Ethanol Fuel Choice Facts

Iowa ethanol plants are celebrating a record year in 2009, with 3.1 billion gallons of ethanol product, 39 ethanol plants up and running and renewable fuels accounting for 8 percent of the state’s Gross Domestic Product. Do these figures represent an industry that needs to eliminate competition and consumer choice at the pump?

No Fuel Choice = Higher Prices

Consumer Demand Cannot Be Legislated
Iowans know the value sustainable agriculture brings to our state in the form of food and fuel. In fact, more than 80 percent of all Iowans voluntarily use ethanol-blended gas, according to the most current Iowa Department of Revenue statistics. Iowa retailers also support biofuels. More than 95 percent of the state’s 2,234 retail locations selling gasoline offer ethanol blended products.

Still, ethanol producers want to mandate ethanol blends in all gasoline sold in Iowa. They want to eliminate Iowans fuel choice to, by their calculations, sell another 25 million gallon of ethanol in Iowa, or less than one percent of last year’s total production.

If a mandate is passed, not only is consumer choice lost but so is marketplace competition — and competition among suppliers and between retailers is what drives fuel prices down. Advocates for this mandate claim that ethanol blend prices would be “5-7 cents lower” than straight gasoline. That’s certainly not what we’ve seen in Minnesota, where the price of fuel is consistently higher than the price of fuel in Iowa.

Additionally, one of the reasons Iowan's enjoy low fuel prices because of the number of independently owned and operated convenience stores across the state. Mandates that disrupt the competitive marketplace and force retailers out of business not only hurt small business owners and cost jobs, but ultimately consumers lose when competition is removed from the market place.

Iowa Taxpayers Shouldn’t Fund Another Bailout
Eliminating consumer choice at the pump doesn’t make sense. A mandate is simply a bailout for a small group of investors at the expense of all Iowans.

Should Iowa taxpayers be forced to fund the state’s ethanol industry? That’s exactly what we are doing with a product mandate, and we’re not even asking these businesses to pay us back when all is said and done. If Iowa Legislators truly believe this industry is the key to our future, perhaps the answer is simply offering support by state-backed loans. Let the burden of risk remain with the investors, and let our free market system remain intact.

Moving Forward…
With federal biofuel mandates already in place and the 2006 Iowa Renewable Fuels Standard supporting these requirements, there is absolutely no need for biofuel mandates in Iowa. We need to continue on the path set by the existing standard. It has helped encourage consumer demand and created the infrastructure necessary to market more renewable fuels.

Our goal should be to create demand for Iowa products and sell more ethanol nationwide. Work should continue on the federal level to grant liability protection to retailers for their equipment. Provide these Iowa retailers — who have always supported the biofuels industry — to safely market biofuel products and sell more ethanol featuring blends beyond today’s standard E10 blend .