The Wall Street Journal: Put a Corn Cob in Your Tank

August 19, 2013

August 18 – A strong candidate for the most expensive policy blunder of recent years would have to be the mandate to blend corn ethanol and other biofuels into the nation's gasoline supply. This month even the Environmental Protection Agency essentially acknowledged that the program is increasingly unworkable and costly to consumers. The EPA just won't do much to fix it.

When these mandates were enacted in 2007 under George W. Bush, biofuels were sold as the wonder-fuel of the future: a cheap and plentiful domestic energy source to compete with OPEC oil and reduce global warming. Six years later none of those predictions have panned out.

One of the biggest debacles has been the law's requirement that the oil and gas industry mix cellulosic ethanol—made from the likes of switch grass and wood chips—into gasoline. The original law mandated the use of one billion gallons of cellulosic fuel in 2013, with even higher levels through 2022. This may have been the worst government forecast in history, which is saying something. Even with taxpayer subsidies, total cellulosic volume in 2012 was about 20,000 gallons. The government was off by a mere 99.9%.

In its annual program review this month, EPA reduced the mandate to six million gallons from 14 million. But even that is several million gallons above what can be bought anywhere. So the oil and gas industry has to pay what amounts to a fine (mostly passed on to consumers) for not buying enough cellulosic fuel that doesn't exist.