The Environmental Protection Agency announced on October 13 that it had approved an increase in the amount of ethanol that can be blended into gasoline from 10 percent to as much as 15 percent. Apparently, the Obama administration’s plan is to forget about ethanol’s negative impact on consumers and their gasoline-powered equipment, ignore the facts when it comes to air quality, and instead pander to the farm lobby.
For months, administration officials have been hinting that the EPA would approve the ethanol industry’s request for an increase in blend volumes. The industry desperately needs a bailout, because it has built far too many distilleries over the past few years. As Bob Dinneen, president of the Renewable Fuels Association, explained, “We have lots of gallons of ethanol chasing too few gallons of gasoline.”
The EPA is granting them a bailout by allowing ethanol producers to blend more of their corrosive, hydrophilic, low-heat-content fuel into our gasoline. And while the agency’s ruling limits the use of the higher-ethanol-content gasoline to model year 2007 and newer cars and trucks, the move further complicates the American motor-fuel market, which is already the most Balkanized motor-fuel market in the world. Refiners are now producing about 45 different blends of gasoline and multiple blends of diesel fuel. Managing all those different fuels increases costs that are ultimately borne by the consumer.
This latest decision allows the ethanol scammers to continue gorging themselves at the public trough. In July, the Congressional Budget Office reported that corn-ethanol subsidies cost U.S. taxpayers more than $7 billion per year. Those subsidies are larger than those given to any other form of renewable energy.
The collection of groups opposed to this bailout made for a strange coalition. In August, 39 groups — including the Alliance of Automobile Manufacturers and the American Petroleum Institute as well as the Natural Resources Defense Council and the Environmental Working Group — asked Congress to hold hearings about the proposed increase in ethanol consumption. Congressional leaders ignored the request.
That congressional inattention will cost consumers dearly. For years, ethanol-blended gasoline has forced boat owners to pay for expensive repairs to their boats’ fuel lines and tanks — and that was with gasoline containing just 10 percent ethanol. There are 500 million non-road engines (think lawnmowers, chainsaws, and weed-whackers) now in use in America, and none of those engines is designed to run on fuel containing more than 10 percent ethanol.
Of course, the ethanol lobby loved the EPA’s decision. Growth Energy, an advocacy group that employs former presidential candidate Wesley Clark, quickly issued a press release applauding the move, but insisted that “much more must be done to reduce America’s dependence on foreign oil.” That statement implies that subsidies and mandates for corn ethanol have helped cut oil imports. Here’s the reality: They haven’t.
Between 1999 and 2009, U.S. ethanol production increased sevenfold to more than 700,000 barrels per day, but during that same time period, U.S. oil imports actually increased by more than 800,000 barrels per day. Furthermore, and perhaps most surprising, is this: During that same time period, U.S. oil exports — yes, exports — more than doubled to some 2 million barrels per day. Data from the U.S. Energy Information Administration show that, in the last decade, oil imports closely tracked U.S. oil consumption: As U.S. oil demand grew, imports grew; when consumption fell, imports dropped. Ethanol production levels had no apparent effect on oil imports or consumption.
Thus, despite more than three decades of subsidies that have cost taxpayers tens of billions of dollars, the ethanol industry cannot point to any decline in oil imports during the time period when the industry experienced its most rapid growth.
Maddening as that is, the real outrage of the corn-ethanol scam involves air quality. In 2007, the EPA admitted that increased use of ethanol in gasoline would increase emissions of key air pollutants, including volatile organic compounds and nitrogen oxides, by as much as 7 percent. On Wednesday, the agency again acknowledged that more ethanol consumption will mean higher emissions of key pollutants.
That admission is driving environmental advocates like Frank O’Donnell, the president of Clean Air Watch, to distraction. On one hand, explains O’Donnell, the agency is saying that more ethanol will mean higher emissions of nitrogen oxides. Yet the ethanol bailout comes “at the same time that the EPA is setting tougher standards on smog.” Indeed, the EPA is implementing new rules on ground-level ozone that could affect dozens of cities. What contributes to the formation of ozone? You guessed it: nitrogen oxides.
Donald Stedman, a professor emeritus of chemistry at the University of Denver, has been studying ethanol’s impact on air quality for two decades. In a recent interview, he told me that his assessment of the EPA’s decision is much the same as O’Donnell’s: “More ethanol means worse air quality, period.” He adds that corn ethanol “doesn’t do anything to reduce greenhouse gases.”
Evidence that the Obama administration is more worried about the farm lobby than urban air quality came within minutes of the EPA’s announcement. Agriculture Secretary Tom Vilsack issued a statement praising the move, saying that the increased use of ethanol “is an important step toward making America more energy independent.”
Here’s a tip: Whenever you hear the phrase “energy independence,” think “rip-off.” The EPA’s decision is yet another unfortunate win for the farm lobby and another loss for consumers and clean-air advocates.
— Robert Bryce is a senior fellow at the Manhattan Institute. His latest book is Power Hungry: The Myths of ‘Green’ Energy and the Real Fuels of the Future (PublicAffairs).