Welcome Back, Carter. Nixon, Too

It's almost a cliché at this point to mention this similarities between Joe Biden and Jimmy Carter. Not that that's stopped us, nor will it when the observation is accurate. But it is worth pointing out that the president isn't the only elected official who seems hell bent on recreating America's most disastrous decade since the close of the Second World War, that is, the 1970s.

The House's Democratic majority overcame some internal opposition to pass legislation on [May 19] addressing high gas prices by cracking down on possible price gouging from oil companies. The bill was approved along party lines in a vote of 217-207. Four Democrats -- Texas' Lizzie Fletcher, Jared Golden of Maine, Stephanie Murphy of Florida and Kathleen Rice of New York -- joined all Republicans in the chamber in voting against the legislation.

The Consumer Fuel Price Gouging Prevention Act, introduced by Reps. Kim Schrier, D-Wash., and Katie Porter, D-Calif., would give the president the authority to issue an energy emergency proclamation that would make it unlawful for companies to increase fuel prices to "unconscionably excessive" levels.

"The problem is Big Oil is keeping supply artificially low so prices and profits stay high. Now I think that when the market is broken, that's when Congress has to step in to protect American consumers," Rep. Frank Pallone, D-N.J., the chair of the House Energy and Commerce Committee, said in a hearing on Monday. "And that's what this bill does: It empowers the FTC to go after the gougers and empowers the agency to effectively monitor and report on market manipulation."

If you're old enough to have watched Rhoda or owned a record by Bread, this move might sound familiar to you. That's because the Nixon administration introduced price controls on gasoline and other consumer goods in the early '70s, while regulations grew up to strangle the expansion of the oil and gas industry throughout the decade. It was a spectacular failure, as anyone with any grasp on basic economics could have predicted. That's why one of the most recognizable images of the decade -- right up there with with the Bee Gees and John Travolta on the Saturday Night Fever soundtrack -- is motorists lined up for miles waiting for gasoline.

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The president of the United States is nearly 80 years old, the speaker of the House is 82, as is the House majority leader, while the Senate majority leader is a comparatively sprightly 71. They were all adults in the 1970s. Indeed, they were all working in politics at the time. You'd think they would remember what a disaster it all was. Isn't the purported advantage of a gerontocracy that the agèd rulers would be able to recall the mistakes of the past and, more importantly, how to avoid repeating them? Perhaps President Biden isn't the only powerful person in a state of cognitive decline.

The Great Ethanol Boondoggle

During the Jimmy Carter administration when gas shortages and long lines at the pumps were high on voters long list of dissatisfactions, a bright idea took hold: mandate ethanol, the creation of gasoline from crops, most especially food stock like corn –about 40 percent of which is  now used to produce it.  It was convenient for politicians on the left. It was renewable. It was domestic and, not least of all, it was a political plus for those who supported it because Iowa was the first primary election in the country and it is corn country.

For decades afterward, even when there was no shortage of available fuel from conventional sources, Congress adored ethanol. Of course, there have always been problems created by the ethanol mandate. It raises the price of food—corn and meat in particular. It can damage car engines and fuel pumps. Two years ago, the Atlantic decried the lost promise of ethanol, once the darling of the Democrats:

 In the United States, the cultivation of corn for ethanol now requires a staggering 38 million acres of land—an area larger than the state of Illinois. By comparison, the total area of cropland used to produce grains and vegetables that humans eat is only about twice that acreage. In other words, the U.S. devotes enough land to corn-ethanol production to feed 150 million people.

The 2007 Energy Independence and Security Act requires ever-increasing amounts of ethanol in gasoline sold in the United States. Small refineries are theoretically allowed to seek EPA exemptions from the mandates when the high compliance costs threaten their operations. Sixty-five small refineries have sought exemptions -- but the EPA has denied every one of them. If they shut down because operations are no longer profitable, East Coast fuel supplies in particular will be hard hit and prices more volatile.

It appears that while hawking renewables at the same time it substantially reduces conventional fossil fuel production, the Biden Administration has decided to increase the blend of ethanol required in gasoline and, in the process, raising gasoline prices even higher. A week ago, the EPA scaled back the corn-ethanol mandate for 2020 due to the widespread lockdowns and now proposes to raise the mandates for cellulosic ethanol, biodiesel, and advanced biofuels. Renewable diesel costs between fifty cents and one dollar more than petroleum diesel, an increase passed on to consumers.

Who benefits from the shift? It's not vehicle owners, because as fuel economy has improved, the quotas have become "increasingly unattainable" and the damage to older cars greater. Refiners are forced to buy credits from EPA to comply with the quotas or turn to more expensive biofuels, which are often imported.

Who's to blame? Not Iowa corn  farmers. It’s the oil giants and hedge funds. And the Iowa corn farmers who banked on their state’s early presidential caucuses to keep them in the ethanol drivers’ seat? Well, the writing  on the wall appeared in 2016 when Ted Cruz, who opposed the ethanol subsidies and mandates, won the Republican primary there.  And their doom was sealed when in 2020 Donald Trump won the presidential race in their home state.

Maybe the only way to kill this program is for oil-producing states to run their primaries before any state that produces the now-favored mandated substitutes for corn-based ethanol.