Fuel prices in the United States have reached all-time highs. (Photo by Jared Strong/Iowa Capital Dispatch)
Iowa’s two U.S. senators are touting fuel made from crops — especially ethanol — as a means to replace oil imported from Russia and to cut soaring fuel prices that have reached all-time highs.
“It’s very clear that biofuels provide a quick and easy solution for lowering prices at the pump,” U.S. Sen. Chuck Grassley said Wednesday in a press conference with U.S. Sen. Joni Ernst.
The Republicans said they agree with President Joe Biden’s move on Tuesday to ban imports of Russian oil, coal and natural gas as part of wider efforts to squeeze Russia’s economy for its invasion of Ukraine, which began more than two weeks ago.
However, the senators disagreed with Biden, a Democrat, for his promotion of electric vehicles to decrease the country’s reliance on fossil fuels. Biden, in a speech Tuesday, also said homeowners should get tax credits to update their homes to cut heating costs.
“If we do what we can,” Biden said, “it will mean that no one has to worry about the price at the gas pump in the future.”
About 3% of the United States’ imported crude oil was from Russia last year, according to the U.S. Energy Information Administration.
Ernst said the push for electric vehicles is part of a “reckless and deranged” climate agenda. The rise of electric vehicles threatens to hamper the ethanol industry, and more than half of Iowa’s corn is used to make ethanol. Iowa is also the leading producer of ethanol in the country.
Instead, Ernst and Grassley have joined a bipartisan group of Midwestern senators to support the Home Front Energy Independence Act, a bill that would increase the amount of ethanol in the nation’s fuel supply by making E15 — a fuel blend that contains about 15% ethanol — more widely available, subsidizing the fuel’s production and sales with tax credits, and providing money to upgrade fuel infrastructure to accommodate higher ethanol concentrations.
Can the ethanol industry meet fuel demand?
Ernst said she is confident there is sufficient ethanol production capacity to fill the Russian oil void, but Chad Hart, an Iowa State University professor who specializes in agricultural economics, wasn’t so sure.
Hart estimated that ethanol production would need to increase in excess of 30% to replace what is imported from Russia if all of that oil is used for fuel.
Ethanol surpluses and additional production capacities that are available now might be able to handle that increased demand in the short term, “but if we’re talking about a longer-run replacement, it would mean the need to build more ethanol plants,” Hart said.
A true picture of the potential ethanol demand is complicated, in part because not all of the imported oil has been used for fuel.
Monte Shaw, executive director of the Iowa Renewable Fuels Association, said there is sufficient production capacity right now based on his association’s estimates of how much of that oil is refined into fuel. Demand for ethanol plummeted at the start of the coronavirus pandemic and hasn’t fully recovered.
“Today, there’s anywhere from 2.5 to 3 billion gallons of ethanol production capacity that’s sitting there ready to roll, it’s just not being used because the demand’s not there,” Shaw said.
However, it’s unclear how long it might take to make the higher ethanol blends available to consumers. Proposed legislation in Iowa to switch from E10 to E15 stalled at the Statehouse last year but has greater support this session. A sticking point is the amount of time and money it will take to upgrade fuel tanks and pumps to handle the higher concentration of ethanol, which can degrade certain plastics and rubbers.
The state legislation — House File 2128 — got overwhelming support in the Iowa House but has languished in the Senate for weeks after being referred to a subcommittee. Fuel station owners are seeking more state funding in the bill to upgrade their infrastructure.
Even if the bill passes, the E15 requirements don’t take full effect until 2026, and there are exemptions for fueling stations that have certain old tanks or face excessive costs to upgrade.
It’s unclear how much support the newly proposed federal legislation might have. It contains aspects of past proposals that did not muster approval.
“It’s political theater, as far as I’m concerned,” said Dave Swenson, an Iowa State University research scientist who specializes in transportation economics. “This is just a reflexive attempt to bolster the ethanol industry by offering up a solution that isn’t a solution to the problems that we have.”
Swenson said he doubts the proposed federal legislation will have a palpable effect on fuel prices — especially in the immediate future — and that lawmakers and the ethanol industry are merely seeking to capitalize on the war to pass a bill that would otherwise lack support.
Shaw disputed that notion and said the nation has failed for years to fully embrace ethanol as a means to offset the need for foreign oil.
“I don’t think it’s opportunistic,” Shaw said. “I think it’s realistic. If we had done stuff like this years ago, we wouldn’t be in this situation.”
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