August 17, 2010
In An Open Market, All Fuels Can Compete
In his most recent op-ed, UNICA President Joel Velasco sources a research paper from Bruce A. Babcock of Iowa State University that suggests allowing the tax credit and the tariff to lapse wouldn’t have much of an impact on the U.S. ethanol industry. Growth Energy has repeatedly pointed out that the only reason the ethanol industry needs government support today is because we are arbitrarily denied access to all but ten percent of the fuel market
These government supports are important because ethanol only has access to a small portion of the transportation fuel market. Brazilian ethanol has enjoyed government support in the form of pro ethanol policies for the last three decades. Since 1976 the government has mandated the blend of ethanol with gasoline, as high as 25 percent, and the production of Flex Fuel Vehicles – roughly 90 percent of their current fleet.
Babcock’s paper is based on the assumption that the EPA approves a move to E15 and it results in the use of a lot more ethanol. If the ethanol industry gets access to a bigger share of the market, the government supports aren’t as important. That’s essentially what we’ve said in our Fueling Freedom Plan. But our plan goes much further. By eliminating artificial market barriers we can open the market and force all fuels, including Brazilian ethanol, to compete for the consumer’s dollar.
Velasco is right when he says that “competition works.” But we can only compete in a fair and open market where consumers have access to all fuels. Redirecting current U.S. government supports to the build out of blender pumps and flex fuel vehicles will enable consumers to choose an alternative fuel at the pump. With the infrastructure is in place, government supports for ethanol become less necessary.
