Earlier this evening, a sense of dread overcame me as I filled my car with gas. As I watched the meter run over $60, I could feel my wallet let out a quiet weep of despair. While I stood there watching my bank account deplete, I noticed a sticker on the gas pump that said, “Contains 10% Ethanol.”
After a bit of research, I realized that I had stumbled upon a classic case of Stilger’s capture theory. The reason that I was pumping fuel that contains 10% ethanol comes from a program called the Renewable Fuel Standard. This program requires that a certain volume of “renewable” fuel be mixed in with any transportation fuel (gasoline) sold in the U.S., which, in theory, will reduce the quantity of fossil fuels used and thus help the environment by reducing emissions.
Since its implementation in 2005, the main benefactor of this program has not been the environment but instead the agricultural industry–particularly corn producers. Since the RFS was put into action, over a third of corn production in the US has been devoted to ethanol production. This new, steady demand for corn has led to negative production externalities such as the destruction of natural habitats (to turn land into corn fields) and water pollution from fertilizer runoff. Critics of the RFS have cited these environmental concerns and increased consumer costs as incentives to do away with the program.
The RFS began as a promising program. Still, its effects have not been as intended, and it now primarily serves special interests who benefit from the market for corn it creates (as well as providing a barrier to entry for alternatives such as foreign oil).
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