How Mandating Ethanol Use Makes Your Big Mac More Expensive

Have you noticed the price of beef, chicken, and eggs going up in recent years? This is what happens when federal laws require turning food into fuel. The Renewable Fuel Standard (RFS) requires refiners to blend ethanol into the nation’s fuel supply. Because the only domestic source of cost-effective ethanol is corn-based ethanol, this means that federal law mandates turning food into fuel.

As a new ad campaign explains, the Renewable Fuel Standard makes it more difficult for American families to put food on the table. In a new video, Feed Food Fairness speaks with chain restaurant owners who are struggling with higher food costs due to the federal ethanol mandate.

Wendy’s franchisee Mark Behm explains how the RFS hinders growth and hurts his employees. “We’ve had to cut back on the amount of capital improvements that we make in our restaurants,” he says. “Some of our employee benefits have been diminished.”

White Castle President Lisa Ingram points out that beef prices have risen 46 percent since the RFS became law. She notes that White Castle is a family-owned business with 406 locations that operate in 12 states and support more than 10,000 jobs. Ingram estimates the RFS costs each White Castle location about $15,000.

Ingram adds that the RFS is preventing her business from growing. “We’re not out there building new restaurants,” she says. “We’re not out there creating new jobs because of RFS.”

As we have explained on these pages before, the harmful effects of the RFS ripple throughout the economy. Chain restaurants, many of which are small and family-owned businesses, support millions of jobs across the country. Most chain restaurants operate on small margins, according to the National Council of Chain Restaurants. This makes it difficult for them to absorb higher food costs without passing those costs on to consumers, cutting jobs and benefits, or shuttering operations altogether. This is just one of many reasons the RFS is a flawed policy.

IER Policy Associate Alex Fitzsimmons authored this post.