The corn lobby – which benignly styles itself The National Corn Growers Association – is upset with the Orange Man for – as CNN puts it – “reducing demand” for its crops.
What he’s actually done is reduce the mandate for them by granting waivers to refineries which would otherwise by forced by a federal law called the Renewable Fuels Standard or RFS to douse the gas they make with ethanol – which is made (in the United States) using mostly . . . corn.
Almost all of the “gas” sold in the United States actually contains 10 percent ethanol (E10) because of the regs that require, not because American motorists want it. If they did want it, there would be no need for the mandate.
Which mandate puts a lot of corn into American motorists’ tanks – and a lot of money into the pockets of the corn lobby.
Every gallon of E10 sold includes a 10 percent subsidy to the corn lobby, or about 15-20 cents per gallon. This amounts to about the same sum as the federal gas tax of 18.4 cents per gallon, but with the latter American drivers get something desirable in return for their money – the roads, without which their cars wouldn’t be much use – which they’d probably pay for without being forced to, while the Corn Tax is simply a transfer of wealth from American drivers to a very politically powerful and parasitic “industry” that depends on government force to keep it in business.
Ethanol is a product without a natural market – which is why the corn lobby had an artificial one created for it, using the political power it wields in farms states to apply pressure to candidates for office to support laws such as the Renewable Fuels mandate. It’s no different in principle than the “zero emissions” mandates in place in states like CA, which created an artificial market for electric cars by imposing a requirement that a certain number be sold each year.
The chief difference – for now – is that Americans aren’t forced to buy an electric car. But the corn lobby has succeeded in sluicing corn juice into almost all of the “gasoline” sold in the country.
It is still legal to buy real gas (without ethanol) just as it’s still legal to buy real Coke (with sugar rather high fructose corn syrup) but you have to go out of your way to find it. There are only a relative handful of stations – see here, to find some – that sell real gas because of the pressure on the system to produce and sell ethanol-laced gas.
The two products have to be pipelined/shipped/trucked/stored separately, which makes things more involved, which makes things more expensive. It’s cheaper to sell just (or mostly) the ethanol-laced gas – just as it’s cheaper to sell Coke sweetened with high fructose corn syrup but only – in the case of E10 – because of the artificial incentives created by the mandates and the compliance costs they impose.
And it’s actually not cheaper.
While ethanol-lacing may reduce the cost of a gallon of “gas,” that “gas” costs Americans in several other ways that aren’t immediately obvious.
First, ethanol-doused gas reduces gas mileage – because it doesn’t pack nearly the same energy punch that 100 percent gasoline does. It takes 1.5 gallons of pure ethanol to equal the energy content in BTUs of 1 gallon of unadulterated gasoline.
The more ethanol in your “gas,” the lower your gas mileage.
This can be compensated for to some degree by designing an engine specifically for ethanol-laced fuels (which have higher octane) using very high-compression and turbochargers to increase cylinder pressure – but this increases the cost of new cars built with engines designed to take advantage of the higher-octane/ethanol-laced fuel.