Editorial: End failed ethanol subsidies
Rep. Peter Welch, D-Vt., took on a powerful Midwest lobbying group when he advocated for the end of ethanol subsidies this past week on the shores of Lake Bomoseen. He chose Lake Bomoseen as a backdrop because of the damage ethanol gasoline does to boat engines as well as most other two-cycle engines like snowmobiles, lawnmowers, chainsaws and grass trimmers. In a word, the detrimental effect of ethanol gasoline to two-cycle engines and boat engines in the past few years has been a giant headache for most of us — and very costly for some businesses. (See story Page 1.)
But this won’t be an easy fight.
The production of corn-based ethanol is a multi-billion-dollar industry with a powerful congressional lobby representing the corn-producing states of the Midwest. While the use of ethanol gasoline began slowly in the 1970s, it is now mandated by Congress that all fuel sold in service stations in the country contain up to 10 percent ethanol.
The industry, however, makes no sense. A similar biofuel made with sugarcane, instead of corn, is more efficient, causes less pollution and does not raise the cost of feed for cattle because of the higher price paid when corn is raised for ethanol. Nor is ethanol cost-efficient. To make the industry viable, Congress subsidizes farmers three ways to insure farmers make a profit: ethanol producers get a 45-cent-per-gallon federal subsidy amounting to $6 billion annually; a tariff barrier protects the industry from foreign competition; and Congress mandates the use of ethanol in fuel sold at American gas stations to ensure a market.
“There is no other industry I know of that gets three forms of incentives to stay in business,” Welch said at the Lake Bomoseen press conference last Thursday. “It’s just an upside-down policy that needs to be changed… We’ve got a lot of budget problems in federal government right now. We’ve got to make sensible decisions, and ethanol is Exhibit A.”
To that end, Welch has introduced legislation that would simply end federal subsidies for ethanol — a move that would also allow ethanol-free gasoline to be sold service stations. (Currently, ethanol-free gas can be imported from Canada, but it comes at a cost of 20-25 cents more per gallon.) “Our position,” Welch said, “is to let the market work. If we take the subsidies away, we think the problem will solve itself.”
The irony is that ethanol was initially touted as a “green” alternative to regular gasoline. As a bio-fuel, it was supposed to help reduce America’s dependence on foreign oil, while reducing pollution from a strictly oil-based fuel. The results, however, have been disappointing, at best.
“If you have clear evidence that something’s not working, you should fix it,” Welch said, adding, “the question is: Why don’t we change it?”
The obvious answer — the power of political lobbyists and the constituents they represent — poses a tough challenge to political leaders in the U.S. House of Representatives and, particularly, to budget-cutting conservatives in those corn-producing states. Rep. John Sullivan, R-Oklahoma, has joined Welch in co-sponsoring the legislation, but will they be able to convince their colleagues in Iowa, Indiana, Nebraska, Illinois, Ohio and other states to end the gravy train for so many of their farm-based constituents?
Welcome to the fundamental problem in U.S. politics.