If the presidential election process didn’t begin in Iowa, ethanol would likely be a memory. For example, the Wall Street Journal reports that former Governor Rick Perry once unsuccessfully sought a federal waiver from the mandate to include ethanol in gasoline, claiming it had a negative economic impact.
But because the election process begins in Iowa, where nearly half of the corn grown is converted to ethanol, most Republican candidates, who make a career of denouncing government mandates and crony capitalism, have come to embrace the ethanol mandate—even as they decry the Obamacare mandate forcing Americans to have health insurance and the billions of taxpayer dollars being transferred to private companies.
The federal government’s support for ethanol is long and costly. It began with the Energy Tax Act of 1978 when Congress created a 40-cent subsidy for each gallon of ethanol blended into gasoline. The goal was to create an alternative to gasoline at a time when U.S. crude oil production was starting to decline and more oil was being imported from countries that used oil for political leverage to achieve their policy agenda.
Congress increased that subsidy periodically until it reached 54 cents per gallon, but then began scaling it back, finally eliminating it for corn-based ethanol in 2011.
However, Congress didn’t leave the ethanol industry empty-handed; the 2005 Energy Policy Act required gasoline to include up to 10 percent renewable fuel, known as the Renewable Fuel Standard (RFS).
Once Democrats took control of Congress in 2007, they passed, and President George W. Bush signed, a much more aggressive RFS, which included cellulosic biofuels made from several other organic products such as switchgrass.
Who has benefited from this decades-long support of ethanol? Not the public. Consumers don’t really care; they just want to get their gas at the best price possible and drive on.
And certainly not countries with large low-income populations—Mexico, for example—that depend of corn as a staple. The RFS created a huge increase in demand for corn, which at times pushed up the global price and made it unaffordable for some of those low-income populations.
But the ethanol producers, from the farmers to the processors, have benefited handsomely from the subsidies and the mandate.
So you might expect that the same Republican presidential candidates who claim that people should be able to buy the kind of health insurance they want, not the kind government tells them to buy, would make the same claim about gasoline.
You might expect that the same presidential candidates who claim that huge government subsidies and mandates are making health insurance more expensive—not less expensive, as the politicians promised—would understand that the same thing happened to gasoline.
And you might expect that the same presidential candidates who claim that the government’s transfer of billions of dollars to private health care companies that supported Obamacare—many of which made huge donations to the Democrats who wrote and voted for it—would also want to end the crony capitalism embedded in the RFS.
And you’d be right, a few months ago, since most of those Republicans were against the RFS (including Perry and Wisconsin Governor Scott Walker) before they were for it—as presidential candidates stumping in Iowa.
Their efforts to explain away their policy flip-flop are embarrassing—and revealing. At this point it seems only Texas Sen. Ted Cruz remains consistent in his opposition.
To be clear, there is nothing wrong with ethanol—if consumers want it in their gas tanks. Which they would if the product were an efficient, cost-effective substitute for gasoline. In that case, the public, not the environmentalists and ethanol lobby, would demand it be blended in gasoline.
Now even some environmental groups, including the Natural Resources Defense Council and the Environmental Working Group, are having buyers remorse as they realize the carbon footprint to create corn-based ethanol may be worse that the fossil fuel it replaces.
So as we move closer to the presidential primaries, watch for most Republican candidates to praise the Renewable Fuel Standard mandate even as they denounce the health insurance mandate. You might even ask them, if you get the chance, if health care freedom is so important, why isn’t energy freedom?
Merrill Matthews is a resident scholar with the Institute for Policy Innovation in Dallas.