The Irony of Iowa’s Ethanol Exemption

Oh the irony. This morning, the Des Moines Register is reporting on the death of a piece of legislation known as SF 2359. The bill would have required that all gasoline sold in Iowa contain at least 10% ethanol. But Iowa legislators couldn’t garner enough political support for the bill.

You read it right. Iowa, the biggest ethanol-producing state in the US, doesn’t have a requirement that forces consumers to buy ethanol-blended gasoline. The result: only about 73% of the gasoline sold in the state contains ethanol. And according to a story written by Dan Piller, a reporter at the Des Moines Register, the Iowa legislature couldn’t pass SF 2359 because it was “opposed by a coalition that included fuel retailers and marketers and truckers.”

Iowa has about 3.3 billion gallons of ethanol production capacity, that’s more than twice the capacity of the next-biggest producer, Nebraska. Iowa’s ethanol industry and farm lobby plays an outsized role in US politics. Every four years, presidential candidates must make the haj to Iowa and bow down before the ethanol industry while  proclaiming their loving support for corn ethanol. The 2008 election provided hard proof of the importance of the Iowa ethanol industry. Both Hillary Clinton and John McCain – avid critics of ethanol before they began their campaigns for the White House – became ethanol evangelists when they started visiting Iowa.

For decades, US taxpayers and consumers have been paying for the subsidies and mandates that are designed solely for the benefit of the corn ethanol scammers, but Iowans have not shared equally in the pain. About 28 states and the District of Columbia have mandates on ethanol-blended gasoline. And earlier this year, top Iowa legislators believed they would be able to add Iowa’s name to that list. Jack Kibbie, a Democrat from Emmetsburg, who serves as the president of the Iowa Senate had a wonderful quote in Wallaces Farmer:

We hear from critics here in Iowa that a mandatory blend of E10 won’t work, that it will mess up engines on motorboats and lawnmowers…Baloney. With all the lakes and boats they have in Minnesota, many more than in Iowa, they’re doing just fine with their E10 mandate. Remember, this bill we want to pass, Senate File 2359, calls for a 10% blend of ethanol in gasoline for highway use for motor vehicles. It has provisions to provide non-ethanol gasoline for antique vehicles, motorboats, lawnmowers and other small engines.

But earlier this week, Kibbie was forced to admit that his bill was dead. And his explanation was revealing: “People don’t like mandates,” he said, “and of course the petroleum marketers didn’t like it.” So Kibbie and his fellow Democrats decided not to subject the bill to a full debate before the Iowa legislature.

At the very same time that the ethanol lobby is pushing the Obama administration to break the “blend wall,” which prohibits gasoline retailers from selling fuel containing more than 10% ethanol, the Iowa legislature can’t even pass a measure that would require Iowans to buy gasoline containing 10% ethanol. Indeed, the ethanol industry wants federal regulators to allow fuel retailers to sell gasoline that has been adulterated with up to 15% ethanol. And they need that regulatory relief because fat federal subsidies led to too much investment in ethanol production capacity. According to Ethanol Producer Magazine, 19 ethanol plants with a capacity of 884 million gallons per year are now sitting idle. And another 7 plants with 484 million gallons of production capacity are under construction. Meanwhile about 192 plants are operating with total capacity of 12.7 billion gallons per year.

The punchline here is obvious: Iowa, a state that has about 25% of all the ethanol production capacity in the US, doesn’t require its citizens to buy ethanol-blended gasoline. And the Iowa legislature can’t pass a bill to change that because, as Kibbie said, “people don’t like mandates.”

Oh the irony.

ROBERT BRYCE’s fourth book, Power Hungry: The Myths of “Green” Energy and the Real Fuels of the Future, will be published in April.



Robert Bryce will publish his fifth book, Smaller Faster Lighter Denser Cheaper: How Innovation Keeps Proving the Catastrophists Wrong.