Government Redirecting Corn Into Your Gas Tank
2012 saw possibly the worst drought in over fifty years. This has devastated corn yields and driven up the price of corn. In terms of surging costs, this would be bad enough for individuals, especially those in the corn-using businesses such as food and livestock farming. However, on top of this, the government is making things even worse. By forcing gasoline makers to use an increasing amount of ethanol as part of the Renewable Fuel Standard regulations, the government is making corn even more expensive, making it even more scarce for its normal uses, and changing the composition of gasoline to something other than what cars were designed to use.
This ethanol mandate reminds me of the sequence in Atlas Shrugged where regulators inexplicably demand that Taggart Transcontinental rush grapefruits across the country. This forces the cancellation of a coal train and leaves many regions to suffer the consequences of not having a basic source of electricity.
Like the grapefruit mandate, the effects of the government’s ethanol mandate are rippling throughout the economy, and not just in the food and agriculture businesses. Here are some fairly recent reports of effects that are either caused or exacerbated by the ethanol mandate:
- Refiners are facing increasing costs of blending gasoline.
- Automakers and organizations such as AAA are warning of the potential damages to older vehicles if the amount of ethanol in gasoline exceeds ten percent, which it is about to. There are even some warning labels on gas tank caps informing motorists that vehicles could be damaged if E15—gasoline with fifteen percent ethanol—is used.
- Motorists are facing higher prices at the pump and getting less mileage for each gallon of gasoline.
- American consumers are facing higher food prices, including on products such as beef, pork, chicken, turkey, eggs, cereals, and dairy products.
- Mexican consumers are finding it increasingly more expensive to purchase a major Mexican staple: corn-based tortillas.
- Farmers are feeding cows candy as part of a desperate search for a cheap alternative to corn-based animal feed.
- Other farmers are slaughtering more pigs since they cannot afford to feed as many as before.
How many of these things would be occurring if the government was not diverting corn into gasoline?