The People of America's Oil and Natural Gas Indusry

Listen Up - Consumer Impacts of the RFS

Mark Green

Mark Green
Posted December 4, 2013

With the first public hearing on EPA proposals for 2014 ethanol use scheduled Thursday, policymakers should pay attention to how ethanol mandates under the Renewable Fuel Standard (RFS) are affecting regular Americans.

This theme was recurrent during a gathering of diverse, consumer-oriented groups on the eve of EPA’s hearing: RFS mandates are negatively impacting everyday American life, from the fuels we use to the costs of what we eat, and could do additional harm unless Congress takes major action.

robgreen_shareableTurkey and chicken producers cite RFS mandates for diverting more corn to ethanol production, resulting in higher costs for feed. The National Chicken Council’s Mike Brown says since the RFS went into effect in 2007, his industry’s input costs have gone up $8.8 billion. Four of every 10 ears of corn are going into ethanol production because of RFS mandates, Brown says, with the effects rippling through a number of industries:

“For every false signal to the market that tells you to put corn on your land this year when you had wheat last year, that then distorts the rest of the commodity markets.”       

Indeed, Rob Green of the National Council of Chain Restaurants says franchisees have the ripple: $3.2 billion in annual commodity cost increases or about $18,000 per restaurant. Green:

“This issue affects chainsaws and chain restaurants. And so it’s very unique, a broad coalition. … We’re not anti-ethanol, we’re just asking for the free market to work.”

Did someone mention chainsaws? Kris Kiser of the Outdoor Power Equipment Institute said there are 27 million to 30 million pieces of small-engine equipment sold in the U.S. each year – and 250-300 million existing units in garages, sheds and basements – and none of it is designed or warranted to use fuel with more than 10 percent ethanol content. Some see higher-ethanol blends, such as E15, as a way to satisfy RFS mandates that have the country approaching the ethanol “blend wall” – the point at which the E10 fuel pool can’t absorb any more ethanol, which EPA itself acknowledges. Kiser:

“When E15 was approved my industry and our friends in the marine industry and the automobile industry … said you can’t do this. You can’t reverse-engineer the marketplace, the legacy equipment, the legacy fleet, legacy automobiles, the refueling infrastructure and people, frankly, who use it. These people have fueled their products since the beginning of engines the same way. Everything that goes into the car goes into the (gas) can, what goes into the can goes into the chainsaw or the generator or the bass boat, the ATV and the mower.”

More Kiser:

“What happens is, failure of one of those products not only is an economic failure, this is engine destruction. So the product is destroyed. … Regrettably, if your boat fails 30 miles offshore, your snowmobile fails out in the wilderness in inclement weather, your chainsaw engages while it’s in neutral – somebody gets hurt. ”

This, then, is a pivotal issue with the RFS: Americans at risk of being harmed – seeing their vehicles’ engines damaged by E15, small engines being ruined, food budgets busted – as well as broader impacts to the economy at large.  

These are some of the major consumer concerns that are rising. They need to be heard and acted upon. API President and CEO Jack Gerard:

While EPA is right to address the blend wall, “that really doesn’t fundamentally address the real concern on the part of chain restaurants, the turkey federation, the chicken council and others, because theirs is heavily driven by corn use. It’s important to understand the broad ripple implications of this policy and ultimately the need for Congress to step in. … The more the public understands this question, the more they get confronted with the … blend wall challenges rippling into all these dynamics … there’s more and more hue and cry.”

EPA has scheduled a hearing. Time for some listening, too.

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.