Considering all the harm that corn-based ethanol causes — from damaged engines to reduced mileage to higher food costs — one of the easiest ways the federal government could save money would be to eliminate the massive, taxpayer-funded subsidies it provides for ethanol production.
Instead, Washington is set to make the ethanol boondoggle even bigger.
U.S. Agriculture Secretary Tom Vilsack recently announced that Washington will be handing out special grants and loans to gasoline stations that install more pumps that can dispense so-called E-85. That’s a mix of 85 percent ethanol and 15 percent gasoline.
E-85 can be used in only a small percentage of the cars that are currently on the road. But the Obama administration wants greater use of E-85, so it is offering money to stations that install the pumps.
Doesn’t the fact that the administration has to provide those funds prove that ethanol is unable to stand on its own in the free market? Think about it: If there were high demand for E-85, gas stations would not hesitate to install pumps to dispense it, because they would know they could get a good return on that investment.
But instead, the so-called “demand” for ethanol is driven almost completely by government meddling in the market. And that is doing serious harm. Diversion of corn to ethanol production has now pushed U.S. corn reserves to their lowest level in 15 years, The Associated Press reported recently. That will mean higher food costs.
This latest waste of taxpayer dollars on ethanol is one more example of how our federal government often throws good money after bad.