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Standing up to the Ethanol Mafia

Earlier this week a group of Senators from some of the states that are victims of the Renewable Fuel Standard (RFS) decided to fight back against the ethanol mafia. It’s about time. The spectacle last week of a few Midwestern Senators making threats and holding up nominations to protect a government handout that only benefits their wealthy backers in the ethanol industry was a new low even for Congress. Members of a party that ostensibly opposes regulation and federal mandates went full mafia-protection-racket to defend the federal government mandate that keeps Big Ethanol raking in the cash.

The RFS is the embodiment of government gone wild. It provides a federally guaranteed market for a product that no one needs and most people don’t want. Absent this government mandate, some ethanol would likely still be blended into gasoline to comply with environmental regulations, but nowhere near the levels that are mandated by the RFS. That is why Big Ethanol and their bought-and-paid-for Senators like Chuck Grassley and Deb Fischer went to the mat to stop even the minor, commonsense adjustments proposed by the EPA.

What was that proposal? What was it that sent Big Ethanol into a frenzy? The mere suggestion that perhaps the federal government should not be mandating imports of foreign fuels. Last year about 45% of biodiesel needed to meet the RFS was imported because the United States does not produce enough domestically. The EPA quite reasonably suggested that maybe the RFS should be adjusted slightly to better match actual domestic production. But the first rule of government handouts is no backsliding at any cost. Big Ethanol has decided that in order to protect their mandated market, the RFS must only ever go up. So instead of commonsense, we get a program that finances criminals, foreign producers and Big Ethanol. We are left with a situation where President Trump, who regularly rails against imports, is pressured into protecting a program that mandates those very imports at the expense of domestic petroleum fuels.

In their fulminations against the EPA, the subsidy Senators talked about the jobs that the RFS supports. Well what about the jobs it destroys? Hundreds of thousands of people work in the refining industry across the country, people whose jobs are at risk because of the escalating cost of complying with the RFS. East coast refiners are particularly damaged by being forced to buy compliance offsets, called RINs, to meet federal RFS mandates. That is money plucked from states like Pennsylvania and Texas to line the pockets of Iowa ethanol producers. In this situation it is perfectly appropriate for Senators like Ted Cruz and Pat Toomey to stand up to this extortion.

And it’s not just the refining industry that is harmed by the RFS. Every good that is transported by truck in the United States is more expensive because of the RFS. That is money taken from the pockets every single American to enrich, not the farmers in Iowa or Nebraska, but rather a few rich ethanol producers.

It’s long past time for our elected representatives in Washington to stand up to the ethanol mafia. President Trump should listen to these senators who are taking a stand; they are advocating for domestic jobs and domestic energy production, both of which are harmed by the RFS, and they are advocating for all Americans, who are forced to pay more for goods and gasoline because of the RFS.

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