Tuesday, July 1, 2014


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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