Congress Shucks Subsidies For Ethanol, Not Mandates
Energy Policy: Congress let the corn-based fuel's tax credits expire when it adjourned, but continuing mandates for its use means pump prices will go even higher and the money saved will be spent elsewhere.
Subsidies for ethanol expired over the weekend, ironically just days before the Iowa caucuses.In their 33 years of existence, ethanol subsidies, the original poster child for crony capitalism, with an estimated cost of at least $45 billion and an annual price tag in recent years of $6 billion, have been a political sacred cow, letting farm state politicians bring home the bacon in exchange for generous campaign contributions.
A $16 trillion deficit in an election year in which the economy struggles through a nonexistent recovery and a failed stimulus has made it hard to defend such subsidies. Letting this one expire allows members of Congress to claim they are cutting spending in hard times even when they aren't.
The money not expended on ethanol subsidies will not be returned to the Treasury or to the American taxpayer.
It will be spent somewhere else, likely on some other green energy pipe dream like solar panel makers that go bankrupt or electric cars that catch fire.
Farmers will do fine, but most taxpayers and consumers will not. The price of corn will remain high, continuing to be pushed higher by the forced use of ethanol in gasoline that has not expired. Food prices driven higher by this mandate will continue to rise, as will gas prices as the added cost to ethanol producers is passed down the line, paid ultimately by the consumer at the gas pump.
Ethanol was supposed to save the earth and pave the way to energy independence. It has done neither. We are more dependent more than ever on foreign sources of petroleum, used in a wide variety of products and processes as well as our cars, and increased biofuel cultivation has hurt the environment through increased use of pesticides, farmland expansion and agricultural runoff polluting our rivers and coastal waters.
It takes 1,700 gallons of water to produce one gallon of ethanol.
Each acre of corn requires 130 pounds of nitrogen and 55 pounds of phosphorous.
Increased acreage means increased agricultural runoff that is creating aquatic dead zones in our rivers, bays and coastal areas.
According to the Hoover Institution's Henry Miller and professor Colin Carter of the University of California, Davis, "ethanol yields about 30% less energy per gallon of gasoline, so miles per gallon in internal combustion engines drop significantly."
Automakers have warned that increasing the percentage of ethanol in gasoline would damage current engines. Under current law, the federal government requires that fuel contain 10% ethanol. Another mandate requires the consumption of 36 billion gallons of renewable fuels by 2020.
The ethanol industry is planning an aggressive effort to increase the percentage of ethanol despite warnings about the damage done to engines in cars already on the road.
Tom Buis, CEO for the industry group Growth Energy, revealed that the new agenda "is opening up the market place with E15 (15% ethanol blend) and flex pumps and flex fuel vehicles."
Ethanol will survive without subsidies, but it cannot survive or compete without government mandates.
Our energy policy and energy choices should be driven by the free market and consumer choice.
Ethanol has never made much sense economically or environmentally. It never would have made it to market without politically motivated congressional mandates and the now-expired subsidies.
Believers in free markets and less government need to continue the effort to shuck corn as an energy source.
Corn belongs in our breakfast cereal and not in our gas tanks.
