The Trump administration announced last month it would honor the promise made to corn farmers in October to allow year-round production of E15, a gasoline blended with 15% ethanol. Lifting the ban, the administration said, would help corn farmers burdened by tariffs and mass flooding by increasing the price of corn.
That's likely true. But what's good for farmers is not necessarily good for consumers or the economy — or for that matter, the environment.
Environmental Protection Agency rules had suspended E15 fuel during summer months, when hotter weather exacerbates its smog-producing qualities. Ten percent blends have always been permitted year-round.
Ethanol is a boondoggle. The crude oil glut has made it unnecessary from an energy conservation perspective. Meeting this year's federal Renewable Fuel Standard, which requires refineries to produce 15 billion gallons of ethanol, will add costs at the pump. And production of corn-based ethanol generates perhaps as much carbon emissions as it saves by off-setting oil consumption, according to a 2016 Yale study.
The only purpose ethanol blending serves is to prop up farmers in politically important agricultural states such as Iowa and Ohio.
The fate of those farmers is not an insignificant consideration, particularly this year. Flooding across the Midwest is delaying the planting of crops, raising the possibility of a drastically lessened harvest this fall. In addition, President Donald Trump's tariffs have limited exports to key markets, namely China.
And while the president coughed up $16 billion in relief to offset the lower exports, that's no substitute for a free marketplace.
And it's the marketplace that we should be concerned about if more of the corn crop goes to ethanol.
Currently, 34.5% of the nation's corn harvest is used to make ethanol. An MIT Technology review found that increased ethanol production has contributed to rising prices for foods made with corn, like corn-fed meat products as well as beverages with high-fructose corn syrup.
If weather-related shortages materialize this year, prices will likely soar. In 2012, when a drought choked the Midwest, corn production fell by 25%. And domestic corn prices reached as high as $8.24 per bushel.
Ethanol quotas for gasoline have increased corn production since the early 2000s. The increased demand for farmland has encroached on natural spaces, and the fertilizer used to boost the crop is believed to have caused algae blooms in water sources like Lake Erie.
As icing on a very unsavory cake, the Department of Energy admits gasoline with ethanol blends gets less gas mileage than non-blended fuel, meaning that drivers consume more gasoline. And any gasoline blended with more than 10% ethanol is corrosive to engines not specifically designed for using biofuels.
Ethanol is a bad deal. And encouraging its use is bad policy.
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