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Political Editors / June 23, 2018

Ethanol Boondoggle Causing Headaches for Pruitt

The mandate and EPA waivers continue to pit farmers against the refinery industry.

Environmental Protection Agency Administrator Scott Pruitt is finding himself getting the squeeze from competing sides over the ethanol mandate. As the Washington Examiner explains, “The EPA is poised to order refiners to blend more ethanol in 2019 to make up for the agency granting ‘hardship’ waivers to dozens of refiners to help them reduce the cost of blending ethanol in gasoline.” In other words, the EPA is set to increase the total amount of ethanol blended gasoline mandated by the Renewal Fuel Act, which in turn increases the cost of business for the refinery industry. And the refinery industry is clearly not happy about it.

On the other side, farmers and ethanol producers are not happy with the continued extension of hardship waivers. Iowa Democrats have sent a letter to the EPA that states, “The Environmental Protection Agency continues to hurt farmers and undermine the biofuels market by extending waivers to an unusually large number of refineries.” They are essentially demanding an end to the granting of any waivers.

This is a textbook example of the problem with setting up a sector of the economy around a government policy. It always devolves into the politics of the government essentially picking winners and losers, irrespective of the free market. So long as the ethanol boondoggle remains, expect to see more of these needless conflicts of interest.

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