President Needs to Tell the Ethanol Industry: You're Fired
By Merrill Matthews
President Donald Trump changed his mind on many issues since taking office -- China is no longer a currency manipulator and NATO is an important institution. So there's still hope he'll dump the renewable fuel standard (RFS).
The RFS mandates that refiners blend ethanol -- a biofuel mostly made from corn -- into the gasoline that goes into our gas tanks.
On the campaign trail, candidate Trump praised the mandate. And he recently reiterated that support in a letter to the National Ethanol Conference.
But thankfully, the president has demonstrated he can learn on the job. So maybe he'll recognize the problems with the RFS. For example:
Ethanol is not necessary for "our energy independence." U.S. crude oil production began declining in 1974, forcing us to increase imports. At the same time, Arab members of the Organization for Petroleum Exporting Countries (OPEC) imposed an oil embargo on the United States during the Arab-Israeli War. That embargo led to nationwide gasoline shortages and long waiting lines at the pump.
In an effort to reduce the need for foreign oil and promote energy independence, Congress began subsidizing ethanol in 1980.
In 2005, Congress eliminated most ethanol subsidies and simply mandated that refiners blend it into gasoline. In 2007 it passed new legislation that expanded the amount of ethanol used.
Since then U.S. crude oil and natural gas production have exploded, thanks to hydraulic fracturing, or fracking. The problem these days isn't so much a shortage of oil, often it's a glut.
OPEC members are attempting to limit production so that oil supplies fall and prices rise. That strategy hasn't been as successful as they hoped because U.S. drillers increased production -- because of new technology that is lowering their costs.
The U.S. is already a net exporter of natural gas and soon could be a net exporter of crude oil. Energy independence is within our grasp -- without ethanol.
Ethanol is not essential to America's economy. Ethanol is essential to some Americans' livelihoods -- those involved in the business -- but not to America's economy. In fact, it might better be described as a drag on the economy.
Corn must be purchased, planted, watered, fertilized, irrigated, harvested, transported, processed into ethanol, and transported to a refinery that can blend it with gasoline. That process has numerous costly steps, most of which require fossil fuels. In short, we spend a lot of time and money to make ethanol.
Ethanol is not the green energy it was once thought to be. Ethanol was once thought to be a relatively clean-burning renewable fuel. Now, not so much.
In 2016, University of Michigan researchers "conclude[d] that rising biofuel [ethanol] use has been associated with a net increase … in the carbon dioxide emissions that cause global warming."
And then there's smog. The LA Times reported on a 2014 study published in Nature Geoscience, which tracked air quality in Sao Paulo, Brazil. According to the Times, "When the percentage of those vehicles using gasoline rose from 14 percent to 76 percent, ambient ozone concentrations in the city fell by about 20 percent, researchers found."
Conclusion: more cars burning ethanol meant more smog.
While it might have seemed reasonable in the 1970s to transition to ethanol, advances in drilling and environmental assessments have disclosed numerous problems. Maybe President Trump will reconsider the economics and the science and say to the ethanol industry: You're fired!
Merrill Matthews is a resident scholar with the Institute for Policy Innovation in Dallas, Texas. Follow at twitter.com/MerrillMatthews.
