The High Price of “Cheap” Gas
Yesterday, President Joe Biden issued an emergency waiver to permit summer sales of E15 gasoline in an effort to make the ongoing pain at the pump a little more bearable for consumers. E15 contains a greater ethanol content (15 percent) than the standard 10 percent in most gasoline, saving some drivers about 10 cents per gallon—but the true costs of this corn and soy-rich fuel could far outweigh the short-term savings.
Since 2011, the Environmental Protection Agency (EPA) has restricted summer sales of E15 due to the highly evaporative nature of certain volatile compounds in the fuel that increase smog and harmful ozone production at ground level when combined with heat and strong sunlight. Despite this environmental risk, ethanol producers and the Trump administration attempted to permit year-round sales. This effort has been caught up in a drawn-out court battle over whether the EPA or Congress has the authority to grant a year-round waiver under the Clean Air Act. The president’s waiver circumvents the safeguards inherent in our system of checks and balances.
Of course, elected officials are scrambling for ways to ease the high cost of transportation fuels in a midterm election year, but is this political gambit worth it?
Let’s consider the costs:
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Ethanol production is at least as carbon-intensive as gasoline, and could be up to 24 percent higher. This is from a comprehensive February 2022 peer-reviewed report in the Proceedings of the Natural Academy of Sciences.
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The same report finds that the Renewable Fuel Standard, the policy mandating the use of biofuels including corn ethanol in transportation fuels, increased the price of corn, along with other commodities such as wheat.
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The report also details an increase in fertilizer use to combat the nutrients corn growth leaches from the soil. More fertilizer on the ground results in more run-off polluting streams, lakes and other bodies of water, resulting in harmful algae blooms and dead zones. Taxpayers spend billions at the local, state and federal levels across a wide variety of programs to restore waterways, treat drinking water and build early warning systems to prevent the ingestion of the toxic algae. Another report on the need to better understand algal blooms lists billions of dollars in other indirect costs including the effect on commercial and recreational fishing, property values, public health costs, lost workdays, adverse effects on water nutrients and wildlife, and many other concerns.
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Boosting corn and soybean production for ethanol encourages growers to plow under margin land that could be environmentally sensitive, essential to the local watershed and habitat for a wide variety of wildlife from bees to prairie chickens as the National Wildlife Federation has explained. Not to mention, marginal lands are typically poor for farming; their composition is often at odds with the nutrient demands of crop production, requiring farmers to alter the structure and composition of the landscape.
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Gas with higher blends of ethanol can damage small engines, such as boats, motorcycles, chainsaws and mowers, since it burns at a higher temperature and is more caustic than other fuels, necessitating more frequent repairs. “Phase separation” is another issue, in which the chemical composition of ethanol causes the liquid to separate into energy-rich gasoline on top with heavier water and ethanol on the bottom, ruining engines and potentially stranding users. Unfortunately, the same supply chain issues facing so many other industries are also afflicting small engines, creating long waits for higher-cost repairs or replacements.
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Because ethanol contains one-third less energy than gasoline, consumers who choose higher blends will find they have to fill up more often.
But wait—there’s more!
The E15 waiver is only one part of the president’s announcement. It also includes $700 million in payments to biofuels producers to “help maintain a viable and significant market for such agricultural products” and another $105.6 million to build out the infrastructure needed to dispense E15 and higher ethanol blends safely at gas stations. Due to E15’s corrosive nature, many retailers need to retrofit or replace storage tanks and pumps. On top of all this, it’s also important to remember that corn and soy growers get millions of dollars each year from taxpayers in the form of commodity payments, crop insurance premium support and crop insurance payments.
All this comes as no surprise. During Secretary Tom Vilsack’s previous stint as the head of the U.S. Department of Agriculture, he repeatedly flouted Congress’s will in his efforts to expand the use of corn ethanol.
Finally, this push for greater volumes of biofuels in our gas tanks comes at a particularly bad time. Many parts of the corn belt are facing another year of drought. A global fertilizer shortage is squeezing margins and pushing food prices higher. Russia’s war on Ukraine is unsettling the already volatile global grain trade as wheat and other grain exports from Ukraine have ground to a halt, and uncertainty prevails over the upcoming growing season.
This short-sighted stunt comes at a high price for taxpayers, consumers and the environment. For just a few more months of slightly cheaper fuel, we could all be paying out for years to come.
Read RSI’s explainer on this subject here.
Image: jim barber
