Trumping Hydrocarbon Fuels and Consumers

Paul Driessen
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Posted: Jan 29, 2016 12:01 AM
Trumping Hydrocarbon Fuels and Consumers

Donald Trump loves to tout his poll numbers. But if he’s doing so well, why does he pander to Iowa’s ethanol interests?

The gambit might garner a few caucus votes among corn growers and ethanol producers. It certainly brings plaudits from renewable energy lobbyists and their political enablers. But it could also cost him votes in many other quarters – beyond the Corn Ethanol Belt and even in Iowa.

The fact is, the 14.5-billion-gallon-per-year ethanol mandate prolongs policies that are bad for consumers and the environment. And yet many presidential candidates and other politicians support it.

The ethanol mandate forces refiners to blend ethanol into gasoline. It’s the epitome of feel-good government programs run amok. Congress enacted the steadily expanding ethanol blending requirement to stave off the “imminent” depletion of crude oil worldwide, decrease US imports of oil whose price was “only going to increase,” reduce gasoline costs for motorists, and prevent manmade climate change.

We now know all these concerns were misplaced. In fact, the ethanol mandate fails every economic and environmental test.

The “fracking revolution” (horizontal drilling and hydraulic fracturing) has unleashed a gusher of US oil and gas production. Domestic oil production in 2014 reached its highest level in 114 years, and the United States is now the world’s biggest hydrocarbon producer. Global crude and American gasoline prices have plummeted. Fracking technology can be applied to shale deposits anywhere in the world, and even to conventional oil fields, ensuring that the world has at least a century of oil and natural gas supplies – and ample time to develop new energy technologies that we cannot even conceive of today.

Since ethanol gets a third less mileage than pure gasoline, adding ethanol to fuel actually increases fuel costs per tank, especially when crude oil fetches less than $30 per barrel and regular gasoline is under $2 per gallon in most states. For motorists driving 15,000 miles a year, $1.85-per-gallon gas means $1,200 in savings, compared to April 2012 prices. Ending the ethanol mandate would save them even more.

As to climate change, numerous studies demonstrate that there is no credible evidence that manmade carbon dioxide is causing dangerous global warming. Moreover, rising CO2 emissions from China, India and other rapidly developing nations vastly exceed any imaginable US reductions.

The ethanol mandate has devolved into a black hole that sucks hard-earned cash from consumers’ wallets, while padding the pockets of special interests and their political patrons. Poor, minority, middle class and blue-collar families are especially hard hit.

Devoting 40% of America’s corn crop to ethanol production has significantly increased corn prices and thus the price of all foods that utilize the grain: beef, milk, pork, chicken, eggs, farm-raised fish, and countless products that include corn syrup. The corn converted into biofuel each year is enough to feed more than 400,000,000 malnourished people in impoverished and war-torn countries.

Ethanol is corrosive and mixes easily with water, resulting in serious damage to gaskets and engines. Consumers have had to spend billions “degunking” and repairing cars, trucks, boats, snowmobiles, chain saws and other small engine equipment, to prevent (or in the aftermath of) fuel leaks, engine failures and even fires. Vehicle, outdoor equipment and marine engine manufacturers warn against using gasoline blends containing more than 10% ethanol.

The mandate raised fuel costs nationwide by an estimated $83 billion between 2007 and 2014. In New England it is expected to cost the economy $20 billion, reduce labor income by $7.3 billion, and eliminate more than 7,000 jobs annually between 2005 and 2024. It has cost Californians $13.1 billion in higher fuel costs since 2005, and could inflict $28.8 billion in additional costs there by 2025.

Corn ethanol’s ecological impacts have convinced the Sierra Club, Friends of the Earth, Environmental Working Group (EWG) and other organizations to oppose further extensions of the mandate. More than 35,000,000 acres (an area larger than Iowa) are now devoted to growing corn for ethanol, and the EWG says the mandate encourages farmers to convert extensive wetlands and grasslands into cornfields.

Growing corn, turning it into ethanol and trucking it to refineries (since it attracts water, it cannot be carried by pipeline) also requires vast amounts of water, fertilizer, pesticides, diesel fuel and natural gas. Only a tiny fraction of that acreage, water and fuel is required to produce far more energy via fracking.

Contrary to Environmental Protection Agency claims that ethanol helps reduce carbon dioxide emissions, those lands released an additional 27,000,000 tons of CO2 in 2014, the EWG calculates. In fact, the group says, corn ethanol results in more carbon dioxide emissions than estimated for the Keystone XL pipeline.

The United States also imports sugarcane ethanol from Brazil. The American Energy Alliance says the EPA does not account for the associated greenhouse gas emissions and labels sugarcane ethanol an “advanced” fuel, even though it has been around since the 1920s.

The Renewable Fuel Standard (RFS) set expectations for biofuel development based on aspirations, not reality. It assumed switch-grass and wood waste could be converted into advanced cellulosic fuels, but the process has proven very costly and difficult. In an effort to hide this inconvenient truth, EPA now defines even some kinds of liquefied natural gas, compressed natural gas and electricity as derived from cellulosic fuels, in an effort to meet the mandate – even though none of these fuels can be blended into gasoline.

It’s encouraging that EPA’s Inspector General wants the agency’s pro-ethanol rhetoric investigated.

Many consumers are rejecting ethanol-blended fuels, and sales of straight gasoline have climbed from just over 3% of total US gasoline demand in 2012 to nearly 7% in 2014.

Simply put, the ethanol mandate is a disaster. When the government writes fuel recipes and meddles in the free market system, everyone loses except ethanol special interests. Texas Senator Ted Cruz is right: ethanol mandates and energy subsidies should all be terminated. Let biofuel, wind and solar power compete on their own merits, instead of being force-fed to consumers and taxpayers.

However, Iowa Governor Terry Branstad has made support for ethanol a litmus test for the February 1 presidential caucuses, and wants Senator Cruz defeated because of his opposition to the ethanol mandate. Of course, the governor’s stance can easily be explained by the fact his son heads up the America’s Energy Future lobbying group, and ethanol interests have contributed sizable amounts to the six-term Republican governor’s reelection campaigns.

There’s even a pro-ethanol van following Mr. Cruz around Iowa, to change recent polling results that found half of Iowa voters do not care much or at all about preserving the federal ethanol corn mandate.

Meanwhile, Mr. Trump still thinks the mandate should be increased from this year’s 14.5 billion gallons to the full 15 billion gallons allowed under the antiquated RFS law. Jeb Bush and Chris Christy also support ethanol coercion. While this position might be politically expedient in Iowa, its affect on voters beyond the Hawkeye State is likely negative.

Mr. Trump and other candidates often say they will surround themselves with experts who know more than they do on important issues. Their pro-ethanol stance makes you wonder which wunderkinds are advising them right now. Ben Carson and Carly Fiorina, by contrast, share Senator Cruz’s disdain for energy mandates and subsidies.

The issue is a small but important indication of what’s at stake in the 2016 presidential election.