The People of America's Oil and Natural Gas Indusry

The RFS and Looking Out for Consumers, Real Choice

Mark Green

Mark Green
Posted November 1, 2013

It’s understandable that supporters of the Renewable Fuel Standard (RFS) might be anxious these days. Consider that EPA reportedly is thinking about lowering its 2014 ethanol mandates under the RFS, and that more than 160 members of the U.S. House of Representatives are urging the same in a letter to EPA Administrator Gina McCarthy:

“… despite the best intentions of the RFS, its premise and structure were based on many assumptions that no longer reflect the current market conditions, and the imposition of the 2014 volumes now threatens to cause economic and environmental harm. … We therefore urge the EPA to consider a fair and meaningful nationwide adjustment to the ethanol mandate in the Renewable Fuels Standard. Prompt action by the EPA can help to ease short supply concerns, prevent engine damage, save jobs across many U.S. industries, and keep families fed.”

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If your mission is to ensure that the RFS, with its mandates for ever-increasing ethanol use, remains unchanged, these are concerning signs. Which might help explain the breaking bad recently wrought by the ethanol lobby on AAA because the motoring organization also asked EPA to lower its 2014 ethanol mandate. Renewable Fuels Association President and CEO Bob Dinneen called AAA “the puppet of Big Oil” and suggested the venerable 54 million-member organization isn’t putting consumers first.

AAA’s message to EPA cites the approaching “blend wall” and pressure for increased use of E15 and E85 gasoline. Vehicle owners could be stuck with damaged engines, fuel systems and other issues as a result. AAA:

More realistic targets would protect drivers by preventing a possible surge in gas prices or the increased use of potentially damaging E15 gasoline. … AAA would expect negative consumer consequences were ethanol requirements to exceed ten percent of expected gasoline sales given that most cars can only use E10 gasoline, which contains 10 percent ethanol.

AAA President and CEO Bob Darbelnet:

“It is just not possible to blend the amount of ethanol required by current law given recent declines in fuel consumption, and it is time for public policy to acknowledge this reality. The EPA should lower ethanol targets immediately as part of the proposed 2014 RFS rule to support consumers and promote alternative fuels. … There is a real opportunity to put motorists first in what has been a very contentious disagreement between various industries. Gas and car maintenance costs are high enough as it is, and it would be a relief to know that the RFS will not cause significant problems for consumers next year.” 

AAA says its survey last year found that just 12 million of 240 million light-duty vehicles on the roads were approved by manufacturers to use E15. More than a dozen manufacturers said using E15 might void warranty coverage. AAA:

AAA’s automotive engineering experts believe that sustained use of E15 could result in costly problems such as accelerated engine wear and failure, fuel-system damage and false “check engine” lights in some cars. An overwhelming 95 percent of consumers surveyed by AAA were not familiar with E15, indicating a strong likelihood of consumer confusion leading to misfueling.

Not sure what RFA is seeing in all of this. If anything, looking out for consumers is exactly what AAA is doing, which makes RFA hitting AAA – as it did last year – a little like dissing grandma and apple pie. John Kingston, writing on The Barrel blog:

… the AAA was always a problem for the RFA. At worst, most Americans consider it benign; at best, it’s considered a helpful, neutral voice on issues related to driving a car. And for months, it has said it supports ethanol, so casting it as anti-ethanol was obviously impossible. And as a nonprofit trade association, blasting its greed was also not going to work. But most important, while it backs ethanol in general, the AAA has been consistent in saying that E15 can damage car engines, and it should not be used.

Now, a couple of rebuttals to claims RFA unleashed in its latest volley aimed at AAA.

RFS and Energy Security – We’ve discussed ethanol’s role in the fuel supply before, yet ethanol supporters keep asserting that ethanol use is integral to overall energy policy, lowered oil imports and strengthening U.S. energy security. We’ve also posted on that before.

Although the RFS was created partly out of concern for rising oil imports, increased domestic oil production and reduced gasoline demand deserve most of the credit for reducing imports, not ethanol production. Here’s the U.S. Energy Information Administration’s Adam Sieminski during Hill testimony earlier this year:

“Recent and projected reductions in net import dependence primarily reflect the combined effects of the significant lowering in projected petroleum demand growth … and a more robust outlook for domestic petroleum production. Biofuels volumes in response to the RFS program play only a small part in reducing projected net import dependence …”

Marketing higher blend ethanol fuel – RFA claims the “blend wall” wouldn’t be a problem if higher ethanol blends like E15 and E85 were marketed more effectively. There’s little evidence in the marketplace to suggest this could be correct. We discussed weak consumer demand for E85, resulting because motorists have realized that E85 has less energy content, per gallon, than gasoline. In other words, while E85 often has been priced lower than gasoline per gallon, E85 has cost more to go the same number of miles. More Sieminski:

“… one important behavioral question is when consumers start to notice the impact of ethanol’s lower energy content per gallon on the range provided by a tankful of fuel and factor that impact into their buying decisions. Experience in Brazil, where high-percentage ethanol fuels are widely sold, suggests that consumers consider energy content pricing rather than simply buying the cheapest gallons.”

Much is heard from RFA about consumer choice for fuels that few want (E85) or that could damage engines (E15) – even as it attacks one of America’s premier consumer organizations for warning about the risks to vehicles posed by E15. Yet, RFA ignores the fact that the “blend wall” is forcing ethanol-free gasoline (E0) out of the market. In effect, RFA and other ethanol supporters are restricting consumer choice for a fuel that Americans actually want to buy.

ABOUT THE AUTHOR

Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Mark also was a reporter, copy editor and sports editor. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela live in Occoquan, Va., where they enjoy their four grandchildren.