On the heels of federal subsidies and legislation designed to force a commodity into a market with little appetite for it, ethanol may be getting yet another assist. Senators Charles Grassley (R-IA) and Amy Klobuchar (D-MN) recently sent a letter to the Federal Trade Commission requesting investigation of the oil industry for "anticompetitive practices aimed at blocking market access for renewable fuels." In other words, having failed to create demand with special treatment for ethanol, they now want Big Brother to harass oil companies forced to blend it with their product.
This goes back to the 2007 congressional mandate that 36 billion gallons of ethanol must contaminate the nation's gas supply by 2022. With a growing gasoline supply, this might not have been problematic, but demand for gas hasn't grown because of the EPA's mileage demands and better technology from car manufacturers. And since gasoline with more than 10% ethanol wreaks havoc on engines not built to handle its corrosive effects, refiners have found themselves stuck between reality and the mandate. Unbothered by the former, the pro-ethanol lobby claims the oil industry is "blocking the introduction of cheaper, cleaner, and renewable alternatives."
Meanwhile, even one Democrat has conceded the mandate's failure, calling the standard a "flop" that's caused both "environmental ... [and] economic detriment to many sectors of the economy." The White House, however, continues to vow loyalty to the ethanol lobby.
Being a hidden farm subsidy, the mandate garners support from both sides of the aisle. The fact that it is a horrible energy policy which raises food prices and has caused starvation and poverty in third world countries matters little to farm-state Congressmen.
Hot Air's Erika Johnsen writes, "The EPA has been heretofore undeterred in continually raising the requirements, but I suppose it must be getting harder to ignore that nobody but nobody except agribusiness and their associated Big Ethanol lobbyists are fans of ethanol -- not oil companies, not environmentalists (and how often do those two groups unite?!), and certainly not American consumers paying higher food and gasoline prices as a consequence."
About those Big Ethanol lobbyists: They're not going to go quietly. The EPA reassured them that nothing is final and it's only a "draft proposal." But Tom Buis, CEO of Growth Energy, called for "an immediate investigation by the Justice Department and the Commodity Futures Trading Commission to determine if this was an attempt to manipulate markets such as corn futures, ethanol futures and/or RINS markets." In other words, despite all the damage ethanol does to engines and food markets, the ethanol lobby isn't about to let their sweet deal run out of gas.