One could not have conjured up a more odious and counterproductive policy than taking 40% of our corn supply and using it to dilute our fuel, thereby increasing the cost of both food and gas. Yet not only has the Biden administration declined to repeal the ethanol mandate during this unprecedented period of inflation and supply shocks, he will increase ethanol use in a way that will further deplete gas mileage for many motorists and place a greater demand on corn, which is the antecedent to the entire chain of food costs, with prices approaching record highs,
Ever since the pathetic mandate was implemented in 2005 and expanded in 2007, oil refiners couldn’t meet the arbitrary sum of billions of gallons of biofuels to blend into the nation’s fuel supply, even if they wanted to. For 2022, the mandate stands at 36 billion gallons. It’s not safe for engines to have a fuel blend of more than 10% ethanol, but for years the corn lobby was suggesting, in a quite self-fulfilling way, that the way to meet the mandate is by allowing more flexibility to blend “E15” all year round with no restrictions from the Clean Air Act. The real solution, though, is to abolish the original mandate.
Ideally, we should offer “E0.” We should repeal the mandate, which will save independent refiners, alleviate the artificial demand on corn prices and land use, and enjoy more miles per gallon of unadulterated fuel. Instead, the Biden administration has chosen to allow gasoline that uses a 15% ethanol blend, which is typically banned during the summer, to be sold throughout this year. Liberal Republicans like Iowa Sen. Chuck Grassley always pointed to the right to choose and be free to sell E15, but he and the corn lobby forget that we should be free to choose zero ethanol, and oil refiners shouldn’t be forced to blend it into the mix. If Grassley and his lobbyists want ethanol, they are welcome to blend E99 with their own refineries and sell it to people who want it without government intervention.
At a time when we should be allowing people to purchase fuel that achieves more miles per gallon, we are inevitably creating greater demand on gas and food at the same time! According to the Department of Energy, “Vehicles will typically go 3% to 4% fewer miles per gallon on E10 and 4% to 5% fewer on E15 than on 100% gasoline.” So that will wipe out any gain in price from using ethanol, which, for once, is slightly cheaper than gasoline, but only because of the war on fossil fuels. Also, because of the corrosive nature of ethanol, a higher blend will inevitably force gas stations to retrofit their pumps with new fuel dispensers and new underground storage tanks. Guess who will pay for that? What about when all the car owners who are tricked into using E15 blow through their warranties and public clamor forces us to bail them out?
And speaking of car owners, as our government makes oil refiners blend more ethanol, another equally absurd and harmful mandate runs head-first into the ethanol mandate: namely, the Corporate Average Fuel Economy (CAFE) standards. In order to serve the gods of the climate and limit the use of fossil fuels, Congress dramatically expanded the CAFE standards in 2007, forcing auto manufacturers to make expensive cars with paper-thin steel in order to comply with the green energy agenda and increase their miles per gallon (mpg) from 27.5 to 35. This was part of Energy Independence and Security Act of 2007, the same bill that expanded the ethanol mandate, which would later run into problems with the CAFE standards. Just as with the ethanol mandate, the EPA has created a trading credit system in which manufacturers can buy credits from competitors in exchange for not complying with the standard. According to the Heritage Foundation, “a 1 mpg tightening of the standard would cost consumers $7.81 billion annually.”
Fast-forward to last month, and the Biden administration announced its intent to increase the standard to 49 mpg by 2026, essentially barring non-electric cars. So not only will this make cars too expensive for the non-latte-sipping crowd, but it will run into the renewable fuels standard, because there won’t be enough demand for fuel to even meet that standard.
Meanwhile, independent refiners continue to get hammered, as the EPA just denied all of the 36 petitions from small refiners to exempt them from the biofuels standard for the 2018 compliance year. This is done by design to ensure that we don’t create more oil refineries. One could not possibly have conjured up a worse confluence of policies to increase the cost of food, fuel, and cars and destroy jobs in the energy sector. Yet that is likely a feature, not a bug, of their plan. Fewer cars and more expensive food and fuel grease the skids for more dependence on government and less freedom.
Another peculiar thing about the E15 decision is that the reason why the EPA typically bans its sale in the summer under the Clean Air Act is over concern that the higher blend creates more smog. Isn’t it interesting how environmental regulations can be waived to please the corn engine gods, but no such waivers are issued for oil, gas, and coal permitting, the Keystone pipeline, interstate pipelines, transporting liquid natural gas by rail, or drilling in the Gulf of Mexico? In fact, just as the energy crisis was reaching its climax, the Securities and Exchange Commission (SEC), without the approval of Congress, issued a rule that will require all publicly traded companies to disclose the effects of their operations on “climate change.” This rule will make Dodd-Frank and Sarbanes-Oxley look easy and is designed to cripple the fossil fuels business.
One could not have thought of a more irrational idea than taking 40% of the corn grown in this country and shoving it into our engines, thereby raising the cost of both fuel production and food. Corn is the beginning of the food chain, and with the worst crisis of food and fuel pricing ever, why on earth would Congress not immediately repeal the renewable fuels standard?
The Renewable Fuel Standard (RFS) was a Bush-era boondoggle passed by Congress in 2005 to force consumers to buy only transportation fuel blended mostly with corn-based biofuels. The original RFS required 4 billion gallons of renewable fuels to be blended by 2006, but that target was expanded to 36 billion in the 2007 energy bill. Despite years of subsidies, mandates, and tax credits, the industry has failed on the promise of energy independence and a cleaner environment and has left us with higher food and fuel costs.
In fact, the RFS annual targets were never met, so the EPA created a costly RIN (renewable identification number) credit system forcing independent refiners to essentially pay ransom for these credits for not meeting the target. Big oil companies then make a killing off the speculation market of those credits, while independent refiners go out of business. As such, we never achieved more than 20 billion gallons of renewable fuels in any year, but we did cause numerous small oil refiners to go out of business, deplete fuel output supply, and destroy blue-collar jobs.
Almost all the biofuels are created from corn, soybeans, and sugar – with corn taking up the lion’s share of the market. Venture socialist market distortions induced by the government caused so much farmland to be requisitioned for this ineffectual fuel and diverted from cattle feed, thereby driving up the cost of food. According to a study cited by the Heartland Institute, families are forced to pay $2,055 more for food every year because 40% of the corn crop – the antecedent of the food chain – is used for fuel. A study from PricewaterhouseCoopers in 2012 – when ethanol production was just 14.5 billion gallons per year – found that restaurants pay $18,000 more per year.
The lower fuel mileage from adulterated fuel with less energy content and the billions in extra costs to the restaurant industry because of the higher cost of beef, thanks to scarcity of cattle feed, were harmfel effects of the policy from day one, but are downright devastating during this inflation crisis. According to Robert Bryce of the Manhattan Institute, ethanol is proportionally 2.4 times less efficient than unblended gasoline. Thus, we are adulterating the black gold that has become gasoline to ensure we need even more of it at a higher price!
In other words, if we’d flush that corn down the toilet, we’d be better off than with the RFS in place. However, what’s even better is using the abundant corn we have to flood the domestic and global corn market, thereby alleviating the pressure on chicken and beef prices. Wheat prices have already set a new record, and corn prices are close to an all-time record, up 25% just since the beginning of the year. Ukraine is responsible for 16% of the world’s corn exports, and it supplies the EU with 60% of its corn. It is time to get the corn out of our engines and into our food and cattle feed supply.
Ethanol is not the only way we waste our food supply. For years, our government has de facto paid farmers not to grow crops by enrolling up to 25 million acres annually in the Conservation Reserve Program. The program has incentivized wealthy land owners to buy up land from real farmers to keep it dormant in order to save the planet from the weather! Trump promised to cut $9 billion in the phony conservation program, but the 2019 farm bill he signed expanded the number of acres under the program rather than cutting it. The program does nothing but enrich wealthy land owners and further inflate the cost of land, just like any subsidized asset bubble, all the while reducing the supply of crops. The omnibus bill Congress is passing this week increases funding for this counterproductive program across the board.
God has blessed America with an abundance of food and energy, not only to sustain our people but enough to support much of the world. Yet the same way woke energy policy, rooted in pseudo-science, inducing poverty, and growing oligarchic power have impeded our energy production, likewise, woke agricultural policies have limited our food supply. And obviously, an attack on our energy supply is going to further exacerbate the pressure on food prices, which rely heavily on all forms of transportation.
But while our government is finding every way it can continue to make Americans feel the pain of rising costs for food and fuel, guess who is working on buying up the food supply for their people? The Chinese, of course. Bloomberg is reporting that China is buying up U.S. soybeans and corn: “Chinese buyers recently booked about 20 cargoes of American soybeans and about 10 shipments of corn, according to traders who asked not to be identified as they aren’t authorized to speak publicly. The buying spree reflects robust demand in the top importer as worries over supplies grow following Russia’s invasion of Ukraine and weaker-than-expected supply from Brazil, the world’s biggest soybean producer.”
This is reminiscent of China buying up the meat during the supply chain shortage induced by the 2020 lockdowns. China always plans ahead to boost its people, while our government seeks to inflict pain on its people. This once again demonstrates that the real war our elected officials must focus on is the political one right here at home.
Nothing appears on your plate appears without agriculture. The next USDA secretary will navigate complex issues to keep the food system sustainable.
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