Congress shouldn’t be picking energy winners and losers
By Elizabeth Ames Jones | July 9, 2013 |
Little noticed that while the immigration debate raged in the Senate last month, the Energy and Commerce Committee of the U.S. House took up the issue of the federal government’s Renewable Fuel Standard.
The standard was passed as part of the Energy Policy Act of 2005. It mandates that renewable fuels – most commonly ethanol and biofuel – be added to transportation fuels in increasing amounts over the next decade.
The ultimate goal, according to the U.S. Environmental Protection Agency, is to see more than 30 million gallons of renewable fuel in circulation by 2022. While ostensibly a move to combat the impact of fossil fuels, the standard was largely a giveaway to large agricultural interests in electorally important states, and, as with many such schemes, has proven utterly ineffective.
Studies and articles written since the passage of the standard have documented dramatic increases in corn prices. One study released by the Heritage Foundation earlier this year placed the price increase as high as 68 percent, and researchers at The University of California Davis put the number at 30 percent.
While this is certainly painful to U.S. consumers, around the world the impact is nothing short of life-threatening: Increased U.S. food prices impact food costs in developing countries, trapping millions in captive poverty and borderline starvation. On top of that, any presumed improvement in the environmental footprint of the corn-based ethanol feedstock has yet to come to fruition.
The inherent problems and unintended consequences of the fuel standard have prompted efforts to try and fix or repeal the mandate.
House Rule 1959 is being proposed by some members of Congress from Texas and other states to make a bad law better. HR 1959 – the Domestic Alternative Fuels Act – would add natural gas to the fuel standard mandate.
Supporters argue doing so would end the government-granted monopoly corn ethanol enjoys and benefit consumers by addressing supply issues by giving more energy alternatives for meeting the ethanol mandate. For all its best intentions, HR 1959 could ultimately backfire and shore up the bad public policy that is inherent in the Renewable Fuel Standard.
While our country’s prolific natural gas reserves certainly must be used to fuel our quality of life and our national security interests, adding it to the fuel standard in an attempt to create a level playing field is like putting lipstick on a pig. There is no way to improve the Renewable Fuel Standard short of repeal.
The huge surge in supply of our domestic natural gas, thanks to horizontal drilling and multi-stage hydraulic fracturing in shale plays, and the inevitable price stability of our homegrown clean-burning natural gas are among the primary reasons for a manufacturing resurgence in Texas and across America. This dynamic makes us less dependent on foreign sources of energy and places America on a path to joining other gas-rich countries in the export of natural gas.
Adding natural gas to the list of fuel standard mandates distorts prices and won’t help achieve price equilibrium that benefits both the producers and the consumers. Congress should not risk the negative consequences that could be brought forth by HR 1959 and instead must focus on the need for an outright repeal of the fuel standard.
America is an energy nation thanks to states such as Texas. Let’s get government out of picking energy winners and losers and allow the market to decide the fate of “renewable” fuel. I place my money on the real deal that can stand on its own – natural gas.
Elizabeth Ames Jones is the immediate past chairwoman of the Texas Railroad Commission. She served on the commission from 2005-2012.