Noon: Ethanol loses its few friends
Early in his campaign, now top-tier Republican presidential candidate, Ben Carson, supported ethanol — a position for which I called him out. It has long been thought, that to win in Iowa, a candidate must support ethanol.
However, in a major policy reversal, during the CNBC GOP debate, Carson announced that he no longer supports subsidies for any industry, including U.S. ethanol producers: “I have studied that issue in great detail and what I’ve concluded, the best policy is to get rid of all government subsidies and get the government out of our lives and let people rise and fall based on how good they are.”
The ethanol industry responded, saying it receives no government subsidies. But it neglected to mention a very important fact. Instead of subsidies, ethanol producers get something better: a mandate that orders refiners to blend ethanol into motor fuels which forces consumers to buy their product. A federally guaranteed market beats a subsidy every time.
The ethanol industry also benefits indirectly from agriculture programs that support farmers who grow corn for ethanol. And recently, the Obama Administration announced the U.S. Department of Agriculture is offering $100 million in grants to subsidize the installation of blender pumps at gas stations all over the country.
In an attempt to push more ethanol into the motor fuel market, the Environmental Protection Agency admits it plans to “drive growth in renewable fuels by providing appropriate incentives.”
Carson, and a majority of Republicans and many Democrats, knows the ethanol mandate is program that has gone horribly wrong. Enacted by a well-meaning Congress, in a different energy era, it is part of the Renewable Fuel Standard (RFS), which requires refiners to add biofuels to gasoline and diesel.
Ethanol-blended fuel provides fewer miles per gallon because ethanol contains only two-thirds as much energy as gasoline, forcing motorists to fill up more often.
The mandate puts at risk millions of vehicles owned and operated by private citizens and fleets. Ethanol is corrosive. In tests, it has been proven to eat engine components, including seals and gaskets, causing expensive repairs.
Likewise, marine engine makers also caution boat owners to avoid fuels with high percentages of ethanol. During winter storage, they suggest pouring a fuel stabilizer into built-in gas tanks to avoid problems.
These are just some of the costs that impact consumers who buy fuel. Yet the RFS continues to stumble along because Congress has not mustered the will to repeal it.
By November 30, the Obama administration must finalize the amount of biofuels to be blended into motor fuels in the next couple of years. A pitched battle is developing on Capitol Hill. On one side are those who want an even larger market share for ethanol. On the other side are those who see the program for what it is — a massive payout to one allegedly “green” industry.
The latter group includes more than 180 Washington lawmakers who have sent a letter to the administration asking it to “limit the economic and consumer harm this program has already caused.”
Wisely, Carson has figured out that government meddling in the marketplace is a bad idea. Contrary to conventional wisdom, his rejection of special treatment for ethanol is not hurting his campaign. Polls conducted before and after the Oct. 28 debate, when he announced his revised view on ethanol, show Carson continues to rise in popularity nationally.
Congress could learn from Carson’s positive poll numbers and once and for all ending the ethanol subsidies, er, mandates, without fearing political reprisal.
The author of Energy Freedom, Marita Noon serves as the executive director for Energy Makes America Great Inc. and the companion educational organization, the Citizens’ Alliance for Responsible Energy.