Ripon Forum


Vol. 47, No. 3

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In this Edition

Given all the negative headlines these days, it is sometimes easy to lose sight of what is good about America and what it is that draws people to our shores. More than anything, it is our system that sets us apart. It is a system based on freedom and individual initiative, and one that – despite […]

The Promise of the Pacific Rim

New Zealand’s Ambassador to the United States discusses the importance of the Pacific Rim and why the U.S.-China relationship is the most profound relationship of our age.

The Sky’s the Limit

U.S. resurgence and Chinese ascendance need not be mutually exclusive. Those who think otherwise misunderstand the nature of the problems and opportunities the world faces.

The Importance of Pacific Trade to My State

Back from a mission to the Asia-Pacific, the Governor of Idaho explains why trade with the region is not only important to the people of his state, but the country as a whole.

China’s Challenge to the United States

Recent trends suggest that world history is approaching a pivotal period – one where a big shift in the balance of power destabilizes and even destroys international order.

The Renewable Fuel Standard: Bad for free markets

The Chairman of the House Judiciary Committee looks at a policy that started with good intentions but has resulted in numerous unintended consequences.

The Demographic Case for Immigration Reform

Because our native born population is aging, we cannot prosper in the global economy of the 21st century if we do not open our borders to others from abroad in the years ahead.

The Biggest City You’ve Never Heard of

The Mayor of Mesa, AZ and President of the U.S. Conference of Mayors explains how he and other Mayors around the country are leading America’s recovery at the local level.

Replacing the Gasoline Tax with a Road User Fee

With people paying less in gas taxes because of improved economy standards, a new source of revenue is needed to build and maintain our nation’s bridges and roads.

Federal Reserve Transparency: Should We Want It?

The appointment of a new Federal Reserve Chairman is unlikely to end calls for greater openness by an institution that has historically operated behind closed doors.

Ripon Profile of Pat McCrory

Ripon Profile of the Governor of the Tar Heel State.

The Renewable Fuel Standard: Bad for free markets

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An artificial market with a very real impact – that’s the result of the federal government’s subsidization of the ethanol industry under the Renewable Fuel Standard (RFS). It may be a boon for the ethanol industry, but for everyone else it is a completely unworkable and costly policy.

The RFS requires that 36 billion gallons of renewable fuels be in our nation’s fuel supply by 2022. Currently, this mandate is almost entirely fulfilled by corn ethanol. In fact, in 2012 more than 40 percent of the nation’s corn crop was used for ethanol production.

A policy that started with good intentions has resulted in a slew of unintended consequences. One of the greatest unintended consequences of the ethanol mandate is the steep increase in the price of corn partially due to increased food and feed stocks being diverted to ethanol production. To put it into perspective, in 2005 corn prices were around $2/bushel. In 2013, prices have been as high as $7/bushel; however, last summer we saw prices exceed $8/bushel. This steep increase can have a significant impact on those who purchase this commodity. As the ethanol mandate pushes more farmers to reallocate more land to corn production and away from other crop production, we have also seen the prices for other agricultural commodities rise.

A policy that started with good intentions has resulted in a slew of unintended consequences.

Simply put, the RFS has driven up ethanol production at the expense of food and feed uses, passing these higher costs directly down the chain. For many farmers and businesses, rapid increases in the price of corn weigh heavily on their bottom line, making it difficult to stay in business. But it doesn’t stop there – higher corn prices are ultimately reflected in the price of food and other goods on grocery store shelves.

The RFS also impacts the fuel in your gas tank. The mandate has now pushed the United States up against the “blend wall.” This wall is the point where we are producing more ethanol than necessary to generate E-10 gasoline, which is the highest level of ethanol in gasoline that the entire motor vehicle fleet can safely utilize. As the RFS pushes the amount of fuel required to be blended into our nation’s gasoline higher, the fuel industry will likely have to produce a higher blend, like E-15, which cannot be used in all motor vehicles, or failure to blend the mandated volume results in fines, forcing companies to absorb the substantial costs, which would impact fuel prices. Some reports have found that the use of higher ethanol blends in gasoline, like E15, has resulted in engine damage and even failure.

The RFS debate is no longer just a debate about fuel or food. As we see the costs of this mandate continue to rise, it has also become a debate about jobs, small business, and economic growth. Quite frankly, the RFS has created a domino effect that hurts livestock and food producers, businesses, and, ultimately, consumers. Under the RFS, the federal government is essentially telling private industry that they must buy one product, ignoring other groups who also depend on that product and creating an artificial supply-and-demand.

The RFS is clearly unworkable. The mandate drastically manipulates the corn marketplace and increases commodity and food costs across the supply chain. To force ethanol to compete in the free market, I introduced the Renewable Fuel Standard Elimination Act (H.R. 1461). The RFS Elimination Act will do just that – eliminate the ethanol mandate and help ensure that we have enough corn supplies to meet all of our demands. Ethanol would have to compete fairly, instead of being propelled by a government mandate.

The RFS is clearly unworkable. The mandate drastically manipulates the corn marketplace and increases commodity and food costs across the supply chain.

The significant support surrounding the RFS Elimination Act is evidence that there is growing momentum to move away from the RFS. Thus far, nearly 50 bipartisan members of the House have signed on as cosponsors. The backing from groups outside of the House has grown as well.

Renewable fuels have a place in America’s energy policy. Our nation should be looking at alternatives that will help to ease our dependency on fossil fuels. However, these fuels should compete fairly in the marketplace, free from the distortion and government interference that the current ethanol mandate forces.

The RFS is an example of the federal government disrupting the marketplace by putting its heavy thumb on one side of the scale – tipping it in favor of one side over the other. In the debate over ethanol, the government is picking winners and losers. Every cattle producer who faces higher feed costs, every family who shops in a grocery store or dines at a restaurant, and every motorist who fills up their tank at the gas station pays the price of this unworkable policy.

It is evident that Congress must fix this broken ethanol policy and restore free market principles.

Bob Goodlatte represents the 6th District of Virginia in the U.S. House of Representatives. He is a member of the Agriculture Committee, and serves as Chairman of the Judiciary Committee.