Ethanol a “stealth tax” on drivers
Substituting ethanol for petroleum – what could be wrong with that? A lot, it turns out, including a cynical “stealth tax” on drivers.
A few days ago the Environmental Protection Agency announced that soon gasoline can be made from 85 percent petroleum and 15 percent ethanol, up from a current limit of 10 percent ethanol. Such a move to replace imported petroleum with home-grown ethanol sounds great — until you examine the details.
Ethanol is the king of subsidies. Ethanol from genetically engineered dwarf trees or tall grasses holds tremendous promise as a cost-effective, greenhouse-neutral fuel. But for today, nearly all ethanol sold in the United States is made from corn. Domestically produced corn-based ethanol is subsidized via federal payments to grain farmers, by refinery tax exemptions for fuel containing domestic ethanol, and by tariff barriers intended to prevent Brazilian sugar-based ethanol from entering the country. Annual federal subsidies to corn ethanol cost around $5 billion. Are the benefits worth that?
Corn ethanol may not save petroleum. There’s a dispute, but some research suggests corn-based ethanol is a net loser in energy terms — more petroleum goes into production of the corn than the energy value in the ethanol. Indisputably, raising corn to burn as ethanol depletes topsoil. Topsoil may be a more important resource than petroleum, given there are vast reserves of oil and alternatives being developed, while with current science, topsoil is irreplaceable. We’ve got to deplete topsoil to eat. We don’t need to deplete topsoil for fuel: topsoil should be allocated to its highest use, food production.
Corn ethanol may not be good for the environment. If ethanol occurred by magic, then replacing fossil fuel with corn ethanol would reduce greenhouse gas emissions. But ethanol calculations should take into account the greenhouse gases associated with corn production, especially carbon released by changes in land use. Last year, the EPA concluded that corn ethanol production would be worse overall for the environment than petroleum refining http://www.epa.gov/otaq/renewablefuels/420f09024.htm. The ethanol lobby howled, and the EPA “reworked” its ethanol data to reach the desired PC outcome. In politics, “sound science” is whatever supports your predetermined conclusions.
Politics drives the corn-ethanol push. The farm lobby loves corn-based ethanol because it raises the price of corn – though that penalizes average people via higher food prices. Many (not all) enviros love ethanol because it’s not a fossil fuel. Big campaign donors such as ethanol producer Archer Daniels Midland love ethanol because the subsidies are corporate welfare. But does adding more ethanol to gasoline serve the public? Hey – who cares about that?
The stealth tax. By volume, corn ethanol contains about a third less energy than petroleum. That means a gasoline blend of 85 percent petrol, 15 percent ethanol delivers about 95 percent the energy of pure-petroleum fuel. When the federally sanctioned new gasoline blend starts being put into the tanks of cars, MPG will go down.
The typical American driver covers 12,000 miles annually at a real-world fuel economy average of 20 miles per gallon, which comes to 600 gallons of gasoline purchased annually. That the typical U.S. driver burns through almost two gallons a day is a core reason America is addicted to oil. But higher-MPG vehicles with lower horsepower, and plug-in hybrids, seem the best cure — rather than subsidized ethanol.
If the typical driver’s annual 600 gallons declines in energy value by 5 percent, the typical driver will need to buy 30 additional gallons per year. At today’s prices, that’s a stealth tax of $100 per year per American driver. If gasoline prices go up, the stealth tax rises.
Who gets the money from the stealth tax? Oil companies that market gasoline, and the ethanol lobby. Typical Americans will pay an extra $100 per year so that funds can be channeled to these politically connected lobbies, which in turn will make campaign donations to incumbents of both parties. This is both parties of Congress, and the White House, at their worst – reaching into your pocket in order to create campaign donations for themselves.
Don’t fall for it. The media have not noticed that ethanol mandates will cause automotive MPG to decline – as well as subtract spending money from people’s pockets at a time when consumer demand is needed to spur the economy.
Politicians hope people won’t notice that their MPG is going down, or won’t know why, and will simply be quiet and pay the new stealth tax.
Don’t fall for it.