Four out of every five gallons of gasoline sold in Iowa are ethanol-blended products, according to the Iowa Department of Revenue. Yet, Iowa state legislators are considering a statewide mandate that would make ethanol Iowan’s only fuel option.
The legislation, they say, is necessary to save Iowa’s renewable fuels industry. Really?
Iowa ethanol plants had a record year in 2009, with 3.1 billion gallons of product, 39 ethanol plants up and running and renewable fuels accounting for 8 percent of the state’s gross domestic product. In 2010, ethanol will account for one-third of Iowa’s corn production, which would exceed last year’s record.
Advocates claim with a mandate that ethanol-blended prices would be “5 to 7 cents lower” than straight gasoline. Really?
Ethanol-blended gasoline is priced competitively only because of more than 7 cents per gallon in federal and state tax credits and reduced excise taxes. If ethanol is mandated, there is no need to offer those incentives. Without the tax breaks, fuel costs rise.
Mandates eliminate competition, which keeps prices low. Currently, thousands of independently owned convenience stores buy fuel directly from Iowa ethanol and biodiesel plants as well as from the major oil refineries.
Mandate proponents tout the legislation’s economic impact. Really?
Eliminating Iowans’ choice at the pump, they say, would generate an additional 25 million gallons of annual ethanol sales – less than 1 percent of last year’s total. This minor growth does not justify a mandate. We don’t need an ethanol mandate in Iowa.
Consumer Fuel Choice