Ethanol mandates: No waivers, higher prices

Date published: 11/29/2012

Behind the "fog bank" of the Petraeus scandal and fiscal cliff posturing, the Obama EPA has quietly announced its rejection of various animal agriculture groups, small engine manufacturers, the oil industry, and large segments of the food/restaurant industry, all of which sought waivers from corn-based ethanol mandates in the wake of the worst drought in recent memory, which hiked animal feed and gasoline prices.

Several governors, including those of Virginia, Maryland, Delaware, and Arkansas also petitioned the EPA to waive the mandate, but their pleas on behalf of their farmers and ranchers--particularly chicken and hog farmers and cattlemen--fell on deaf ears.

EPA claimed that none of the petitioners showed "substantial harm" linked with the ethanol mandate.

When Congress passed the mandate as part of the 2005 Energy Independence Act, the EPA was given power to decide whether the criteria "substantial harm" needed for temporary waiver relief from the mandate had been met.

It is proving to be a high bar. Texas Gov. Rick Perry, a Republican, tried to persuade EPA back in 2008 to provide his ranchers and chicken industries relief from the ethanol mandate, but his bid also fell short. Earlier this year, Perry watched his presidential run disintegrate following a drubbing in the Iowa primary led by hostile, pro-ethanol forces targeting his campaign.

Big ethanol, led by Archer Daniels Midland, a major campaign contributor that controls huge segments of the ethanol and bio-diesel industries, has won again. The American consumer and free markets--have lost (again).

Watch for higher food and energy prices, and other distortions to emerge as a result. Inquiring minds might wonder why this theme failed to surface during the recent presidential campaign and debates, but if EPA's "stealth release" off the media cycle is any indicator, maybe we already know the answer.

Nicholas E. Hollis


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Date published: 11/29/2012