Somber news came out of AAA this week: the nationwide average price per gallon for gasoline has been above $3.00 for over 1,000 days straight. This is a new and unprecedented record and undoubtedly one of the unsung reasons why the national economy continues to flounder in what the Obama Administration embarrassingly champions as a recovery.
The implications of this unsavory distinction are obvious to average American business owners and families that are stuck holding bigger bills for everything from groceries to utilities. Yet, apparently, some members of Congress think almost 3 years of record high prices for a commodity as essential as gasoline just isn’t enough.
The issue at hand is the Renewable Fuels Standard, or RFS. This law forces Americans to buy increasing amounts of ethanol and other biofuels that the government demands refineries to blend into the national fuel supply. The problem is that the amount of ethanol required by the government to be mixed into the fuel supply no longer matches up with the 2007 forecast of fuel consumption in the United States. The economic downturn and new efficiency standards from the EPA are causing Americans to use less gasoline. Yet the rigid standards set out by RFS are still demanding that the same arbitrary amount of ethanol be blended regardless of the fact that fuel blends with higher ethanol content can damage engines and don’t work with the infrastructure in place at the overwhelming majority of the nation’s fuel stations.
This phenomenon has been referred to as the blend wall. Companies will either have to make major infrastructure investments to adapt to the new standard or they will simply export their refined product to other countries. Either way, prices at the pump are set to skyrocket as early as next year.
This is a classic failure of big government central planning, with obvious unforeseen consequences that should prompt immediate action from our elected officials. Yet Congress remains frozen on this issue. Normally the blame would rest with big government liberal Democrats that adore this type of economic mismanagement.
Yet on the RFS, Americans will have so-called “conservative” members of Congress like Rep. John Shimkus (R-IL) to blame for 5, 6, or even 7 dollar-per-gallon gasoline. Instead of moving to act swiftly with his colleagues on the House Subcommittee on Energy and Power who recognize the current crisis and looming catastrophe that awaits the American people, Rep. Shimkus is apparently more than content with leaving the American people at the mercy of the most radical EPA in history.
Shimkus is willing to hold on legislation direly needed to keep fuel markets stable because he is willing to pass the buck to the EPA in hopes that Obama’s personal army of climate and environment zealots will do the right thing and adjust blending requirements. Shimkus is referring to the same EPA that, mind you, has placed nearly untenable fuel economy standards on the bailed-out auto industry and is now set to effectively kill the coal industry despite the fact that the resource provides the nation’s most affordable and domestically available power.
Leading economists, scientists, and industry leaders agree that the RFS must be addressed. The evidence is painfully obvious that the status quo is untenable. Yet Shimkus’s stance flies in the face of the free market principles that conservative Republicans were sent to Washington to protect. Why?
It’s because Shimkus isn’t committed to protecting free markets. Instead, he wants to protect artificial markets supported by rich farmers and corporate crony interests. Shimkus is standing in the way of free market reform that could save thousands of jobs and billions of dollars so that he can ensure a market exists for the inefficient fuels that his donors like Archer Daniels Midland (ADM) produce. ADM - headquartered in Decatur, Illinois, just miles outside of Shimkus’s district - has donated $22,500 to his Congressional campaigns since 1998, including a $6,000 donation just last year.
To his defense, the Congressman isn’t shy about his defense of big business. He has explicitly cited the billions of dollars of investments that big ethanol has made because of the RFS. Shimkus believes that repealing, or even just freezing, the ethanol blend requirement “sends terrible market signals.” Is $5 to $7 dollar a gallon gasoline not a ‘terrible market signal’?
Congressman Shimkus and, sadly, many of his colleagues have again proven that Washington is no longer about R’s vs. D’s. It’s about them versus us. Despite the fact that the RFS is set to reduce GDP by $770 billion by 2015, entrenched interests in Congress are more interested in creating economic playgrounds for powerful people and companies in their districts than making sure the EPA doesn’t turn the commodities that you, your family, and your business need into luxuries.