The Irony of Iowa's Ethanol Exemption

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This morning, the Des Moines Register is reporting on the death of a piece of legislation—SF 2359—requiring that all gasoline sold in Iowa contain at least 10% ethanol.

This morning, the Des Moines Register is reporting on the death of a piece of legislation—SF 2359—requiring that all gasoline sold in Iowa contain at least 10% ethanol.

Although Iowa is the biggest ethanol-producing state in the US, only about 73% of the gasoline sold in the state contains ethanol. Iowa has about 3.3 billion gallons of ethanol production capacity, more than twice the capacity of the next-biggest producer, Nebraska. The ethanol industry wants federal regulators to allow fuel retailers to sell gasoline that has been adulterated with up to 15% ethanol, and they need that regulatory relief because fat federal subsidies led to too much investment in ethanol production capacity.

About 28 states and the District of Columbia have mandates on ethanol-blended gasoline. Earlier this year, top Iowa legislators hoped to add Iowa's name to that list. But earlier this week, Jack Kibbie, a Democrat from Emmetsburg and President of the Iowa Senate, decided not to subject the bill to a full debate before the Iowa legislature. "People don't like mandates," he said, "and of course the petroleum marketers didn't like it."

At the very same time that the ethanol lobby is pushing the Obama administration to break the "blend wall," which prohibits gasoline retailers from selling fuel containing more than 10% ethanol, the Iowa legislature can't even pass a measure that would require Iowans to buy gasoline containing 10% ethanol. Oh the irony.

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