Federal Ethanol Scam

A rush to judgment: E15 and the unintended consequences of federal energy mandates

Do you every wonder why the gasoline you purchase contains 10%, soon to be 15%, ethanol? I do.

Did the market bring it because it was both useful and cost effective or did farm lobbyists back door this with the only beneficiaries being farmers, lobbyists and, dare I say farm state legislators?

Below is an excerpt from the linked article.

The RFS was originally created by the Energy Policy Act of 2005 and required 7.5 billion gallons of renewable fuel to be blended into gasoline by 2012 – a target later extended to 36 billion gallons by 2022 under the Energy Independence and Security Act of 2007 (or RFS 2). At the time, many policymakers promised that an increased use of corn-based ethanol would result in reduced greenhouse gas emissions and cuts in oil imports.

Through this federal intervention, policymakers attempted to manufacture a minimum “market” for ethanol. But the numbers are a problem. Thirty-six billion gallons per year, if achieved by blending ethanol into gasoline, would amount to 20 to 25 percent ethanol in gasoline. The vast majority of vehicles in use today – as well as marine and small engines — are not guaranteed to operate safely on ethanol blends higher than E10. Only about 3 percent of today’s vehicles are flex-fuel vehicles that can accommodate greater amounts of ethanol, and that percentage will grow slowly as new flex-fuel vehicles are introduced. Further, many flex-fuel vehicle owners prefer to use gasoline, which provides better fuel economy than high-level ethanol blends. And it’s worth mentioning that ethanol is almost always more expensive on an energy-adjusted basis than gasoline.

The recent economic decline exacerbates this problem. Fewer new vehicles are being sold, and demand for gasoline has dropped — yet the annual volumes of renewable fuels mandated by RFS remain fixed.

EPA’s E15 waiver attempts to address this problem.

-Dan