Who’s paying the costs of the federal ethanol mandate? The American people are paying for this mandate. Every cattle producer who faces higher feed costs, every family who shops in a grocery store or dines at a restaurant, and every motorist who fills up their tank at the gas station pays the price of this unworkable policy.
The Renewable Fuel Standard (RFS) debate is no longer just a debate about fuel or food. It is also a debate about jobs, small business, and economic growth. The federal government’s creation of an artificial market for the ethanol industry has quite frankly triggered a domino effect that is hurting American consumers, livestock producers, food manufacturers, and retailers. A policy that started with good intentions has resulted in a slew of unintended consequences.
The RFS mandates that 36 billion gallons of renewable fuels be part of our nation’s fuel supply by 2022. Almost the entire mandate is currently being fulfilled by corn ethanol. One of greatest unintended consequences of the ethanol mandate that farmers and ranchers experience on a daily basis is the steep increase in the price of corn. In 2012, the RFS required 13.2 billion gallons of corn-based ethanol to be blended into gasoline. This year, it mandates that 13.9 billion gallons be blended, an amount that will use about 4.9 billion bushels of corn, or about 40 percent of the nation’s crop. While corn supplies are being diverted to ethanol production, corn prices have climbed significantly. Between 2005 and 2011, corn prices rose by $5 per bushel. As producers reallocate more land to corn production, we have also seen the prices for other grains and feed stocks on the rise. Simply put, the ethanol mandate has driven up ethanol production at the expense of food and feed uses.
Motorists are also getting less at the pump due to the ethanol mandate. According to the Institute for Energy Research, one gallon of conventional gasoline contains 47 percent more energy than a gallon of ethanol. Mixing greater amounts of ethanol with gasoline decreases the efficiency of the fuel and sends motorists to the gas station more frequently. Furthermore, some reports have found that the use of higher ethanol blends in gasoline, like E15, has resulted in engine damage and even failure.
The RFS is clearly not working. The mandate drastically manipulates the corn marketplace and increases commodity and food costs across the supply chain. To provide relief from this unworkable policy, I introduced the Renewable Fuel Standard Elimination Act (H.R. 1461). The RFS Elimination Act will do just that – eliminate the ethanol mandate and help ensure sure that we have enough corn supplies to meet all of our demands. This legislation would provide much-needed relief to livestock and food producers as well as consumers of these products.
The significant support surrounding the RFS Elimination Act is evidence that there is growing momentum to reform the RFS. Thus far, 28 bipartisan members of the House have signed on as cosponsors. The backing from groups outside of the House has grown as well. This legislation is currently supported by a diverse coalition of organizations including the National Cattlemen’s Beef Association. I thank NCBA and livestock producers across the nation for their continued support in the push to reform this unworkable policy.
Renewable fuels have a place in America’s energy policy. Our nation should be looking at alternatives that will help to ease our dependency on fossil fuels. However, these fuels should compete fairly in the marketplace, free from the distortion and government interference that the current ethanol mandate forces.
Farmers and ranchers from Virginia to California play an important role in our nation’s economy and rich heritage of agriculture production. We should not continue to put our producers in a position where fuel is pitted against food, jobs, and economic prosperity. The RFS Elimination Act would provide the opportunity for a fair and market-based approach for the production and usage of ethanol produced from corn. It’s time to take the RFS off the menu.
Source: Rep. Bob Goodlatte (R-Va.)
Congressman Bob Goodlatte represents the Sixth Congressional District of Virginia. He is Chairman of the House Judiciary Committee and Vice Chairman of the House Committee on Agriculture.