Iowa’s two senators, Chuck Grassley and Joni Ernst, are hosting a field hearing this coming week in western Iowa to discuss the devastating floods that have hit the Midwest. You can see the lesser effects of this flood without traveling to the banks of the Missouri River just by driving down to your nearest gas station, where prices are skyrocketing.
How could flooding in Missouri affect the price of gasoline in Los Angeles, you may wonder? Through the magic of the ethanol mandate, an indefensible corporate welfare boondoggle beloved by Republican and Democratic politicians.
Ethanol is an alcohol made from plants, mostly corn in the U.S. In addition to getting you drunk, it can act as a fuel additive. You’ve probably noticed those signs on gas pumps informing you that your gasoline contains 10% ethanol. That means your gasoline is less efficient and will slowly wreck your motorcycle, boat, and lawnmower.
So, why do refiners put ethanol in your gasoline? Because the federal government requires it. The federal ethanol mandate created by President George W. Bush (officially the Renewable Fuel Standard) was a sop to the ethanol lobby, which wields extra clout thanks to prominence of the Iowa caucuses.
The floods across the Midwest have overwhelmed roads and rails and thus trapped millions of barrels of ethanol in the heartland. In a sane world, this wouldn’t harm drivers who just want some regular old gasoline. But thanks to the Renewable Fuel Standard, it’s effectively illegal to sell gasoline without ethanol in it.
Supply curtailed by nature, demand legislated by Congress — blend them together, and you get $4 a gallon in San Francisco and sharply climbing prices in most of the country.
This ethanol squeeze isn’t the only factor pushing up gasoline prices, of course. But pushing up gasoline prices isn’t the only harm of the ethanol mandate.
Ernst and Grassley’s hearing this week will focus on the Army Corps of Engineers and how the federal government can mitigate the harm of future floods. These two lawmakers are perfectly positioned to mitigate the harm future floods will pose to the rest of the country by dropping their stubborn support of the Renewable Fuel Standard.
We know why Grassley and Ernst love the mandate, but that doesn’t make it OK. The Renewable Fuel Standard is pure special-interest politics. It enriches corn growers and ethanol refiners at the expense of the rest of the country by forcing us to buy something we don’t like.
Any Democratic candidate with guts, and who really wants to stand up to the special interests, will say in Iowa that the Renewable Fuel Standard needs to go. The Republican Senate, if it actually believes in free markets, would pass a bill winding down the Renewable Fuel Standard over five years.
Americans are happy to help the farmers of Iowa recover from these floods. But we’re not happy to keep tolerating their special-interest corporate welfare.