We’ve learned from class that ethanol producers have long benefitted from subsidies, tax credits and Congressional production mandates. However, ethanol producers have recently hit tough times with falling gasoline consumption and excess production capacity that is now forcing some plants to close and some to even go bankrupt. This past Friday, group of ethanol producers appealed to the government to raise 10% limit in most gasoline blends to as high as 15%. The Renewable Fuels Association, an industry lobbying group, is working hard to persuade our government that allowing ethanol blends to go to 15% is both necessary and positive step “to ensure the full potential of a robust domestic ethanol industry.” The Energy Secretary Steven Chu indicated favoring at least a small initial increase to 12 or 13% in near future unless auto companies see risk that the change would cause damage to their products. It is important to note that some automakers in the past have put out their concerns that higher blends over time can cause corrosion and damage auto emission systems. The Alliance of Automobile Manufacturers has recently joined refiners and environmental groups to warn our congress that a higher blend of ethanol in gasoline would “lead to increased air emissions from gasoline-powered engines and potentially endanger consumers using these engines.” To add to the mix, the food producers are also lobbying against raising the ethanol limit as that process would divert corn from use as food and animal feed leading to increased food prices for consumers. Currently, both the EPA and Energy Dept has been testing higher ethanol blends, but it would still take at least nine months until a final decision can be made to approve this 15% blend proposal.
On one hand, I understand the quagmire the ethanol producers are in where their efforts to double corn ethanol use to 15 billion gallons by 2015 (from 2007 Congress mandate) has suffered under current economic crisis which caused lower gasoline consumption throughout the country. On the other hand, I don’t want to put this higher ethanol blend of gasoline in my vehicle that some automakers are saying will cause damage while paying higher prices for my fish tacos wrapped in corn tortillas. And who’s to say that the ethanol producers might even pursue 20% or higher ethanol blend mandate after they get their way with this proposal?
1) Krauss, Clifford; “Bigger Share of Ethanol is Sought in Gasoline”; March 6, 2009; source from http://www.nytimes.com/2009/03/07/business/energy-environment/07ethanol.html
2) Johnson, Alex; “Mechanics See Ethanol Damaging Small Engines”; August 1, 2008; source from http://www.msnbc.msn.com/id/25936782/