Politics

The Big Lie that is Ethanol

Trump supports, Cruz decries federal mandate that costs taxpayers, consumers billions of dollars

Every four years, almost every presidential hopeful pledges fidelity to ethanol in the politically crucial state of Iowa. But critics contend government policy distorts the free market and adds costs to fuel and food.

Ethanol has become a key dividing line in the increasingly bitter fight between billionaire Donald Trump and Texas Sen. Ted Cruz in the run-up to the Feb. 1 Iowa caucuses. Trump supports the ethanol mandate — and even suggested this week increasing support — while Cruz has defied conventional practice by proposing a phase-out of requirements that fuel contain ethanol.

To ethanol opponents, the corn lobby and Iowa’s status as the kickoff of the presidential election, are sources of never-ending frustration.

“This is one of the largest continuing robberies in American history,” said Robert Bryce, a senior fellow at the Manhattan Institute. “It costs more than traditional fuel, and it’s worse for the environment than traditional fuel. It’s a terrible, terrible deal.”

Many environmentalists, who once backed ethanol as a green fuel, now agree. The Environmental Working Group contends that ethanol causes more environmental problems than it solves. Some studies indicate the production of ethanol uses almost as much or more energy than it creates. And there’s increasing evidence the gasoline additive is not good for car engines, and greatly shortens the lifespan of small, two-stroke engines, like those found in lawn mowers and chainsaws.

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Emily Cassidy, a research analyst for the advocacy group, said since Congress mandated ethanol in the nation’s fuel supply in 2007, skyrocketing prices for corn have prompted farmers to plow over millions of acres of grasslands to grow more. This both increases carbon emissions and contaminates water, she said.

“It’s really bad in the short term, and it’s not even proven to be good in the long term,” she said.

A spokesman for the American Coalition for Ethanol did not respond to inquiries from LifeZette. But industry backers argue that ethanol contributes to American energy independence and creates thousands of jobs. The association also contends the industry has sparked innovations in farming and biotechnology.

To Bryce, such arguments are hogwash. He said that since 2005, ethanol has added about $104 billion to the cost of gasoline. A study last year by the University of Tennessee Institute of Agriculture estimated the corn ethanol industry has received $50 billion in taxpayer and market subsidies since 2005. Combined with the fuel increases, that puts the total 10-year cost at about $150 billion.

392px-Ethanol_production_and_imports_in_the_USBryce said all of the ethanol production facilities in the country have increased the fuel supply by the equivalent of 600,000 barrels per day. The increase in domestic oil production is six times greater than that, he said.

“This has never been about foreign oil,” he said. “It’s always been about farm subsidies.”

The ethanol mandate passed by Congress in 2007 has created an enormous demand for corn and other crops used in biofuels. According to the Congressional Budget Office, about 40 percent of the corn crop now goes to fuel. In addition to raising fuel costs, studies indicate the policy also made food more expensive. A 2013 study by the consulting firm FarmEcon LLC indicates the cost of food as a percentage of after-tax income, after steadily declining since 1950, has been rising again since 2006.

[lz_table title=”Increasing Food Costs in the U.S.” source=FarmEcon LLC]Food costs rise above trend since ethanol use skyrocketed
2006,+  $82
2007,+$139
2008,+$126
2009,+$250
2010,+$264
2011,+$423
2012,+$514
[/lz_table]

The study estimated the ethanol mandate has contributed to an increase since 2005 in the annual food bill for the average family of four of $2,055 beyond the long-term trend. Tom Super, a spokesman for the American Chicken Council, said the situation likely has worsened since the study came out in 2013.

“Four out of every 10 rows of corn is now going into our gas tanks instead of food or animal feed,” he said. “The tab keeps getting run up under this broken law.”

Super said the policy not only raises the price of corn on the cob but “anything that eats corn and anything that has corn as an ingredient, which is a lot.”

A 2014 report by the Congressional Budget Office indicates that meeting the demands of the 2007 law would increase the cost of diesel fuel in 2017 between 30 and 51 cents per gallon and the price of E10 fuel — gasoline mixed with 10 percent ethanol — by 13 to 26 cents per gallon. At the same time, the report forecast “only limited potential” for reducing carbon emissions.

Bryce and Super argued that the politics of ethanol would be far different if Iowa were not first on the presidential calendar. All of the major candidates except for Cruz and Kentucky Sen. Rand Paul favor keeping the ethanol mandate.

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