Here’s a Monday morning quiz to kick off your work week: Which industry relies on political support and subsidies to help it compete against Big Oil?
Some in Northwest Missouri might think the answer is wind power, but not today. The answer is ethanol.
The Environmental Protection Agency unveiled rules that would require an increase in the amount of ethanol that refiners must add to their fuel in 2020. The Trump administration’s Renewable Fuel Standard seeks to remove barriers to a 15 percent ethanol blend, known as E15. The goal is to increase the sale of biofuel beyond the current mandate of 15 billion gallons a year.
The EPA announcement, made last Friday as Washington seemed preoccupied with other matters, set off a flurry of political reaction that was about as predictable as the opening statements at a congressional hearing. The changes to the fuel standard must be finalized by Nov. 30.
Missouri Sen. Roy Blunt called the ethanol rules great news for farmers and agri-business. “At a time when corn growers are recovering from historic flooding and facing market uncertainty, this agreement will provide a much-needed boost,” he said.
Critics accuse the Trump administration of attempting to “pacify” farmers. Others throw out the “s” word, suggesting that ethanol is propped up with subsidies that have more to do with the electoral map than a sensible energy policy.
You can debate the value of ethanol vs. petroleum all you want. Subsidies, though, are a red herring that opponents of any industry like to throw out. Here is an incomplete list of things that receive some form of government subsidy: wind power, ethanol, electric cars, deep-water drilling for oil, home purchases, industrial equipment purchases, football stadiums, shopping malls and parents having children.
The question might be what isn’t subsidized or, at least, which subsidy is necessary for economic reasons and which is more of a political sop. We’re sure that baby-making would occur without government intervention, but policymakers know that decreasing the financial burden of parenting leads to increased consumer spending. So there’s a wider economic benefit.
Can a similar argument be made for making ethanol? Last year, the ethanol industry employed 71,367 workers and generated $46 billion in direct economic activity, according to the Renewable Fuels Association. A wider impact could be felt in rural areas across the country, including Northwest Missouri, from capital investment and increased corn prices.
It would be difficult for any community, including St. Joseph, to write off ethanol policy as a purely political gesture. Here, the government’s renewable fuels proposal brings tangible benefits that are hard to ignore.