President Trump’s Ethanol Decision Exacerbates Bad Policy

President Trump’s Ethanol Decision Exacerbates Bad Policy
AP Photo/Evan Vucci

The Ethanol Issue

Naturally, a recent article in The Wall Street Journal, “Trump Gives Farmers a Jolt of Fuel,” by the U.S. Senators from Iowa, Chuck Grassley and Joni Ernst, supported President Trump’s decision to allow year-round sale of E15, shorthand for gasoline blended with 15 percent ethanol, as opposed to the more common E10. The U.S. Environmental Protection Agency (EPA) has prohibited the sale of E15 during the summer peak driving season out of concern that it produces more ground-layer ozone or smog. Mandating increasing amounts of ethanol has emanated from the Renewable Fuel Standard (RFS) created under the Energy Policy Act of 2005.

Unfortunately, President Trump’s decision doubles down on bad policy that mandates biofuel consumption. Forcing higher ethanol fuel blends into the marketplace is bad for our economy and environment.

Ethanol Has Higher Costs

The main economical problem with pushing ethanol is that it has a far lower energy density than the conventional gasoline that comprises nearly 50 percent of all U.S. oil usage. Specifically, ethanol has just 76,000 BTUs per gallon, well below the 114,000 BTUs per gallon for gasoline. This means that to receive the same amount of energy contained in 1 gallon of gasoline, Americans must buy 1.5 gallons of ethanol. This of course has a very predictable result: higher prices. Ethanol mandates also increase fuel costs in more subtle ways such as slashing margins for U.S. oil refineries. Studies conclude that American drivers pay at least $10 billion more each year for gasoline because of the RFS.

Yet, there are other costs of greater ethanol use that may get less attention but are just as damaging. With mandated surging demand, for instance, some 40 percent of the U.S. corn harvest is for making ethanol, thereby increasing the cost of corn and other food. This mass usage has also “reduced U.S. corn exports and raised the price of corn on global markets.” And most Americans probably don’t know that nearly 75 percent of the food that we buy contains corn, meaning that costs for other grocery items also go up when we insist that corn gets devoured to make fuel.

Not just highly problematic for a country where 50 million Americans “can’t afford basic living expenses,” higher cost energy and food, indispensible items that “cannot not be used” regardless of price, trickle down to wreak havoc on the U.S. economy. Higher costs for indispensibles erode the consumer spending that generates 75 percent of our economic growth.

Ethanol Damages Vehicles

Another hidden cost of ethanol is that it damages vehicles and their engines. Higher ethanol blends, such as E15, can harm engines and fuel systems, leading to expensive repairs. This “corrosiveness” of ethanol is exhibited by the fact that it cannot be transported by pipeline, which is another extra cost: pipelines are easily the cheapest way to move product. Some 75 percent of cars on American roads were not built to use E15, ditto for our hundreds of millions of boats, motorcycles, ATVs, and lawn equipment. In fact, the use of E15 potentially voiding new car warranties has long been an issue with the mandated surging use of ethanol. “The problem with ethanol in gasoline.”

Ethanol Has No Environmental Benefits

Indeed, ethanol is not a “cleaner substitute” for gasoline. In fact, more ethanol is clearly antithetical to our primary environmental goal to deploy better efficiency first – even before more wind and solar – to cut greenhouse gas emissions. With an energy content that is as much as 50 percent lower than that of gasoline, ethanol worsens vehicle efficiency for American drivers.

The Clean Air Task Force has opposed ethanol for obvious reasons: “the 30-year lifecycle GHG emissions from corn ethanol are approximately 28 percent higher than those from gasoline.” A recent study from the University of Michigan was just as conclusive: “biofuels increase, rather than decrease, heat-trapping carbon dioxide emissions.”

Additionally, the National Research Council has determined that ethanol uses far more water in its production cycle than gasoline. And ethanol also requires massive amounts of fertilizer and land to grow crops. Nitrogen fertilizer used in the corn fields has “ruined wells under farmland and has seeped into rivers that millions of people rely on for drinking water.

As for EPA itself, in a report for Congress this past June, the agency stated that “biofuel production associated with large-scale cultivation of corn and soybeans contributes to the adverse environmental and resource conservation impacts of the type listed in EISA Section 204,” in reference to the 2007 Energy Independence and Security Act (EISA) that expanded and extended the ethanol mandate. “EPA Says Ethanol Damages The Environment.”

Conclusion

Ethanol and other biofuels are heavily subsidized products that benefit only a small group of farmers and manufacturers in a few states. This is best exemplified by the authors of the aforementioned WSJ article themselves. Iowa’s Chuck Grassley and Joni Ernst represent a state that produces a leading 1 in every 5 bushels of U.S. corn. Just because their political lives depend on biofuel mandates, that doesn't mean ethanol use should be forced on the entire country. It's not justifiable in any way: “Ethanol: The GOP-Supported Rip-Off.” 

Purposefully manufacturing a market for any product stands in contrast to President Trump's goal of “U.S. Energy Dominance." Beyond economic and environmental problems, even the “energy security” argument for more biofuels has continued to fade. Since EISA of 2007, U.S. crude oil production has steadily grown 120 percent to a record 11.2 million b/d and is now expected to boom to 14 million b/d by 2020. Americans must become more cognizant of all of these problems: the U.S. ethanol industry seeks major expansion not just by more domestic use but also by exporting even more.

Jude Clemente is the Editor at RealClearEnergy.

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