EDITORIAL: The gas ‘tax’ most don’t know about

Corn mandates are partially responsible for the high prices Nevadans have been paying at the pump. It’s a reminder that taxes aren’t the only way government increases costs for consumers.

As of last last week, the average price of gasoline in Las Vegas was about $3.62 a gallon. A year ago — after the coronavirus catered demand — the price fell below $2.45. Three months ago, it was less than $2.90. People have become so accustomed to prices rising in the summer that few drivers take the time to consider why they’re so high in the first place.

One of those overlooked factors is the 2007 Energy Independence and Security Act. That was a fancy way to describe a bill that amounted to a political handout to Midwest corn farmers. The law required that gasoline contain a certain amount of renewable fuel, a category that includes ethanol from corn.

Congress gave the EPA the ability to increase the amount of ethanol that gasoline must contain. Renewable fuel produces renewable identification numbers or RINs. Companies that don’t meet the EPA’s mandates have to buy RINs to make up the difference. It’s similar to a cap-and-trade program for corn ethanol.

As The Wall Street Journal recently detailed, increased fuel economy standards have made it harder to meet the EPA’s mandates. Another problem is that many existing cars can’t handle gasoline that contains more than 10 percent ethanol. It can ruin engines, gas pumps and storage facilities.

Under the Trump administration, the EPA handed out hardship waivers to some small refineries. But the 10th U.S. Circuit Court of Appeals threw out the waiver program early last year. That led to an increase in the price of RINs. President Joe Biden appears likely to increase ethanol mandates and reverse course on granting waivers.

“RINs this week were trading at $1.90 per gallon, up from 15 cents in January 2020,” a Journal editorial noted. “Our sources estimate the ethanol mandate is adding about 30 cents a gallon to the wholesale cost of gas on average. The federal gas tax is 18.4 cents.”

What a rip-off. It doesn’t have to stay this way either. The original law expires in 2022. But before you count your future savings at the pump, the EPA, under Mr. Biden, is working on a new mandate. A new law could be worse. Tesla wants the EPA to give it RINs to sell to fuel refineries, much like it makes millions off other automakers through renewable energy credits.

This is special-interest politics at its worst. The law lavishes benefits on the well-connected, while most drivers never even realize how much it all costs them when they fill up at the pump.