Corn Belt Politicians Are Using High Gas Prices To Push Even More Carveouts for Ethanol

With the average price of gasoline in the U.S. reaching its highest level since the start of the Iran war, lawmakers are thinking about giving energy producers special treatment to supposedly cut costs at the pump.

As part of the negotiations over the Farm Bill, which is expected to be voted on by the House of Representatives this week, a bipartisan group of Corn Belt lawmakers is proposing a measure to authorize the sale of E15—gasoline with an ethanol content up to 15 percent—year-round. This fuel is typically not allowed to be sold in the summer months because it evaporates easily, which contributes to air pollution and smog. (The Trump administration waived requirements last month to allow for E15 to be sold this summer, citing high gas prices.)

The proposed amendment would also limit blending exemptions for small refineries under the Renewable Fuel Standard (RFS)—the federal law that requires refiners and fuel importers to ensure that a certain percentage of the transportation fuel sold in the U.S. comes from renewable fuels, the most common of which is ethanol. Compliance with the RFS is estimated to cost refineries about $70 million in both 2026 and 2027, according to the energy consulting firm Turner, Mason & Company.  

“At a time when consumers are acutely sensitive to energy prices, this amendment represents a pragmatic solution that balances energy affordability, rural economic strength, and regulatory certainty,” said a coalition of agricultural and energy groups in a support letter for the measure. Additionally, its reforms to RFS exemptions “will help restore transparency and predictability for all parties subject” to that law. 

It doesn’t seem like “all parties” are on board. 

Last week, the National Corn Growers Association published a press release calling out a group of “oil corporations” for attempting to “derail legislation that lowers fuel prices.” 

“There is a tiny minority of major energy corporations – like Delek U.S. Inc., Cenovus Energy, CVR Energy, HF Sinclair, Parr Pacific Holdings and Suncor Energy Inc. – that are masquerading as small refineries to get Renewable Fuel Standard exemptions they don’t need,” said the association’s president, Jed Bower. “Their greedy actions are holding up legislation that would help farmers who are struggling during tough economic times.”

It’s unclear how many exemptions these companies have been granted or how much they save, since the Environmental Protection Agency does not publish which companies are granted RFS waivers. But the mere fact that the industry is lobbying so hard to reduce exemptions indicates that the cost is “very likely significant” for small refineries, says Ben Lieberman, an energy expert at the Competitive Enterprise Institute. The firms did not respond to Reason’s request for comment.

Still, even if this amendment doesn’t go into effect, corn farmers and the ethanol industry are unlikely to be hurt since they will continue to be propped up by taxpayers. 

In addition to being supported by the federal government mandating ethanol be made, the industry has benefited from generous federal subsidies for years. From 2009 to 2020, it received more than $60 million from the Agriculture Department to spur the development of next-generation biofuels. Most of this money, however, went to supporting incumbent corn ethanol producers and expanding their production, according to Taxpayers for Common Sense.   

The corn lobby was handed another win in 2022 with the passage of the Inflation Reduction Act, which expanded tax credits and subsidies for a variety of clean and alternative fuels. Last summer, the One Big Beautiful Bill Act changed eligibility requirements for one of these tax credits to allow more ethanol facilities to qualify. The Treasury Department estimates that this credit will cost taxpayers $53.1 billion through FY 2035. 

While the sale of E15 will certainly be a boon for ethanol producers, it’s not clear that consumers will stand to benefit. E15 is cheaper—usually by 5 to 10 cents—than gasoline with lower ethanol levels, but not all manufacturers “have adopted the parts needed to accommodate ethanol fuels,” reports The Hill. E15 is also less energy-dense than its counterparts, which means that drivers may experience reduced fuel efficiency, rendering the savings at the pump moot. 

“The sale of E15 year-round would help the ethanol industry and no one else,” Joshua Sewell, director of research and policy at Taxpayers for Common Sense, tells Reason. “It isn’t about consumer choice, it’s about using the heavy hand of the federal government to force more consumption of corn.”

Sewell says the best thing lawmakers can do to “create more stability and predictability for farmers, consumers, and taxpayers” is to end President Donald Trump’s tariffs on foreign goods. For farmers, these trade policies have raised the price of fertilizer and other inputs, which will likely be passed on to consumers through higher food costs. In both the first and second Trump administrations, the federal government has attempted to soften the blow of these trade policies by offering multibillion-dollar bailouts to farmers, a quiet omission that tariffs don’t work. 

Another option that lawmakers might consider is ending the RFS altogether, which would save consumers billions of dollars—the R Street Institute estimates that the law added nearly $164 billion in costs to consumers from 2014 to 2023—benefit the environment, and potentially reduce food prices. Rep. Scott Perry (R–Pa.) has introduced an amendment to the House Farm Bill that would do this, although its passage seems unlikely. 

As it stands, a sizable coalition of Republicans is threatening to withhold its support for the Farm Bill over provisions related to pesticide use. Given the lavish subsidies that taxpayers have given to the ethanol industry over the years, perhaps lawmakers ought to add these proposed carveouts to their list of reasons not to support the bill.