The U.S. Environmental Protection Agency has proposed reducing the amount of ethanol and other biofuels that must be mixed into the nation’s fuel supply. Fuel blenders would be required to use 15.21 billion gallons of biofuel in 2014, down from 16.55 billion gallons last year.
That’s a good sign that the EPA finally recognizes the federal mandate for ethanol is creating economic distortions. But the mandate should be cut much more significantly, with the ultimate goal that it be eliminated.
The Energy Independence and Security Act of 2007 set benchmarks for a huge increase in the production of domestic biofuels, supposedly to boost national security and help the environment by reducing U.S. consumption of foreign oil.
Ethanol does reduce oil consumption. But most of the ethanol in the U.S. is made from corn. Nearly 40 percent of the U.S. corn crop goes to ethanol.
Corn is the No. 1 source of livestock feed. When so much corn is diverted into making ethanol, feed prices go up. Americans subsidize ethanol through tax breaks, and then they pay for ethanol again through higher food prices.
But conservation efforts and a tough economy have curbed the nation’s demand for fuel. North American oil and gas production has skyrocketed, thanks to new extraction techniques. So the demand for ethanol has been far less than expected.
That has put fuel blenders in a bind. Federal law requires them to mix their gasoline with huge, fixed amounts of biofuels. The standard mix is nine parts gas to one part, or 10 percent, ethanol. At that level, ethanol is safe for gasoline-powered cars.
The problem is that from a practical standpoint, blenders have hit a wall. Cutting their gas with 10 percent ethanol doesn’t use enough ethanol to meet the mandate.
The biofuel lobby wants to bump up the amount of ethanol to 15 percent or more. Auto manufacturers warn that such highly diluted fuel could damage some cars. Gas stations have no reason to offer blends with more ethanol, since consumer demand for that is practically nil. That hasn’t stopped the corn growers and other pro-ethanol groups from pressing for the government to require the use of still more ethanol.
None of this makes economic sense. It’s time to put a stop to the mandate.Chicago Tribune