Argument Against E15 Ordinance

Taylor Smith, policy analyst at The Heartland InstituteThe City Council’s Finance Committee held a hearing to discuss a proposed ordinance to require self-service gas stations to provide E15, a gasoline blended with 15 percent ethanol.

While the move is being touted as a way to save consumers cash, an analyst at The Heartland Institute says E15 gasoline won’t save motorists money at the pump.

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“I think it’s well intended because Chicago has high gas prices,” said Taylor Smith, a policy analyst. “It’s noble to try and pursue an ordinance or consider an ordinance or do something to reduce Chicago’s dubious status of having the highest gas prices of metropolitan areas in the country.

“I think a significant body of research has shown [E15] won’t accomplish two of the objectives it set out to do: reduce the cost of gas and greenhouse gas emissions.”

Increasing the amount of ethanol in gasoline is unlikely to have an economic impact.

“The main variable in the price of gas is the price of crude oil,” which is determined based on supply and demand, Smith said, adding government cannot control the supply and demand chain.

In addition to this, ethanol contains less energy than pure gasoline.

“Ethanol contains 33.33 percent less energy than pure gas,” Smith said. “You will need to make more frequent fill ups to travel the same distance if you have E15.”

As for reducing greenhouse gas emissions, a study published in the peer-reviewed journal Climatic Change reveals ethanol may not reduce carbon dioxide levels as much as claimed.

“A paper published in September 2013 found that burning ethanol emits 2 percent less CO2 emissions than gas,” Smith said. “That’s a very insignificant amount.”

Corn that is grown to produce ethanol doesn’t absorb more carbon dioxide than corn grown to produce corn flakes, he added.

If there was a high demand for E15, retailers would choose to sell it on their own, Smith said.

“I think government shouldn’t pick the winners and losers, [or] pick the fuel of the future,” Smith said, adding the market and consumers will determine what the fuel of the future will be. “Gas prices are high at the moment. There’s a rise in demand from China and India. It creates a large economic incentive for investors to find what the alternative will be.”

There’s an easier way for city officials to save consumers cash at the pump.

“If [the city] wants to break away from the dubious status of having high gasoline prices, it needs to get rid of the double tax on gasoline and not apply the sales tax,” Smith said. “[Illinois] is one of seven states that double taxes gasoline. Like other states in the nation, it has the motor fuel tax which pays for roads and bridges, but Illinois is one of seven that applies the normal sales tax on gasoline. That sales tax can go up or down based on the price of crude oil.”

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