High Motor Fuel Prices through Ethanoll

Open email to Rep. Fred Upton (MI), Chairman of the Committee on Energy and Commerce:

Dear Rep. Upton,    The following concerning gasoline is from one of my Associates:
" You may or may not have noticed that gasoline prices are going up.  Normally, gasoline prices follow the price of crude oil because of the accounting rules that refiners use for valuing inventory. (That's another story)  However, the price of crude oil has been fairly stable.  What's going on?

    It turns out we are being victimized by the federal government. Are you surprised? The problem is the federal mandate for ethanol in gasoline. The Congress in its wisdom has decreed increased volume of ethanol for motor fuel at a time that the volume of gasoline is fairly stable.  That means that the percentage of ethanol in gasoline would have to increase beyond the current levels of about 10%. However, automotive automobile companies have warned that such a move might damage some engines and refiners are reluctant to expose themselves to lawsuits for engine damage.

    Therefore, they use another provision of the mandate to buy an exemption from the EPA rule.  But the price of those exemptions keeps rising because the demand exceeds the supply. (Econ 101).  Therefore, the refiners simply pass that increasing cost along to their customers.

    The use of ethanol in gasoline back in the 1980s had a marginal positive effect on unburned hydrocarbons from gasoline engines.  That problem was eliminated when catalytic converters were added to engine exhausts.  At this time there is absolutely no need for ethanol, and the price of gasoline would fall if its use were eliminated.

    Unfortunately, the federal government under Obama is not driven by economics but by catering to the farm states; the ethanol lobby and the environmentalists.  There is some fantasy that ethanol reduces carbon dioxide emissions.  It is a total fantasy.            

    However, it fits their narrative that ethanol in gasoline reduces the rate of global warming.

    Would you like to buy a bridge in Brooklyn?"

    I say additionally:

    New oil discoveries in the US, improved drilling techniques, and the recently improved process of oil recovery from shale have contributed considerably to Continental US oil reserves. Those oil reserves can now be developed for public use to significantly decrease and perhaps eliminate importation of crude oil. Conservationists say that because the quantity of oil reserves has a reasonably definite life, it should be conserved. With your help, the Obama Administration seems to be following that philosophy by denying permits for drilling and even prohibiting construction of a pipeline from Canada for more than a year. This latter is not a US conservation matter, but rather a method to deny crude oil availability in order to promote wind and solar energy at great public expense, through subsidies.
    Some years ago, when we were especially vulnerable to the variability of Middle East oil imports, Congress established a program of mandating ethanol usage in gasoline in order to extend the automotive fuel supply. This was also associated with subsidies to producers of ethanol from corn and an anticipation that ethanol would ultimately be produced from cellulosic biomass.
    Representative Upton, the energy world has changed. Crude oil is now available on a worldwide basis at higher production than ever before, and as I said previously, US reserves have increased tremendously. We no longer need ethanol to augment our automotive fuel supply. We have the oil reserves and private industry only needs permission to drill and produce from the vast holdings of federal land. The mandate requiring any ethanol addition to build a fuels, either from corn or cellulosic biomass, should be eliminated and subsidies for production of ethanol by those roots should be immediately discontinued. If ethanol can compete cost-wise with gasoline, without its various subsidies and mandates, and private industry wishes to add it to gasoline, I have no objection.
    While we are on the general subject of energy, I again request that the Congress eliminate the Department of Energy, which has probably done more damage to the United States economy and its development than any other agency.