The Huffington Post: Don’t Blame It on the Rain: The Ethanol Mandate Is a Bad Idea in Any Year

August 27, 2012

The long drought will have real consequences for the nation's food and energy markets. But it also creates an opportunity for Washington to take a hard look at the Bush-era mandate known as the Renewable Fuels Standard (RFS), which requires that 10 percent of the gasoline we put in our cars be comprised of ethanol, most of which is made from corn.

Because both sides in the debate over the standard tend to exaggerate, we conducted extensive research into the issue. We conclude that the ethanol mandate has some significant negative consequences and few redeeming features. Even without a drought, the policy is inefficient; with a drought it is much worse. Two economic myths drive support for the ethanol mandate.

Myth 1: Ethanol lowers gas prices by about $1 per gallon.

Research backed by the Renewable Fuels Association (RFA) contends that ethanol reduced gasoline prices by $1.09 in 2011 and $0.89 in 2010, a claim picked up in numerous speeches by Secretary of Agriculture Tom Vilsack. But in a recent research paper, we found such claims to be based on implausible economic assumptions and spurious statistical correlations.