API wants Congress to repeal, not reform, federal RFS

The American Petroleum Institute is bringing refining executives to Washington, DC, to convince Congress and the White House that the federal Renewable Fuels Standard should not simply be reformed, but fully repealed.

“Our sense is there’s no support in Congress for keeping the RFS as it is,” said Bob Greco, API downstream group director. “Some members want to repeal it; some want to reform it. We’re telling the House Energy and Commerce Committee, which is looking at the problem, that repeal is the best solution. That’s why we’ve mobilized our grass roots network to contact members of Congress and the White House.”

Assumptions behind the 2007 Energy Independence and Security Act’s expansion of the RFS, which the 2005 Energy Policy Act established, have not been borne out, creating a “reality gap,” he told reporters in a Sept. 17 teleconference.

“For starters, demand for gasoline is down,” Greco said. “The US Energy Information Administration now estimates we will use 424 million fewer barrels of gasoline this year than it projected, a trend that is expected to continue. The mandated ethanol volumes are completely out of touch with today’s fuel market reality.”

US crude oil production has grown and imports have decreased, with EIA projecting that the US will produce 64 million more and import 241 million fewer barrels than was projected back in 2007, he continued. “Our nation’s energy security outlook is much improved not through ethanol mandates but through increased domestic production, a primary goal of the RFS,” Greco said.

Consumers have largely rejected flex-fuel vehicles which can use higher ethanol blends because mileage drops as more ethanol is used, and advanced cellulosic biofuel levels Congress expected have fallen short year after year, he said.

‘Dangerous relic’

“While the RFS may have been well-intentioned 6 years ago, it is a dangerous relic of America’s era of fuel scarcity,” said Greco. “Today, the RFS is not just outdated; it is bad public policy that is poised to harm millions of consumers.”

Hours earlier, Fuels America, a coalition which includes Growth Energy, the Renewable Fuels Association, and other groups representing fuel ethanol producers, said a new survey shows consumers overwhelmingly support gasoline with a 15% ethanol blend, and retail outlets’ equipment can be retrofitted for higher ethanol levels easily and at a low cost.

Greco said fuel ethanol proponents are being dishonest when they say gasoline with higher ethanol concentrations costs less per gallon than regular gasoline. “When you adjust the cost of ethanol vs. gasoline on a BTU basis, gasoline has always been cheaper than a gallon of E85,” he explained. “The consumer benefits of buying an E10 blend make more sense.”

A growing number of people and groups are calling for the RFS’s repeal, “but we understand that will take time,” said Greco. “That’s why we’ve also petitioned EPA to provide a stop-gap measure and reduce the total renewable fuels volume requirement to a level below 10% of overall gasoline demand for 2014.”

EPA acknowledged there are problems with the RFS when it said it would study the blend wall issue in formulating its 2014 mandates as it issued its 2013 quotas, he said.

“So far, it’s doing a very poor job,” Greco said. “The 2013 mandates didn’t come out until this August. The 2014 mandate is supposed to be finalized by November, but it will take months for the agency to receive and consider comments first. We want EPA to do what it can in the short term but what it’s done is not sufficient.”

Contact Nick Snow at nicks@pennwell.com.

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