NCPA - National Center for Policy Analysis

Reasons to Get Rid of the Renewable Fuel Standard

November 25, 2014

The Renewable Fuel Standard (RFS) needs to be repealed, argue Nicolas Loris and Katie Tubb of the Heritage Foundation. They offer a few reasons why the RFS -- which requires that gasoline and diesel fuel contain ethanol -- is a problem:

  • It raises the price of gas. Regular gasoline is more energy-efficient than ethanol, requiring consumers to use more fuel.
  • Because ethanol comes from corn, the demand created by the RFS increases corn prices by up to 68 percent. Corn prices are important, because they raise the price of food for humans as well as for animals.
  • The government's energy targets have routinely been off base, and there is more ethanol than there is demand for the product.

Does anyone benefit from the renewable mandate? Corn growers, ethanol refiners and ethanol producers, say Tubb and Loris. Because the standard guarantees that there will be a market for ethanol, producers are not forced to compete in ways that other industry participants must, limiting innovation.

Source: Katie Tubb and Nicolas Loris, "The Ethanol Mandate Proves the Government Is a Poor Central Planner," Daily Signal, November 24, 2014.

            

 

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