Imagine a government energy program that is such a disaster that the Environmental Working Group and the American Petroleum Institute both oppose it. The anti-poverty group ActionAid USA wants to get rid of it, as does the pro-business Competitive Enterprise Institute. Sen. Dianne Feinstein, D-Calif., wants to end it. So does Sen. Pat Toomey, R-Pa. They're both sponsors of the Corn Ethanol Mandate Elimination Act of 2015.
Feinstein pans the ethanol mandate as "both unwise and unworkable." Quoth Toomey: "It drives up gas prices, increases food costs, damages car engines and is harmful to the environment." Scott Faber of the Environmental Working Group told me the Environmental Protection Agency "shows corn ethanol is worse for the environment than gasoline." The free market-promoting Manhattan Institute's Robert Bryce believes that the renewable fuel standard costs American families $10 billion annually in higher fuel prices. But will Congress vote to kill the program? And if so, will President Barack Obama, a longtime ethanol booster, sign the bill?
The renewable fuel standard, or RFS, started off with the best of intentions: to reduce greenhouse gas emissions and promote American energy independence. It morphed into a victim of its own success. Some 40 percent of the U.S. corn crop now goes into American gas tanks, which has driven up the cost of feed for livestock, as well as food prices for American families. In 2013, PricewaterhouseCoopers figured the standard pushed up food prices at chain restaurants by $3.1 billion per year. Because the standard requires refiners to purchase increasing volumes of ethanol, production increased from 3.9 billion gallons in 2005 to 13.9 billion gallons in 2011, according to the Manhattan Institute. At the same time, gasoline consumption is down 12 percent from 2015 projections. The industry is up against the "blend wall." When blends contain more than 10 percent ethanol, some automotive engines break down.
Add up the many groups that oppose the ethanol mandate and you would think the Feinstein-Toomey bill is a slam-dunk. But there may be one state more powerful than ranchers, consumers, environmentalists and capitalists: Iowa. As the host of the first-in-the-nation presidential caucuses, Iowa has a supersize presence in U.S. politics. Iowa's GOP governor, Terry Branstad, has a pithy warning for self-styled free market GOP hopefuls: "Don't mess with the RFS."
For his part, environmentalist Faber believes that Capitol Hill can kick its ethanol habit this year. Even the ethanol lobby is looking to Washington to reform standards for renewable fuel. The Houston Chronicle's Jennifer A. Dlouhy has reported on the Advanced Biofuels Association's decision to back an overhaul that would accommodate the production of more advanced biofuels. "Their industry will go the way of the butter churn unless Congress changes the RFS," Faber crowed.
Though Iowa will tempt hopefuls to support a bad policy, New Hampshire follows Iowa; South Carolina follows New Hampshire; and Nevada follows South Carolina. These states include meat producers that have had to pay higher feed prices and consumers who have seen grocery bills rise.
Bryce's paper titled "The Hidden Corn Ethanol Tax" is more cynical. He has reported on how the mandate has lowered fuel efficiency, damaged small engines, promoted harmful land use and driven up food prices. It's good for corn farmers and ethanol refiners but bad for most everyone else. "Do I think the corn ethanol scam, the mandate, will be repealed?" Bryce mused. "I doubt it.
"I wish it were so, but after a decade of watching this, I can't get any more cynical about it," Bryce continued. "Where are the free market Republicans?" They seem to melt into the Iowa cornfields.
Senators hear from ethanol boosters, but they don't hear so much from the ordinary people who pay the freight for this destructive mandate. They should.