Last Monday the Environmental Protection Agency (EPA) increased the amount of renewable automobile fuels required to be sold in the United States next year from 7.8% to 10.2% of the 138.5 billion gallons of gasoline consumed. The vast majority of this mandate requires higher levels of ethanol in gasoline. The higher standard is required by the Energy Independence and Security Act of 2007 (EISA), a law that increases the use of renewable fuels each year in order to reach a goal of 36 billion gallons by 2022. Supposedly the use of ethanol and other renewable fuels will help gasoline to burn cleaner, creating less pollution, and to reduce America's reliance upon foreign oil.
While burning cleaner gas is an admirable goal, the Federal Government's ethanol mandate has ensured that the American corn industry has consumers and businesses in a stranglehold without producing quantifiable benefits. In fact, some scientists now argue that there are few, if any, environmental benefits to ethanol. According to a report by the Hudson Institute, "converting undeveloped land to cropland-in order to grow more corn and facilitate biofuel production-releases a massive amount of carbon dioxide. Only if biofuels are made from waste products or grown on abandoned agricultural lands does the production process actually reduce greenhouse gas emissions." In addition, inasmuch as ethanol separates from gasoline in the presence of water, the blends of ethanol and gasoline that we put in our cars cannot be transported through traditional petroleum pipelines. Instead, ethanol is shipped by rail, at greater cost than gasoline, and mixed with gasoline near the point of distribution. That is why the 10% ethanol-gasoline blends are not available all over the country, only in major metropolitan areas.
Meanwhile American taxpayers subsidize the ethanol industry with $3 billion every year. These subsidies are given to corn farmers and ethanol producers no matter what price corn commands on the market, which is extremely high because of the EPA requirement for biofuel. So many corn farmers have become wealthy from this two-tier system of subsidies and Federal environmental mandates which inflate the price of corn on the open market.
Because of this system, food prices around the world have risen dramatically in the last few years. Corn, beef, milk, butter, tortillas, gasoline and many other basic food commodities have become more expensive than ever because of the artificial government intervention in the market. This increase in food prices has hurt the world's poor more than anyone else but even middle-income American consumers have felt the pinch at the pump and in the grocery store.