NCPA - National Center for Policy Analysis

Biggest Problems with the Ethanol Mandate

January 31, 2014

The Environmental Protection Agency's (EPA) ethanol mandate lowers fuel efficiency and damages vehicle engines, says Justin Sykes of Americans for Tax Reform.

The EPA's Renewable Fuel Standard Program requires that renewable fuel be included in motor vehicle fuel, as well as in fuels for trains and marine engines. The mandate has created a number of problems for consumers, including:

  • Higher gas prices: When the mandate is increased above the 10 percent blend wall in 2015, gas prices will increase $1 per gallon.
  • Lower fuel efficiency: Ethanol supporters will tell you that putting ethanol in fuel drops prices, because ethanol costs less than gas. If comparing gallons to gallons, yes -- ethanol is cheaper. However, ethanol provides one-third less energy per gallon than gas.
  • Higher corn prices: Since the mandate was instituted in 2010, corn prices have risen to almost $7.00 per bushel in 2014, much higher than the EPA's $3.22 estimate. Today, 40 percent of American corn is turned into ethanol.
  • Conservation: Federal policies incentivize ethanol production to the point that it is more attractive to grow corn for ethanol than to receive subsidies for land conservation. As a result, 5 million acres of conservation land has disappeared since the mandate was introduced.

On top of these problems, ethanol erodes vehicle engines and livestock producers have been forced out of business thanks to higher corn (i.e. feed) costs.

Source: Justin Sykes, "The Top 10 Pitfalls of the Ethanol Mandate," Americans for Tax Reform, January 23, 2014.


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