the country with the big heart, always ready to lead the world in sending food aid to those in need (including to communist Russia in the 1920s)? Alas, with the world’s people in desperate need of more food, this presidential administration is ordering even more of our country’s abundant corn crop to be burned up on American highways. What’s wrong with this picture?

    Speaking as a human being here, and not as an economist, the EPA’s ethanol policy is a moral obscenity.

    The views here are those of the author and not necessarily Daily Surge

    Originally posted here.

    Image: https://picryl.com/amp/media/ethanol-plant-0d6ef1

    Dr. Mark W. Hendrickson is a retired adjunct faculty member, economist, and fellow for economic and social policy with the Institute for Faith and Freedom at Grove City College.

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