Big ethanol's fuel mandate costs American taxpayers millions

Government’s toll on taxpayers is easy to compute when April 15 rolls around or when a receipt clearly shows the portion of a cost that’s attributable to sales taxes. There is no such clarity for taxpayers where the federal renewable fuel standard is concerned. But the burden is indeed there, and it’s significant. The renewable fuel standard and its ethanol mandate functions as a hidden tax on families and consumers — an added expense on top of budgets already stretched thin by stagnant wages, rising healthcare costs and an uneven economic recovery. Costs associated with federal ethanol mandates are everywhere.

At the gas pump, consumers must fill up more often because a gallon of ethanol contains roughly two-thirds the energy of a gallon of gasoline. The U.S. Department of Agriculture, against the will of Congress, has spent in excess of $100 million of taxpayer money to support the installation of ethanol fuel blender pumps at gas stations, an example of an “if you build it, they will come” investment intended to spur consumer demand that so far is too low to justify robust private sector investments in blender pump infrastructure.

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Misfueling and the corrosive nature of ethanol-blended fuels also impose a cost to consumers in the form of engine damage to cars, boats, motorcycles and other outdoor power equipment. At times, such engine damage can lead to scenarios that pose health and safety risks. The ongoing diversion of corn from the food chain to the fuel tank imposes its own cost on families.

 

Limited flexibility in the supply chain for livestock producers creates market instability and exacerbates the impact of droughts and other unanticipated events. The guaranteed market for corn created by the renewable fuel standard incentivizes farms to grow more corn at the expense of other commodities and produce.

This doesn’t just hurt family budgets, it also hurts the environment as marginal land — land that natural or would otherwise be left fallow or to rest between crop cycles — is tilled, depleting the soil and requiring greater levels of nitrogen-heavy fertilizers to remain productive. Taxpayers have funded millions at both federal and state levels to address ensuing water-quality issues, such as harmful algal blooms.

The U.S. Environmental Protection Agency is beginning to acknowledge some of these costs and the “real constraints” for biofuels in the marketplace, in terms of demand, infrastructure and production. If admitting you have a problem is the first step toward recovery, the slightly lower volumes of ethanol the EPA has recommended in its 2018 renewable volume obligation proposal, is a good sign for taxpayers.

But to create a more free market that affords consumer choice for fuel blends that best suit consumer needs, including a ready supply of ethanol-free fuel for those that prefer it, the EPA should further reduce the renewable fuel standard’s burden on consumers in 2018 by finalizing lower biofuel volume mandates and working with Congress to reform and remedy the broken renewable fuel standard once and for all.

Maintaining high biofuel volumes under the renewable fuel standard program means the continuation of a mandate that has distorted the free market and given a leg-up to special interests for years, leaving consumers to pay the price. To demand a better renewable fuel standard for taxpayers, submit a request to the EPA for a reduced biofuel mandate next year. Demand that consumer costs and taxpayer protections not be compromised.

Nan Swift is the federal affairs manager at National Taxpayers Union.


The views expressed by contributors are their own and are not the views of The Hill.