Ethanol mandate tries to create demand where there is none - Liberty Justice Center

Ethanol mandate tries to create demand where there is none

Should Chicago gas stations be forced to carry fuel with higher ethanol content? Several Chicago aldermen think so.

Earlier this week, the Chicago City Council’s Finance Committee considered an ordinance sponsored by Aldermen Ed Burke and Anthony Beale that would mandate all gas stations in the city to carry E15, a fuel consisting of 15 percent ethanol.

Most gasoline already contains 10 percent ethanol because of government mandates, and that may increase due to federal Renewable Fuel Standards. Ethanol is supposedly better for the environment because it reduces carbon monoxide emissions when combined with gasoline, but ethanol isn’t as fuel efficient as gas.

At this week’s hearing, Wesley Clark – the former general and Democrat presidential candidate who now works for Growth Energy, a pro-ethanol lobbying organization – argued that E15 would be “good for the economy” and “the environment,” claiming that E15 would sell for about $0.05 to $0.15 less than 87 octane gas. If true, this would suggest consumer demand for E15 would be high.

If that’s true, why have a mandate at all? Businesses should be lining up to carry E15 to attract customers who are desperate for cheaper gas.

Part of the reason they don’t is the high cost of providing it. According the Chicago Sun-Times, no station in the city is certified to provide E15. The Illinois Retail Merchants Association estimates upgrades for E15 sales cost anywhere between $8,000 to $100,000 for any single station. While some small gas stations would be exempted from the Chicago E15 mandate, the high upgrade costs have also deterred larger stations from carrying it.

Cost aside, this issue is ultimately one of freedom of choice. The ethanol market is already fueled by subsidies and mandates to stay afloat, which shows that market demand for it is weak. If consumers really wanted a product, government wouldn’t have to force them to buy it or businesses to sell it.

The fact that they resort to mandates strongly suggests E15 is a bad deal for consumers and businesses alike.

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