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The Ethanol Mandate Is Literally Impossible by Alan Reynolds

In recent years, politicians set impossibly high mandates for the amounts of ethanol motorists must buy in 2022, while also setting impossibly high standards for the fuel economy of cars sold in 2025. To accomplish these conflicting goals, motorists are now given tax credits to drive heavily-subsidized electric cars, even as they will supposedly be required to buy more and more ethanol-laced fuel each year.

Why have such blatantly contradictory laws received so little criticism, if not outrage? Probably because ethanol mandates and electric car subsidies are lucrative sources of federal grants, loans, subsidies and tax credits for “alternative fuels” and electric cars. Those on the receiving end lobby hard to keep the gravy train rolling while those paying the bills lack the same motivation to become informed, or to organize and lobby.

With farmers, ethanol producers and oil companies all sharing the bounty, using subsidies and mandates to pour ever-increasing amounts of ethanol into motorists’ gas tanks has been a win-win deal for politicians and the interest groups that support them and a lose-lose deal for consumers and taxpayers.

The political advantage of advocating contradictory future mandates is that the goals usually prove ridiculous only after their promoters are out of office. This is a bipartisan affliction.

In his 2007 State of the Union Address, for example, President Bush called for mandating 35 billion gallons of biofuels by 2017, an incredible target equal to one-fourth of all gasoline consumed in the United States in 2006. Not to be outdone, “President Obama said during the presidential campaign that he favored a 60 billion gallon-a-year target.”

The Energy Independence and Security Act of 2007 (EISA) did not go quite as far as Bush or Obama, at least in the short run. It required 15 billion gallons of corn-based ethanol by 2015 (about 2 billion more than were actually sold), but 36 billion gallons of all biofuels by 2022 (which would be more than double last year’s sales). The 2007 energy law also raised corporate average fuel economy (CAFE) standards for new cars to 35 miles per gallon by 2030, which President Obama in 2012 ostensibly raised to 54.5 mpg by 2025 (a comically precise guess, since requirements are based on the size of vehicles we buy).

The 36 billion biofuel mandate for 2022 is the mandate Iowa Governor Terry Branstad (and Donald Trump) now vigorously defend against the rather gutsy opposition of Sen. Ted Cruz. But it is impossible to defend the impossible: Ethanol consumption can’t possibly double as fuel consumption falls.

From 2004 to 2013, cars and light trucks consumed 11% less fuel. The Energy Information Agency likewise predicts that fuel consumption of light vehicles will fall by another 10.1% from 2015 to 2022.  So long as ethanol is no more than 10% of a gallon (much higher than Canada or Europe), ethanol use must fall as we use less gasoline rather than rise, as the mandates require. If we ever buy many electric cars or switch from corn to cellulosic sources of ethanol, as other impossible mandates pretend, then corn-based ethanol must fall even faster.

If raising ethanol’s mandated share above 10% is any politician’s secret plan, nobody dares admit it. Most pre-2007 cars can’t handle more than 10 percent ethanol without damage, and drivers of older cars often lack the income or wealth to buy a new one. Since ethanol is a third less efficient than gasoline, adding more ethanol would also make it even more impossible for car companies to comply with Obama’s wildly-ambitious fuel economy standards (which must also reduce ethanol use, if they work).

The 2007 law also mandated an astonishing 16 billion gallons of nonexistent “cellulosic” ethanol by 2022 from corn husks or whatever. We were already supposed to be using a billion gallons of this marvelous snake oil by 2013. Despite lavish taxpayer subsidies, however, production of cellulosic biofuel was only about 7.8 million barrels a month by April, 2015 (about 94 million a year). The Environmental Protection Agency (EPA) mandate in June 10, 2015 was 230 million billion in 2016, which is more fantasy.

It doesn’t help that the Spanish firm Abenoga – which received $229 million from U.S. taxpayers to produce just 1.7 million gallons of ethanol – is trying to sell its plant in Kansas to avoid the bankruptcy fate of cellulosic producer KiOR. It also doesn’t help that a $500,000 federally-funded study paid finds biofuels made with corn residue release 7% more greenhouse gases than gasoline.

The contradictory, fantastic and often scandalous history of ethanol mandates illustrates the increasing absurdity of mandates from Congress and the EPA.

The 2007 biofuel mandate was not just bad policy. It was and remains an impossible, bizarre policy.

This post first appeared at Cato.org.

Alan ReynoldsAlan Reynolds

Alan Reynolds is one of the original supply-side economists. He is Senior Fellow at the Cato Institute and was formerly Director of Economic Research at the Hudson Institute.

Ethanol: Lies, Myths and the Immorality of using Food for Fuel

We have written about how using food for fuel is immoral because of the over 1 million people, mostly children, who die each year of starvation. Using corn based ethanol raises the prices of everything that depends on this food product from the cost of meat, cereals and every corn based product.

Not only is ethanol bad for the starving poor it is also bad for your vehicles engine, whether it be a car, boat or motorcycle. The American Motorcycle Association (AMA) in an email exposes the myths behind the ethanol special interests.

The AMA in an email titled “Stop the decade of E15 misinformation: Urge your representative to protect your access to safe fuel” states:

The first 10 years under the Renewable Fuel Standard, established in 2005, represent a decade of misinformation from the ethanol lobby concerning safe fuel for your motorcycle.

To protect your access to safe fuel, urge your representative to cosponsor the RFS Reform Act of 2015 (H.R. 704). The American Motorcyclist Association needs your help to pass this bill. You can send a prewritten email to your representative immediately by following the “Take Action” option and entering your information. The AMA encourages riders to personalize their message by drawing on their own personal riding experiences.

In an effort to prohibit the spread of E15 fuel, which contains up to 15 percent ethanol by volume, the AMA supports H.R. 704, sponsored by U.S. Reps. Bob Goodlatte (R-Va.) and Peter Welch’s (D-Vt.). The bipartisan bill would amend the Renewable Fuel Standard to recognize market conditions and realities. It also would prohibit the U.S. Environmental Protection Agency from allowing any station to sell gasoline containing more than 10 percent ethanol by volume and require those already selling it to stop.

In other words, the sale of E15 will not be permitted if this legislation becomes law.

The AMA has repeatedly expressed concerns to government officials and federal lawmakers about possible damage to motorcycle and all-terrain-vehicle fuel systems and engines from the inadvertent use of E15. Allowing the higher ethanol blends to become more readily available greatly increases the chance of misfueling.

In October 2010, the EPA approved E15 for use in model year 2007 and newer light duty vehicles (cars, light-duty trucks, and medium-duty passenger vehicles). In January 2011, it added model year 2001-2006 light duty vehicles to the approved list.

Passing H.R. 704 will help protect the estimated 22 million motorcycles and all-terrain vehicles currently in use on America’s roads and trails that are not approved to use E15, and the riders who depend on safe fuel for their operation.

Preventing inadvertent misfuelings has been one of the AMA’s top priorities, because motorcycles and ATVs are not designed to run on ethanol blends higher than 10 percent, and many older machines favored by vintage enthusiasts have problems with any ethanol at all in the fuel. Using fuel with more than 10 percent ethanol can void the manufacturer’s warranty, potentially leaving motorcyclists with thousands of dollars in additional maintenance costs.

RELATED ARTICLES:

The Ethanol Debacle

Time to help Ethanol Bite the Dust

Report: Florida ethanol plant a bust – zero gallons of biofuel produced

EDITORS NOTE: The AMA offers readers the opportunity to join the conversation with us by sharing the E15 fuel issue on Facebook and by clicking here to
Take Action.

Obama Keeps Telling Renewable Energy Lies

Imagine you wanted to get in your electric car and drive a considerable distance. It wouldn’t take long for your car to run out of power, so you would have to have another car, one using gasoline, to drive behind you to make sure you reached your destination.

That’s a description of “renewable energy”, wind and solar, in America today because they both require backup from traditional energy sources such as coal, oil, natural gas, and nuclear. And “renewable energy” based on “free” sun and wind power costs more to produce and purchase. Need it be said that the sun does not always shine consistently everywhere or at night and that the wind does not always blow?

Within twenty-four hours of one another I received a news release from the Governor’s Wind Energy Coalition celebrating the election of a new chairman and vice chairman, and read a CNN news article saying that “The White House wants to put more returning servicemen and women to work manufacturing and installing solar panels” as part of “his growing list of climate actions meant to combat global warming.”

That list was a twelve-page long, single-spaced White House fact sheet. The White House seems to think that the states can do something about “climate change”, but the climate is measured in decades and centuries, not whether it is going to rain next Monday which is something we call “the weather.” And just as you can do nothing about the rain, neither can you do anything to affect the climate decades from now.

The White House has a problem. There is no “global warming.” Even if you change the name to “climate change”, the Earth has been in a natural cooling cycle for the last eighteen years.

For the past 5,000 years humans have, as often as not, “done something” about the climate by moving somewhere else it was less of a bother and threat or found ways to adapt. Other than prayer, there was and is nothing humans can do about Mother Nature.

Most surely, getting veterans to manufacture solar panels is about as lame and stupid an idea as the President has proposed in the last 24 hours. Does the name “Solyndra” ring a bell? It was one of several solar farms that, along with wind farms went belly-up, leaving investors and consumers with nothing but the sunlight and passing breezes.

Indeed, the best news of late has been that the U.S. Senate has rejected a proposal to extend the federal wind Production Tax Credit (PCT) for another five years. The wind producers have benefitted from it for three decades. The federal subsidy to wind-energy producers expired along with other tax breaks at the end of 2013, but was retroactively extended through 2014 as part of the Cromnibus budget bill passed last December.

The PCT was intended to provide what was a then-new energy industry a helping hand, but it kept being extended and the industry benefitted as well from renewable energy mandates (REM) in 29 states and the District of Columbia. They require that a specific amount of electricity be purchased from renewable energy, wind or solar, producers. All that managed to do was drive up the cost of electricity to consumers. This is what happens when politicians get involved.

That’s a good reason to wonder why there is a Governors Wind Power Coalition in the first place. It consists of 23 Democratic and Republican governors from every region of the nation “working together to develop the nation’s wind energy resources”, but the nation doesn’t need wind energy which produces an unpredictable amount as opposed to traditional resources such as coal.

At the same time the President is talking about solar and wind power, his administration is pursuing a relentless “war” on coal that is forcing the primary source of electricity in America, coal-fired plants, to shut down. If that doesn’t sound like treason, then consider too that the U.S. is the greatest producer of oil and natural gas in the world and we have at least two century’s worth of known coal reserves. We have absolutely no need for wind or solar energy.

When Obama gave his State of the Union speech in 2014, solar power represented a pathetic 0.2 percent of the U.S. electricity supply according to the U.S. Energy Information Administration. According to the Energy Research Institute, in 2013 wind power provided 1.6% of all the energy consumed in the U.S.

There isn’t a single good reason for either wind or solar power in an energy powerhouse like the United States. They are both costly, unpredictable, and a threat to a number of animal species. Neither the science, the cost, nor the recent history of “renewable energy” provides a single good reason to force Americans to pay for this “green” failure.

© Alan Caruba, 2015

Higher Gas Prices Add to Economic Slump

Courtesy of the Heritage Foundation:

Unemployment is at 8.3 percent. The economy is sputtering at 1.5 percent growth. Food prices are rising due to drought conditions across the country. And gas prices are up again, pinching Americans’ summer budgets. It is past time for the President and Congress to pursue smart policies that would put us on a path to relief.

According to AAA’s Fuel Gauge Report, the current national average for regular is $3.66 per gallon. That’s up 28 cents per gallon from a month ago, and July had its biggest price jump since AAA started tracking prices in 2000. To see the average for Florida click here.

There are many factors affecting prices that we cannot control—worldwide tensions, especially in the Middle East, can drive up oil prices. Global demand, especially from China and India’s rapidly growing economies, continues upward.

But after three years of adding regulatory hurdles and blocking exploratory access and development, President Obama’s policies are helping keep prices higher than necessary.

If the President truly wanted to lower gas prices, he would work to increase supply. But when given the opportunity, he has done the opposite. He turned down the Keystone XL pipeline, which would bring up to 830,000 barrels of oil per day from Canada. His Administration has made it even harder for companies to explore and extract domestic energy resources by canceling, delaying, or withdrawing a number of lease sales for exploration and development. Meanwhile, huge swaths of federal lands have been put off limits for energy exploration.

Domestic refinery outages have had a recent impact on gas prices. Two of the factors holding back domestic energy production are regulatory red tape and litigation—and these, we can do something about. As Heritage’s Nicolas Loris notes:

Environmental activists delay new energy projects by filing endless administrative appeals and lawsuits. Creating a manageable time frame for permitting and for groups or individuals to contest energy plans would keep potentially cost-effective ventures from being tied up for years in litigation while allowing the public and interested parties to voice opposition or support for these projects.

We don’t have to stand still. Congress could alleviate the energy crunch in 10 different ways by taking action on things we can control, like restrictions on oil shale development and offshore drilling.

One of the most common objections is that increasing domestic oil production takes too long and would not impact the market for at least a decade. The longer people make this argument, however, the longer it will take. The sooner we make investments in domestic energy, the sooner those benefits will be realized. And with some serious reforms, some of this oil can reach the market in much less than a decade.

Gas prices aren’t under the control of any one President. But Americans shouldn’t settle for policies that restrict oil exploration, refining, and production and artificially drive prices higher.

MORE FROM THE HERITAGE FOUNDATION:

High Gas Prices: Obama’s Half-Truths vs. Reality

President Obama’s 10 Worst Energy Policies