06/19/2026
ICYMI: R Street Institute Senior Fellow for Energy Philip Rossetti of argues that the E15 debate exists because of an artificial problem — the Renewable Fuel Standard. The solution? Get rid of the RFS and let the market determine the optimal level of ethanol consumption:
Recent research from the R Street Institute sheds some light on the real costs of the RFS. In examining the additional cost of ethanol per unit of energy relative to gasoline, as well as estimating the additional cost consumers pay at the pump for the program’s compliance, the program has likely cost $199 billion since 2010. The reason for this high price tag comes down to the difference between old assumptions and what occurred in the past. Gasoline prices have not been as high as predicted when the RFS was initially adopted, making ethanol a less economical substitute to gasoline. This observation is further backed up by the fact that other countries with much higher petroleum prices than the United States have much lower rates of biofuel blending. In lay terms, the assumptions that led policymakers to think the RFS was relatively costless were ultimately untrue, and biofuel consumption levels are pushed upward because of the mandate.
But ultimately, from an economics perspective, it does not really matter who is right about the RFS’s cost, because no economic justification for the program exists. The market is better able to determine the optimal mixture of liquid fuels for sale, which will necessitate more ethanol consumption in some years compared to others as the prices of fuel inputs fluctuate. The government has introduced inefficiency into markets by shielding the ethanol industry from competition via the RFS and passing the costs to Americans at the pump.
The debate about E15 blending exists because of an artificial problem stemming from the failures of the RFS. In an ideal world, the market would determine the optimal mixture of ethanol and gasoline, but the tension between environmental regulations and the government mandating enormous purchases of ethanol has created this problem. From a policy standpoint, the solution is obvious: get rid of the RFS, and let the market determine the optimal level of ethanol consumption instead of politicians.
READ MORE: https://riponsociety.org/article/will-americans-benefit-from-year-round-e15-sales-no/