Friday RFS Roundup – 6/20

June 20, 2014

When people think of summer, thoughts of the beach, cookouts, family and friends are always top of mind. But this summer, an overwhelming amount of Americans are feeling the burden of ethanol mandates raising the price of summer staples. Since the introduction of the Renewable Fuel Standard in 2005, an annually increasing amount of corn is diverted from food and animal feed to ethanol fuel–making it more and more difficult for ranchers to feed their herds. By increasing the competition for the price of corn, the ethanol mandate has unintentionally been driving up the cost at the grocery store, and by 2022, the RFS will increase food costs for Americans by $3 billion—annually.

Learn more about this trend from this week’s ethanol news:

MarketWatch, Why High Gas Prices Mean High Beef Prices: With nearly 40 percent of the U.S. corn crop diverted to ethanol production, competition between fuel and food is causing increased prices, particularly beef prices. With corn prices at about $4.40 a bushel today – up from $2.00 a bushel when the RFS was first enacted – consumers are seeing this price increase reflected in their grocery store bills.

In Short: “So why do rising gasoline prices hurt more at the checkout line when it’s time to barbecue? One word. Corn. In part you can thank (or blame) the Renewable Fuel Standard (RFS) , which was created by Congress in 2005 and expanded in 2007; it required refiners to blend renewable fuels such as corn-based ethanol with gasoline, starting with 7.5 billion gallons of blended fuels by 2012 and rising to 36 billion by 2022.”

Quartz, You’re Not Crazy, America—Your Grocery Bill is Going up Fast: Economic analyst, Matt Phillips, visualizes how food costs are on the rise and are not projected to lower any time soon. As evident in one of Phillips’ graphs, we see that since the beginning of the Renewable Fuel Standard in 2005, beef prices have dramatically spiked reaching nearly $4.00/pound today.

In Short: “As an economic issue, inflation just isn’t a problem in the US…That said, food has gotten a lot more expensive recent months…The recent price-climb is one of the fastest since 2011, when a spate of bad weather drove up the cost of food commodities such as wheat and corn. High feed costs and drought also seems to be behind some of the current food price spikes.”

The Tennessean, Bad Policies Push up Food, Energy Prices: Money manager and researcher, Thomas Fairfax Landstreet delivers some straight talk on why food prices are rising, and government policy gone awry is to blame. By restricting the supply of food, ethanol mandates leave consumers with the bill for this failed policy.

In Short: “Most observers blame recent droughts for the rise in food prices. But droughts come and go, bad policies like the Renewable Fuels Standard (RFS) don’t. The RFS has diverted 40 percent of the corn crop away from the food supply, leading to scarcity of the world’s largest cash crop. Corn goes into everything from cereals to sodas to cattle feed.”