Freedom Discussions

Corny Capitalism

by Matt Purple, LRC

Earlier this year, the Environmental Protection Agency issued another one of those announcements read exclusively by government bureaucrats and green policy wonks. The EPA decided to delay a decision to increase the concentration of ethanol legal in gasoline from 10% to 15%. So-called E15 fuel would have to wait for approval until November.

It was a little-read regulatory decision that barely made a splash in the media. But it was also a rock thrown at Washington’s hornets’ nest of food and agricultural lobbyists. “We are disappointed,” warned food giant Archer Daniels Midland. “We find this further delay unacceptable” and a “dereliction of duty,” harrumphed ethanol lobbying group Growth Energy.

By delaying the decision, the EPA punted on a crucial decision. The pressure brought to bear against the agency by the agriculture industry has been incredible. It’s also been applied well; the EPA will most likely still approve E15 fuel in the fall.

That’s bad news for any American who likes to drive. In a country powered by the automobile, E15 is an enormous question mark. Since the 1970s when ethanol was first regulated by the feds, concentrations of alcohol in fuel above 10% have been illegal. But the government, lost in a dream world where cars can run on corn, has tied itself in regulatory knots trying to force ethanol into the fuel supply.

The history of ethanol is a sad torrid affair of crony capitalism and green fantasies. By jumping in bed with the agriculture industry and blindly slapping on new regulations, the government artificially propped up an industry and put itself in a bind from which there may be no return.

From Suing Toyota to Subsidizing E15

Across America, pumps at gas stations are emblazoned with the words, “Contains 10% Ethanol.” That’s no free market innovation. Since the 1970s, the federal government has heavily subsidized the production of “gasohol” – a blend of 90% gasoline and 10% ethanol that reduces tailpipe emissions. For decades, progressive politicians and environmental groups have revered ethanol as a miracle additive that will help purify America’s air. “No country has ever gone to war over ethanol,” reads one sign on the Washington, D.C. Metro subway.

There’s just one problem: Ethanol fuel is wildly inefficient. The amount of corn required to soak the fuel supply is massive. To shift America’s car culture entirely from gasoline to gasohol would require 700,000 square miles of land growing corn exclusively for ethanol production. That would mean converting one-fifth of the United States into a sprawling corn farm.

Then again, the government never found a green boondoggle it didn’t love. For five years now, Congress has been mandating that the fuel supply be diluted with ethanol. The Energy Policy Act of 2005 required 7.5 billion gallons of ethanol in the fuel supply by 2012. A Democratic Congress went a step further in 2007, mandating 9 billion gallons by 2008, 15.2 billion by 2012, and 36 billion by 2022.

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