The Environmental Protection Agency's Ethanol Band-Aid

NCPA August 22, 2013

After a nine-month delay, the Environmental Protection Agency (EPA) on August 6 finally revealed the amount of ethanol that is expected to be blended into gasoline in 2013. However, the agency's announcement is too little, too late. Issuing the mandated ethanol level now can be likened to putting a Band-Aid on the patient after last rites have been read, says Bob Beauprez, a former Republican member of the House of Representatives from Colorado.

The ethanol mandate is one of the most convoluted and unworkable programs ever enacted by the U.S. Congress. Those who served in Congress and voted for it remember that it was supposed to improve air quality, promote the fledging U.S. ethanol industry, and reduce dependence on foreign oil by adding homegrown ethanol to the nation's fuel supply.

• While Congress' intentions were good, the Renewable Fuel Standard has become a self-inflicted wound.
• The ethanol mandate has sent corn prices skyrocketing, harmed cattle and poultry producers, forced refiners to waste money on ethanol credits, and hiked food prices worldwide.
• In fact, some observers say the mandate contributed to the "unrest and upheaval" during the Arab Spring uprisings because it raised bread and other food prices.

To remain in compliance with the mandate, refiners have the option of purchasing ethanol credits called Renewable Identification Numbers (RINs).

• Since the beginning of the year, RIN prices have climbed from 7 cents to a high of $1.43 on July 17.
• As one observer has calculated, the RINs have added about a dime to motorists' price at the pump.

Then there's the cellulosic ethanol mandate. In hopes of spurring the development of fuel from wood chips and switchgrass, refiners are required to mix cellulosic ethanol into motor fuel. However, no commercial quantities of cellulosic ethanol have been produced -- ever. Yet the EPA has been levying millions of dollars in fines against oil companies each year for failing to buy and use the nonexistent fuel.

Here's the bottom line. The administration and the EPA cannot continue to apply Band-Aids to this epic policy failure.

Source: Bob Beauprez, "EPA's Renewable Fuel Folly," Washington Times, August 15, 2013.