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The Daytona Beach News-Journal: Future ethanol mandates would be bad for economy

Tuesday, September 24, 2013

When oil-industry supporters and Al Gore agree on an issue, one had better pay attention as to why.

Former Vice President Gore and many oil-industry supporters are dubious about the feasibility of using ethanol in gasoline blends, as mandated in the U.S. Renewable Fuel Standard.

That regulation was intended to reduce dependence on foreign oil, make emissions cleaner and decrease gasoline prices.

The ethanol mandate has failed on most fronts. Indeed, for the first time last week, prices for regular unleaded gasoline had remained above $3 per gallon for 1,000 days straight, the first time in U.S. history that’s happened, according to the American Automobile Association.

Earlier this year, the Florida Legislature repealed its own ethanol mandate in an effort to make unblended gasoline cheaper for people who own older cars and boats.

The state still has to abide by federal regulations.

Nationwide, ethanol has had the unintended consequence of driving up food prices, a consequence of plowing a portion of food supply into gas tanks.

The ethanol mandate eats up about 40 percent of U.S. corn, and 15 percent of global corn supply. That drives up food and feed costs, making a number of foods including beef more costly.

Gore admitted as much in late 2010. Gore said he was only trying to please corn farmers and major agricultural corporations when he touted the ethanol mandate. U.S. ethanol policy is mainly a farm subsidy, not an energy policy.

But Congress and the White House should look seriously at reforming or repealing the Renewable Fuel Standard and other alternative-energy mandates.

What lawmakers should not do is increase the ethanol mandate, from 10 percent of a gallon of gas to 15 percent of a gallon, as is being pushed for in some quarters.

Laws from 2005 and 2007 would mandate that by 2022, the nation’s fuel supply contain 15 billion gallons of corn-based ethanol and 21 billion gallons of non-corn biofuels, according to Nicolas Loris of the Heritage Foundation.

Groups such as the American Petroleum Institute and the Heritage Foundation believe refineries won’t be able to meet those mandates by 2022. If that happens, the refineries could be fined.

Those fines will be passed on to consumers in the form of — you guessed it — higher prices at the pump.

The mandates from ivory towers in Washington, D.C., regarding ethanol and other biofuels are how false markets take root temporarily — the government insists upon them when they are not or cannot be viable over the long term.

And with many biofuels, the main trouble is that the technology is not there yet to meet the standards and federal mandates. In the case of ethanol, there is great debate between regulators and the oil industry over whether most conventional automobiles on U.S. roads today can run on ethanol blends of 15 percent. Some manufacturer warranties do not cover engine problems caused by the 15 percent blend.

The automotive industry has made great strides recently in improving fuel efficiency. And electric cars in greater numbers are on the horizon. Such environmental innovations will drive progress, albeit not at the pace we may like.

For now, the nation needs affordable oil and gasoline to fuel its needs and the economy.

Ethanol is not providing the answers we need. It’s time to throw in the towel.

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