Opportunistic messaging is as common in Washington as Metro delays. But when an industry group selectively employs the same free market arguments it usually rejects in order to push for special treatment for its product, that's a level of rich hypocrisy that demands a response.
Recently, the Iowa Renewable Fuels Association joined other ethanol-industry heavyweights in making a case for the dubiously named Consumer and Fuel Retailer Choice Act, saying the government should stop impeding the free market and allow expanded sales of less energy-dense E15 fuel during summer months. As taxpayer advocates, we are all for a consumer-demand-driven market — which is why it is vital to remember that the IRFA, while engaged in this small-seeming push for more E15, is also waging a full-on battle to expand the government's special protection of the ethanol industry in the form of federal fuel mandates.
Through a policy with another misleading name — the Renewable Fuels Standard — the IRFA and a slew of other ethanol industry interests are depending on the government to force increasing volumes of their product into the U.S. fuel supply regardless of actual consumer demand and despite added costs for small business owners and taxpayers, engine-damage risks for boaters and motorists, and uncertainty in food and commodity costs — all consequences of ethanol's special treatment.
So much for the free market.
The corrosive nature of ethanol means that as more of the fuel is forced into the fuel supply, gas stations will be on the hook for major retrofits to their facilities, including underground storage tanks and fuel dispensers — changes that can cost small business owners around $250,000. You might think they'd just avoid selling it, but what actually happens is that taxpayers end up footing the bill for E15 and E85 blender pump installation, through state and federal biofuel infrastructure programs.
RFS ethanol mandates are also burdening consumers with added costs. Engine experts, retailers and mechanics have reported engine damage brought on by ethanol. Blends higher than E10 are not suitable for boats, motorcycles and other small engines, and E15 is not warrantied for use in most cars. In fact, the vast majority of cars on the road today — with some counts suggesting as much as 90 percent — are not compatible with E15.
Perhaps some of the most significant impacts of the ethanol mandate's market muddling are felt by the food and commodities industries. With a large portion of the RFS requirements being met with conventional corn-based ethanol, other industries that rely on corn — like the food industry — are made more vulnerable to a variety of factors that can cause price fluctuations. When a drought or flood strikes, for example, government ethanol mandates remain fixed, and competition for remaining crops is fierce, driving price volatility, which is most challenging for companies that purchase corn for animal feed, but also for the full food supply chain — including consumers.
On the point of free markets needing to be dictated by consumer choice, we agree with the IRFA. But corn ethanol does not exist in a free market, which is why this same rationale must extend to the RFS. It is for this reason that Sens. Rand Paul, R-Ky., and Ted Cruz, R-Texas, support the elimination of government ethanol mandates.
Consistent with our work on behalf of taxpayers, we maintain that it's time for Congress to reform the RFS, stop dictating to the marketplace and stop forcing consumers to pay the price for failing ethanol policies.
Nan Swift is Federal Affairs Manager for National Taxpayers Union, and Autumn Hanna is Senior Program Director for Taxpayers for Common Sense.
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