This standard is one reason
the price of gas will increase
Daily Signal – David Kreutzer
– 6/30/2014
On June 26, the
Congressional Budget Office released
a study on the impacts of the Renewable Fuels Standard and found that,
if unchanged, the RFS will increase gasoline prices by 13 to 26 cents per
gallon and increase the price of diesel fuel by 30 to 51 cents per gallon by
2017. Part of the popular, bi-partisan and totally misguided Energy
Independence and Security Act, the RFS promoted increased production of various
forms of ethanol and biodiesel with a host of mandates and subsidies.
The failure of cellulosic
ethanol to meet the fantasy-world targets set years ago means that the ethanol burned in our vehicles primarily
comes from diverting food to fuel—nearly 40
percent of the U.S. corn crop goes to ethanol production. So, the net
effects of the RFS are to drive up farm commodity prices (and subsequently food
prices), drive up the cost of diesel fuel, drive up the cost of the gasoline
used by the vast majority of drivers, and provide
little, at best, environmental benefit. It’s not a simple case of
supply and demand where more ethanol means lower fuel costs. Understanding the
complete picture is more complex. But one thing is clear: The RFS is simply a
bad idea whose time to go has come.
Lower energy content per
gallon makes ethanol fuels unattractive to most drivers. To a certain extent,
this weakness was hidden because most gasoline contains only 10 percent of the
lower-energy ethanol. But refiners cannot legally add any more ethanol to E10
gasoline—the most common gasoline sold, which is comprised of 90 percent
gasoline and 10 percent ethanol—and cannot get consumers to buy E85 (a blend of
15 percent gasoline and 85 percent ethanol) without selling it below cost of
production.
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