Hijacked Legacy: Ethanol and the Highway Trust

by
Nicholas E. Hollis*

 (All Rights Reserved)

Americans love the freedom of the open road, from endless Western blacktop to winding country gravel, to the vast network of interstate, limited-access, super-highways which have strengthened links across the Nation over the past quarter-century.  But how many recall that pioneer legislator – Jennings Randolph, then representing West Virginia’s 2nd congressional district in Congress – whose spade work in the 1930s first advocated the creation of a national system of inter-linked superhighways?

As the nation scrambles toward new consciousness on homeland security, it might be worthwhile to reconsider Randolph’s joint resolution and speeches, beginning in 1936, which called for the creation of a superhighway commission, eventually leading to the construction of the modern highway system we take for granted today.

In the depth of the Great Depression, Jennings Randolph saw the nation’s need for improved infrastructure as a vital component of national defense as well as providing economic and safety benefits.  Originally conceived as a toll-financed, “transcontinental” system, Randolph’s proposed construction initiative would have provided millions of jobs and a massive economic stimulus. 

His idea was ahead of its time, seemingly more visionary than practical.  In fact, the successful opening of the Pennsylvania Turnpike’s first section in 1940 provided important real-time support for Randolph’s enthusiasm.  But the country’s attention was focused on the growing conflict in Europe.  During World War II, Randolph recognized the strategic importance of Germany’s vast “autobahn” highway system in launching its blitzkrieg-mechanized divisions on its continental neighbors, particularly Poland, France, and Belgium.

In the mid-1950s, when the Eisenhower Administration adopted the interstate highway concept and put the financial appropriation engine behind it, Jennings Randolph was serving not in Congress.  Yet through his earlier exertions, he could still lay claim to being “Father of the Interstate Highway System.”

A decade later, as a United States Senator for West Virginia and as chairman of the powerful Committee on Environment and Public Works, Randolph added significant infrastructure projects, including the I-79 corridor, an important north/south interstate which links central West Virginia with Pittsburgh and other points north.

Many years down the road the interstate highway system remains one of our nation’s great engineering achievements – a crown jewel – providing links across America’s bountiful expanse.  At interstate junctions, off access ramps, thousand of new towns and businesses have sprouted.  The system has clearly “changed the face” of our country, as President Dwight D. Eisenhower predicted.

While we are more connected as a society today, there are increasingly “thin spots and potholes” we would like to ignore.  Many sections of the interstate highway system, along with other federal and state roads are in dire need of general maintenance.  Ask any trucker or transport professional how deteriorating road/bridge infrastructure harms the economy.  But the inattentive public seems oblivious to the fact that the Highway Trust Fund (HTF) is being drained by hundreds of millions annually siphoned directly to finance a growing ethanol fuel subsidy – one of the greatest highway robbers in history!  Every dollar HTF loses via the ethanol exemption excise tax at the pump is another dollar lost to build/maintain roads.

The Bush Administration has estimated that the HTF has been depleted by 28% due to ethanol use during this year alone, and the problem will only worsen if the new boost for ethanol which easily passed both houses of Congress is allowed to continue and expand next term – as it most certainly will- without an organized citizen response. The legislation calls for a mandated tripling of ethanol use as a gasoline additive by 2012, with a projected to cost of more than $10 billion. 

Ethanol’s success at raiding the HTF provides clear testimony to the lobbying clout of Archer Daniels Midland (ADM) with its minions of controlled agricultural and renewable energy groups, and its lavish campaign contributions on both sides of the political aisle.  Next time your vehicle slams into a pothole or shimmies over a bumpy patch of rough road capable of shaking your suspension or exhaust system loose, flattening a tire or bending an axle, ask yourself if the ethanol subsidy enriching ADM (not the farmer!) is worth it?

In the quarter century since the ethanol began its creep into the wallets and gas tanks of the motoring public (first in Illinois, then Iowa and other corn-belt states, and now beyond), neither the farmers nor  the road users have fared well.  Ethanol producer claims of environmental benefits also appear dubious while there is little doubt that engines function less efficiently with ethanol, breaking down earlier and delivering reduced gas mileage contrasted to conventional unleaded fuels.  These facts have rarely gained public attention, as the ethanol “Reich” has been ruthless and methodical in silencing dissent.

Democracy and its institutions, like the republic’s infrastructure, requires daily maintenance and vigilance.  When Jennings Randolph heard about the ethanol scheme back in the late 1970s, he just shook his head: “It won’t help the people, and it won’t reduce our dependence on overseas oil much either.”  As a big booster of renewable and synthetic fuels, dating back to his early years, Randolph became chairman of the Agri-Energy Roundtable (AER) after retiring from the Senate in 1985.  Later, the United Nations accredited AER forum became a major battleground over these related issues, as aggressive ethanol promoters sought to remake the association into another mouthpiece for ADM.  Randolph, to his everlasting credit, and others, resisted, but the juggernaut rolled on.  Today, his pioneering, populist spirit would surely be outraged with the sneaky diversion of funds from road building/maintenance to ethanol.

A study commissioned by Congress earlier this year estimated that the ethanol expansion provision in the Senate-passed version of the energy legislation would reduce funding for the HTF by more than $800 million next year. The biggest losers in this scheme would be transportation departments and motorists, especially in California, New York, Texas, Pennsylvania, and Florida.  West Virginia would lose upwards of $90 million.  The damage being done to our infrastructure is cumulative dating back to earlier days of ethanol when Federal Highway Administration officials calculated the losses to HTF at $225 million in 1984 and $480 million in 1986.  As ethanol use has increased these HTF losses have grown disproportionately.  Like greedy moths in the closet, the ethanol lobby’s political contributions and sway with key farm states allows them to eat away at the fabric of the Nation’s infrastructure. If we do not mobilize soon to curb this highway robbery, there may not be much left of our roads – or even our heritage and the underlying, old-fashioned values, which engineered them in the first place.

In July 2005, the passage of the Energy Policy Act combined with previously enacted legislation designed to shift the ethanol subsidy from the Highway Trust Fund (HTF) to a direct raid on the U.S. Treasury. The ethanol lobby also garnered a guaranteed mandate for new production levels at 2012. Thus, big ethanol forced oil companies and motorists alike to swallow the additive and a resultant steep gas spike at the pump. No one has yet figured out how to replace the billions siphoned from the HTF for a quarter century, and the nation's infrastructure remains in much need.  Massive diversions of corn from feed/food uses to ethanol -- also a result of the Energy Policy Act -- have sparked large price hikes for meat, milk, other dairy products, and beer at the nation's grocery stores.

Notes for Further Reading

“Tax Nexus between Federal Transportation, Energy and Environmental Policies” by David Bauer, American Road and Transportation Builders Association (ARTBA), Congressional Staff Presentation (June 4, 2002).

“Study on Ethanol Mandate Impact on S. 517” by Nick Economides, Hart Downstream Energy Services (April 2002).

“In Rural Areas, Interstates Build Their Own Economies” by Peter T. Kilborn, New York Times (July 14, 2001).

 “Public Roads: Special 40th Anniversary Edition of Interstate System” by Richard F. Weingraff, Federal Highway Administration/DOT (June 1996).

 Congressional Record, Vol 80, Part 4 (March 24, 1936), p. 4322.

 Congressional Record, Vol. 81, Part 2 (February 18, 1937), p. 1010.

 Congressional Record, Vol. 84, Part 1 (January 18, 1939), p. 462.
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Mr. Hollis is a director of Jennings Randolph Recognition Project (JRRP) and president of The Agribusiness Council (ABC).

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