Do you think the Obamacare rollout raises important questions about government mandates, penalties and just how well bureaucrats can manage complicated issues? It’s not alone. There are a number of similarities between Obamacare and an energy mandate known as the “renewable fuel standard.”
Just consider: The federal government mandates consumers use both products (health insurance and renewable fuels) because the vast majority of people otherwise wouldn’t. It sets the guidelines for what must be used, and heavily subsidizes the effort with taxpayer dollars. In both cases, the government imposes penalties for not using the product —even if the products can’t be accessed. The government assured us both would lower costs when they obviously raise consumers’ costs significantly. Both products could be very harmful, though the government continually denies it.
Other than that, both Obamacare and the renewable fuel standard work just fine.
In 2005, Congress passed the first renewable fuel standard (RFS), mandating that by 2006, a minimum of 4 billion gallons of renewable fuels, such as corn-based ethanol, be used in the national transportation fuel supply.
Then in 2007, Congress expanded the mandate to 9 billion gallons by 2008, and 36 billion gallons by 2022. However, no more than 15 billion gallons could be produced from corn-based ethanol and no less than 16 billion gallons from cellulosic ethanol—a biofuel made from organic material such as switch grass and wood chips. As with Obamacare, very few people would demand that ethanol be mixed in their gasoline, so the government mandates it to try to ensure widespread usage.
Anyone following the news lately knows that people have had trouble accessing the Obamacare website, which has an increasing number of politicians wondering how the government could fine someone for not getting something that isn’t available. That’s exactly what the government does with cellulosic ethanol. Since there is none commercially available, Congress lavished $1.5 billion on companies willing to try to develop it. Several tried; all failed.
Cello Energy Corp. of Alabama, for example, was supposed to produce 70 million gallons, but the company went bankrupt in 2010 without producing a drop. At least Solyndra was actually making solar panels. In 2011, the Environmental Protection Agency (EPA) reduced its cellulosic ethanol target from 250 million gallons to 6.6 million, and later reduced its 2012 goal from 500 million gallons to 8.6 million—a reduction of more than 98 percent. It didn’t help because there was still no commercial production in 2012.
Nonetheless, the fact that there was no cellulosic ethanol for oil refiners to mix with gasoline didn’t stop the EPA from fining them $8 million for not doing so. The refining industry filed suit against the EPA to stop the penalty, and last January a federal judge agreed.
The government keeps raising the amount of renewable fuel to be used each year, even though U.S. gasoline consumption has been flat. The only way to achieve that goal is to put more ethanol in each gallon of gas, so the EPA has proposed raising the “blend wall” from 10 percent ethanol in our gasoline to 15 percent. Car manufacturers, though, are complaining that “E15” is too rich for older car engines and could ruin them.
If all of this sounds a lot like the government’s effort to impose Obamacare, that’s because it is. Some politicians and bureaucrats have a vision they want to impose on the rest of us—for our own good. Just because their system is impractical, costly and doesn’t work—or may even cause us harm—is not a sufficient reason from them not to impose that vision, and penalize us if we don’t submit.•
Merrill Matthews is a resident scholar with the Dallas-based Institute for Policy Innovation.