Last week, the Environmental Protection Agency (EPA) denied Texas' request for a temporary reprieve from federal ethanol mandates.
Under the energy law signed late last year, 9 billion gallons of ethanol and biodiesel must be blended into gasoline between Sept. 1, 2008, and Aug. 31, 2009, to meet a national Renewable Fuels Standard. Texas Gov. Rick Perry (R) sought to reduce that to 4.5 billion gallons, on the grounds that the mandate is hurting livestock producers and increasing food costs.In denying the request, the EPA explained that it did not believe the mandate was having too great an impact on food and fuel prices, and that whatever costs the mandate imposed were outweighed by the mandate's benefit. The ethanol mandate "is strengthening our nation's energy security and supporting Americans' farming communities," Administrator Stephen Johnson explained. Funny thing, I thought the EPA's job was environmental protection, not subsidizing farmers or promoting something as nebulous as "energy security." The mandate cannot be justified on environmental grounds, however, as the ethanol mandate does more harm than good.
Texas Governor Rick Perry is none too happy with the EPA's decision. He writes in today's WSJ:
the diversion of our corn supply from grocery stores to gasoline pumps has caused the price of corn to spiral out of control. Corn prices were once driven by market forces. Today they are artificially driven up by a government mandate. In 2004, before the mandates were imposed, the cost of corn hovered around $2 per bushel. Now it is close to $8 per bushel.This is hardly the EPA's first bad, anti-environmental effort to prop up the ethanol industry. During the Clinton Administration, the agency sought to impose a de facto ethanol mandate in the guise of a "renewable oxygenate" standard under the Clean Air Act. The problem was, the Clean Air Act did not provide the agency to impose such a requirement -- and a good thing too, as the mandate would have done more environmental harm than good.
This is driving up the cost of staple food items at the grocery store. And it is also driving up the price of corn-based feed, devastating the livestock industry to the point that Texas cattle feeders have been operating in the red since 2007. . . . .
Denying Texas's request is a mistake that will continue to force families to bear a heavier financial burden to put food on the table than necessary and harm the livestock industry.
Supporters of the ethanol mandate have their hearts in the right place if they want to diversify this nation's fuel supply. But artificially propping up an industry to the detriment of the vast majority of Americans is bad policy. And that's what this mandate does.
The Clinton Administration's effort could be ascribed to the ethano-philia common among D.C. politicians who hope to curry support in the farm belt and bolster their reelection efforts. But the Bush EPA has no such an excuse. No crass political motive appears to explain the Agency's decision. Rather, it seems, the Bush EPA actually believes in this bad policy.