Ethanol is heavily subsidized

Ethanol is heavily subsidized

Why do we pay so much for gasoline? Why is it mandated that we as consumers have ethanol in our gasoline? I have pondered the theory and compiled research, and to be honest, my findings were clear: There should be no minimum mandate, but cronyism keeps the Ethanol business alive. Established in 2007, the Renewable Fuel Standard requires a certain level of Bio fuels to be mixed in with transportation fluid in increasing amounts each year until 2022, when the total bio fuels nationwide will reach 36 billion gallons.

According to the Environmental Protection Agency (EPA), “Congress created the renewable fuel standard (RFS) program in an effort to reduce greenhouse gas emissions and expand the nation’s renewable fuels sector while reducing reliance on imported oil. but according to Science Magazine the Renewable Fuel Standard causes green house emissions to increase by nearly double in 30 years, while increasing greenhouse gasses for 167 years! They claim that the emissions associated with plowing more lands for corn crop releases more greenhouse gasses into the environment. The EPA misses this point when projecting greenhouse gas reductions.

I checked with the Sierra Club, figuring if anyone would stand behind corn-based ethanol it would be them. But to my great surprise, they strongly oppose corn-based ethonal. Arguing they are unsustainable, they cite concerns in The National Research Council, and according to their report, there is great potential for environmental harm such as the pollution of rivers and other waterways as well as reduced water availability in some communities. They further argue its “time to move beyond corn.”

Another concern regarding ethanol is weather or not the corn industry can meet the demand for more and more corn-based bio fuels. Studies have shown a correlation between ethanol and crude prices due to the increasing demand on corn to fuel our vehicles. Estimates are that as crude oil prices rise, so will corn, with 40 percent of corn crop now being used for bio fuels. They argue “Within three years, demand for corn for ethanol may well exceed the traditional largest source of demand for corn –livestock feeding.  If the ethanol industry expands now and in the future, it may bid up corn prices – thus tending to narrow its processing margins unless ethanol prices simultaneously go up more than corn prices.”

The ethanol business is also heavily subsidized, despite some of the subsidies being discontinued. The Bio-energy Program for Advanced Bio fuels, which makes payments to advanced bio-fuel companies to expand the production of corn oil bio-diesels. These organizations received approximately $53 million dollars in grants and loans, according to They also have the Bio-refinery Assistance Program gives out grants and loan guarantees for advanced bio-fuels and they gave out $25 million dollars between 2009-2012. They also have the Empowering Assistance Program, and the Rural Energy for America Program, totaling $9.8 million dollars in reimbursements and grants.

Beyond these grants and subsidies, they also receive big tax breaks. Starting with the Volumetric Bio-diesel Excise Tax Credit, which is given to feed-stocks like corn, and they are projected to receive $16.2 billion between 2013-2022. The second tax credit they are eligible for is the Alternative Fuel Vehicle Refueling Property Credit, which allows for up to a 30 percent tax break, and this applies to businesses such as gas, those installing bio-fuels, or blending pumps that have E85. From 2013-2022, they are slated to cost taxpayers $220 million, according to

But the problem’s don’t end there – not by a long shot. What about the effects on your vehicle’s engine beyond just gas mileage? There is evidence it does do harm. USA Today is reporting that many warranties from automakers will be void if a customer should use E15 gasoline. AAA has also chimed in, claiming that E15 could be unsafe for vehicles and they advocate more investigation into the impact of E15 gasoline. “It is clear that millions of Americans are unfamiliar with E15, which means there is a strong possibility that many motorists may improperly fill up using this gasoline and damage their vehicle,” said AAA President & CEO Robert Darbelnet. “Bringing E15 to the market without adequate safeguards does not responsibly meet the needs of consumers.” It doesn’t appear that many vehicles are prepared to fuel up with these bio-fuels, as the vast majority of vehicles do not have EPA approval for E15.

With the risks of environmental pollution, vehicle breakdowns, and higher food costs, some don’t see why we should continue to subsidize the corn industry. It appears the corn industry is in a battle by themselves, and the empirical evidence shows that they are losing. People deserve better.