Corn-Based Ethanol Debate Intensifies - - A Bit
A recent article in USA Today questions whether ethanol's days are numbered. While that article is written from the perspective of whether the stock of ethanol producing companies is a good investment, it focuses on some of the issues that frame the debate about continued support for ethanol as a fuel addictive. That use stems from a congressional mandate set out in 2005 requiring 10% of the nation's fuel to be blended with ethanol. Since over 130 billion gallons of gasoline are sold annually in the United States, that means approximately 13 billion gallons of ethanol are produced, the vast majority of this volume from corn. A recent poll conducted by the biofuels industry indicates that 6 in 10 voters support the law requiring the blending of ethanol into tradition gasoline. (Industry Poll, The Hill). Nonetheless, criticisms are increasing on a number of fronts. As the USA Today article points out, there is a genuine question of the overall benefit of ethanol in reducing energy consumption since it requires a substantial amount of energy simply to produce a product. The production of ethanol from corn consumes approximately 40% of the United States' corn crop (The Guardian). Most everyone agrees that this fact has a corollary impact of driving up U.S. food prices. And there are other emerging concerns with respect to the effects of ethanol on dispensing systems and in vehicles. For example, a report by the National Institute of Standards and Technology published in August 2014 (referenced here and here) suggests the likelihood that ethanol will cause leaks in underground fuel storage tank systems unless sump pumps and other portions of the system are retrofitted. There is also a general agreement that the industry would not be sustainable without the two-fold effect of federal mandates for its use and subsidies for its production. Taxpayer supports for corn ethanol have been identified in detail and criticized by Taxpayers For Common Sense (here), one of several organizations that have challenged the wisdom of the support. Indeed, Senators Toomey (R-PA) and Feinstein (D-CA) recently introduced the Corn Ethanol Mandate Elimination Act of 2015. (The Hill: Duo Pushes Repeal of Mandate). Although this legislation is the product of some bipartisan cooperation, many observers believe it has little chance given the substantial support for the continuation of the mandate and subsidies in the mid-western states and their Congressional delegations. While corn-based ethanol seems likely to maintain its institutional support for the near future, the many questions about its use and benefits are receiving increasing attention.
Posted in: Ethanol
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