Corn has taken root in the swamp that surrounds Congress. It has meant big bucks for Big Corn, but most everyone else is paying the price.
The Renewable Fuel Standard of 2005 required gasoline manufacturers to lace their products with biofuels — primarily corn-based ethanol, but also soybean-based biodiesel.
The amount they are forced to add has risen steadily, year after year. And it is scheduled to keep rising through 2022 when 36 billion gallons of renewables will be mixed into the nation’s gas supplies. After that, unelected bureaucrats at the Environmental Protection Agency get to decide.
The entire program is economically irrational. Biofuels are more expensive to make, so the program forces a pricier fuel into the economy.
Ethanol is a far less efficient source of energy than gasoline, so the standard forces Americans to consume more energy than necessary. Meanwhile, the fuel itself has damaged innumerable small engines — from boats and motorcycles to lawnmowers.
The standard even pinches at the dinner table. By diverting food like corn and soybeans to refineries rather than grocery stores or cattle and poultry feedlots, the program forces up food prices.
Consumers are the losers here. The big winners are corn and soybeans growers and politicians who tout the production quota as good for the local economy. For them, the Renewable Fuel Standard is a sacred cow.
Earlier this year, when the EPA proposed a modest 2.5 percent easing of the standard, Big Corn politicians from the Midwest came out swinging, threatening to hold up EPA nominees unless the proposed cuts were withdrawn. The agency quickly folded.
Now, nine conservative senators are punching back. Sen. Ted Cruz, Texas Republican, is blocking the nomination of Iowa Agriculture Secretary Bill Northey to a top U.S. Department of Agriculture post until the White House organizes a meeting to review the Renewable Fuel Standard.
A review is sorely needed. The Renewable Fuel Standard benefits a select few at the expense of many. And the “many” included industries in the Midwest and the agricultural community.
This is not Big Corn vs. Big Oil. It’s Big Corn vs. the National Chicken Council, the National Cattlemen’s Beef Association, the National Pork Producers Council, the National Turkey Federation, the Milk Producers Council.
It’s also Big Corn against the Sierra Club, the National Resource Defense Council, the American Fuel and Petrochemical Manufacturers, the Environmental Working Group, Oxfam, and the United Nations—to name just a few.
Those now defending preferential policies for biofuels originally sold these policies as a way to support economic growth in rural communities. But the program has not only left many food-growers worse off, it has also tempted several small rural towns to bet big on biofuels — and lose.
A Utah State University study details how towns sought to cash in on preferential treatment for ethanol by offering ethanol producers expensive incentives to open operations in their environs. But, the report notes:
As demand for corn rose following the construction of these plants, both farmers and refineries felt an economic pinch. Following corn price spikes in 2008 and 2012, numerous corn ethanol plants went offline due to an inability to run profitably. While many believed that farmers were making off with huge profits, they too failed to gain substantially due to rising costs of input factors such as fertilizer. Heightened competition bolstered the price for land, driving tenant farmers out of business.
A biofuels policy that requires production and consumption of a more expensive, less efficient form of energy cannot, in the long run, increase overall economic growth. It can, however, line the pockets of the favored few and fill the campaign coffers of their political protectors.
Lawmakers and the federal bureaucracy should stop caving into swampy interests. Production quotas breed complacency and technological stagnation — not energy dominance. The entire Renewable Fuel Standard must go.
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