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If ethanol—an alcohol fuel made from corn—is such a great product, why do we need a law to make us buy it? <?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />
Motorists should ask that question as state lawmakers consider AB15, a bill to require most regular-grade gasoline sold in <?xml:namespace prefix = st1 ns = "urn:schemas-microsoft-com:office:smarttags" />Wisconsin to be "E10," a blend containing 10 percent ethanol.
Let's examine the sales pitch Democrat Governor Jim Doyle, Republican Assemblyman Stephen Freese, and a gaggle of agribusiness lobbyists are making for the bill.
First, they claim an ethanol mandate will reduce your pain at the pump by lowering gas prices. But this claim bizarrely assumes that oil companies do not want to get rich.
Here's why. If ethanol-blended gasoline were cheaper—not just today, in the aftermath of Katrina and Rita's disruption of Gulf coast petroleum production, refining, and transport, but also over the long term—then any refiner making E10 would be able to undersell its competitors, gain market share, and boost profits. Sheer greed would impel it to make E10. No mandate would be required.
Federal and state laws already prop up ethanol fuel in various ways. Motorists pay 51 cents less in federal gasoline taxes for every gallon of ethanol purchased, and Wisconsin pays ethanol makers 20 cents for every gallon produced. If ethanol were such a great deal for consumers, it would not need market-distorting tax breaks and subsidies, much less a market-rigging mandate, to compete with conventional gasoline.
Ethanol is also touted as an eco-friendly "green" fuel. But Wisconsin's Department of Natural Resources (DNR) estimates that the proposed mandate will increase nitrogen oxide (NOX) emissions, which contribute to ozone smog, by 6.9-13 tons per day. This is double the reduction in NOX emissions that Wisconsin achieves through vehicle inspection and maintenance programs in six southeastern counties. Ozone levels in those counties currently exceed federal standards. The mandate, DNR cautions, will worsen their ozone problem and "degrade air quality throughout the state."
Economic arguments in favor of AB15 are equally spurious. The bill's supporters say the mandate will "create jobs" by expanding in-state ethanol production. They conveniently ignore the new regulatory burdens the state will have to impose on manufacturers and utilities to offset the projected increases in NOX emissions.
Finally, proponents claim that the mandate will make us less dependent on foreign oil. But they do not explain how this would enhance our security. No policy under consideration—certainly not AB15—could reduce U.S. oil imports from the current level of 58 percent back to the 1973 level of 28 percent. To achieve so great a reduction we would have to shut down much of the U.S. economy—hardly a prescription for making America stronger or safer!
But even if we could get back to the 1973 level, what would it accomplish? Lest anyone forget, 1973 was a year of major armed conflict in the Middle East and extensive international terrorism. It was also a time when OPEC was more powerful than it is today. There is no known relationship between oil import levels and national security.
Besides, the proposed mandate would hardly make a dent on oil imports. My back-of-the-envelope calculation suggests that AB15 would reduce U.S. petroleum imports by four-tenths of one percent. Does anyone believe that if we had just reduced petroleum imports by that amount—or even by 20 percent—a few years ago, America would have been spared the horrors of 9/11, or never come to blows with Saddam Hussein?
Clearly, the only purpose AB15 serves is to enrich special interests and prevent consumers from shunning ethanol-blended gas if it turns out to be a bad buy.