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Free Market Groups Oppose Natural Gas ‘Fix’ for Ethanol Mandate

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Free Market Groups Oppose Natural Gas ‘Fix’ for Ethanol Mandate

Market-Rigging Regulations Should Be Repealed, Not Expanded

Washington, D.C., June 26, 2013 - Twelve free-market public policy organizations today released a joint letter urging House Members to oppose H.R. 1959, The Domestic Alternative Fuels Act of 2013. The bill would allow ethanol derived from natural gas to count toward the federal government’s mandatory blending targets established by the Renewable Fuel Standard (RFS) and the EPA’s implementing regulations.

While commending Rep. Pete Olson (R-TX) and his co-sponsors for seeking to break “the corn lobby’s legal monopoly on a significant and growing share of the U.S. motor fuel market,” the coalition letter argues that the solution is to repeal market-rigging regulations, not empower another special interest to share in the spoils.

H.R. 1959 would compound, not alleviate, the worst unintended consequences of the RFS program. Such undesirable side-effects include skyrocketing grain prices and potentially volatile fuel prices as the RFS compels refiners to sell more ethanol than can safely be blended into conventional gasoline (the “blend wall” problem).

As CEI Senior Fellow Marlo Lewis explains: “Enacting this bill would align the natural gas lobby with the corn lobby. Their common interest would be to increase the overall RFS blending target beyond 36 billion gallons, mandate the sale of E20 or even higher ethanol blends, and relax environmental criteria so that corn- and gas-based ethanol can fill the void created by non-existent advanced biofuels. Expanding the RFS in these ways would likely drive up both fuel and grain prices and make them more volatile.”

The organizations issuing the joint letter are: 60 Plus, American Commitment, Americans for Prosperity, American Energy Alliance, Club for Growth, Commonwealth Foundation, Competitive Enterprise Institute, Freedom Action, FreedomWorks, Frontiers of Freedom, Let Freedom Ring, and National Taxpayers Union.