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 Time to Ditch the Renewable Fuel Standard, Save Americans Money

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PostSubject: Time to Ditch the Renewable Fuel Standard, Save Americans Money   Tue Dec 05, 2017 7:53 pm

Politicians donít have a crystal ball that can predict the future of energy prices, energy supplies, or demand for electricity and gasoline.

But they pretend to, and thatís a problem. It leads to market-distorting policies that harm Americans as consumers and taxpayers.
Take the Renewable Fuel Standard. Congress and the George W. Bush administration established the Renewable Fuel Standard in 2005 and expanded the program in 2007. The standard sets volumetric requirements (peaking at 36 billion gallons in 2022) to mix biofuels into the countryís fuel supply.
Ethanol, the most common biofuel, is made from corn, sugarcane, potatoes, soybeans, and other biomass. The Environmental Protection Agency has the authority to set yearly obligations to be met, which the agency recently did for 2018.
One of the main reasons the federal government enacted the Renewable Fuel Standard was to lessen U.S. dependence on oil and foreign sources of energy. In January 2007, then-Senate Majority Leader Harry Reid, D-Nev.,†said, ďWe canít produce our way out of the problems we have with†oil. The only alternative we have is to look to alternative fuels: the sun, the wind, geothermal, biomass.Ē
In other words, letís replace oil with homegrown corn-based ethanol and soy bean-based biodiesel.
As dubious as the goal of energy independence is, the Renewable Fuel Standard is failing to achieve it. The large majority of transportation fuel is petroleum, and biofuelsí impact on the overall transportation fuel market is minimal.
In 2016, ethanol contributed a paltry 5 percent of the overall transportation fuel market. Natural gas provided 4 percent of the nationís transportation fuel with no mandate in place. Instead, the market is at work and the abundance of cheap natural gas is spurring the growth of natural gas vehicles.
The growth of biofuels as a result of the mandate is minuscule compared to the countryís overall demand for fuel. Yet ethanol consumes a large share of the corn crop and an increasing amount of the soybean crop. The ethanol quota diverts valuable cropland away from other agricultural uses and increases feed prices for cattle and poultry farmers.
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