Washington Times: Ethanol’s Hidden Gasoline Tax

May 7, 2012

With regular gasoline prices still averaging more than $3.50 a gallon nationwide, the last thing drivers need is car troubles. Yet a new scheme from Washington to boost the ethanol content of gasoline from 10 percent to 15 percent could gum up many motorists’ travel plans – literally as well as figuratively.

Ethanol has enjoyed a trifecta of government largesse for many years: tariff protection from imports, direct subsidies to encourage its use, and a federal mandate requiring refiners and importers to blend it into the gasoline pool.

At the end of last year, Congress failed to renew the subsidies and tariff protection but retained the federal mandate requiring increases in the use of renewable fuels, such as ethanol, from approximately 13 billion gallons today to 36 billion gallons by 2022.

The mandate assumed that U.S. gasoline consumption would continue to increase rapidly, but the opposite has happened: Consumption has declined by more than 1 million barrels per day since 2006.