Ethanol: A Corny Trade Policy

Aaron Walling / May 10, 2011

Gas prices are on the rise again. The national average is now just under $4.00 a gallon, and it’s sure to rise as the summer driving season rolls near. The pesky detail not often mentioned is that our ethanol policy is a contributing factor toward these higher fuel prices.

The United States is the world’s largest producer of ethanol, with Brazil a close second. However, Brazil’s sugar-based ethanol is cheaper, more efficient, and cleaner burning than our corn-based product. Yet special interests have managed a rather sweet deal for our domestic producers.

In 2005, under the Energy Policy Act, Congress imposed the Renewable Fuel Standard, which mandated that 7.5 billion gallons of renewable fuel must be blended with the gasoline supply. If the original intent of this mandate, which has since been expanded, was to reduce fuel emissions, then we are hamstringing that effort—and unnecessarily harming U.S. consumers in the process. (more…)