NMA Reboot: Ethanol Industry Gets Reprieve but Long-Term Outlook not Good

This weekly post features recent news stories that highlight and update themes previously covered throughout NMA E-Newsletters and Alerts.

Editor’s Note: The ethanol industry dodged a bullet recently after the Environmental Protection Agency deferred action on permanently lowering the amount of renewable fuels that must be blended into the U.S. gasoline supply. And while delay gives the industry time to regroup and lobby for higher levels, the final quota will likely be less than the original mandate required. The NMA has argued against the federal ethanol mandate for many years. In this 2010 newsletter we discuss the various reasons why mandates for ethanol content in gasoline represent bad public policy: 


NMA E-Newsletter #84: Ethanol Legislation Back In Congress

The NMA has long criticized the federal ethanol mandate as a huge public policy farce. We weren’t alone, but thoroughly ignored.

We argued that ethanol does not make the air cleaner. Ethanol will not reduce our dependency of oil, foreign or domestic. Ethanol is a net negative for the environment. The subsidies for ethanol steal funds that could improve our highways. The price for food grains are increased. And, ethanol is harmful to many forms of non-automotive internal combustion engines. The kicker is that any rational expert, right-wing, left-wing, green, or capitalist, on the subject, does not seriously disagree with our arguments!

So why continue with this farce? Yes, the ethanol mandate has boosted farm income (unless you’re in the livestock or dairy business where feed prices have been increased). For want of a better explanation it seems that we should continue to mandate and subsidize ethanol use because we, uh, once upon a time passed a law to mandate and subsidize ethanol use and we should continue this policy because otherwise the investors that capitalized on this legislative fiasco will now lose money.

Ironically, the current high profile controversy nagging at ethanol proponents is not the waste, expense, futility and harmful effects of the ethanol mandate and subsidies, it’s that we tax cheaper foreign ethanol so it can’t compete in the US market. This is a great distraction that buries the fundamental issue; the ethanol mandate and subsidies should be repealed, in total.

If you would like to contact your US Senators and Representative here’s a few points you might want to raise:

  • How can ethanol reduce our dependence on foreign oil when it takes as much, or more, energy to produce a gallon of ethanol than the energy a gallon of ethanol can deliver?
  • How can ethanol help clean our air when its production puts more pollution in the atmosphere then the oil it is supposed to replace? (not to mention that it makes no difference in the emissions of fuel injected vehicles)
  • How many billions of dollars could be invested in our highways and bridges if the subsidies for Ethanol were eliminated?
  • When water is becoming a stressed commodity in many parts of the country why are you mandating a fuel that uses three gallons of water to produce one gallon of that fuel?

There are other good questions to ask as well. They need to be asked and an election year is a good year to ask them.

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