The Hancock-Henderson Quill, Inc.
Crain's got it backwards by concluding (June 28 Editorial) that the EPA should not raise ethanol blend limits in gasoline from 10% to 12%.
The truth is that no move would leave in place an artificial barrier that prevents consumer choice and bar a cheaper-currently fifty-to-sixty cents a gallon less-fuel from our pumps.
The market has proven conclusively that renewable fuels will only be introduced into our supply chain by government cooperation.
Subsidies for corn ethanol are paid to petroleum processors (not ethanol companies) to modify existing distribution systems and infrastructure to accept the biofuel.
And the government has mandated minimum thresholds for biofuels in our national fuel supply.
Without this support processors would have no incentive and the market for ethanol would be closed.
The ethanol market has reached the arbitrary barrier of a 10% limit and that has resulted in financial institutions moving away from the industry. Modern ethanol plants outfitted with the most current technology are very efficient energy producers, have comparatively small global warming impact and produce valuable byproducts.
But with an artificial cap in place lenders are not providing the loans required to modernize. And, it is difficult to foresee lenders again funding new plant startups with unproven companies as happened in our recent past.
If implemented today, a higher ethanol blend will lower gasoline prices at the pump.
Further savings are possible if and when the petroleum industry begins to formulate gasoline for the inclusion of ethanol for the higher octane it provides.
The most compelling financial reason to raise blend levels, though, is its role and further potential in supporting rural economies.
Corn ethanol is the only new industry to have entered rural economies in the last thirty years. It has brought direct and indirect jobs and economic stimulus and generated much needed tax revenue.
With corn exports relatively static over the last two decades, corn ethanol has created a new market for Midwest farmers. And the industry provides irreplaceable knowledge and infrastructure for future biofuels.
Increasing the allowable ethanol blends to 12% will reduce our dependence on imported oil and provide a buffer to possible future price hikes in oil or supply disruptions.
It will provide both economic and energy security while actually reducing the government restraints on the market. And, for rural areas, it would be the mother of all stimulus packages.