The People of America's Oil and Natural Gas Indusry

On RFS, 'This Is All About Consumers'

Mark Green

Mark Green
Posted December 10, 2013

EPA held the first of a series of public hearings last week on its 2014 ethanol use proposals under the Renewable Fuel Standard (RFS), during which the National Chicken Council’s Mike Brown observed that the Washington, D.C., hearing basically attracted three groups of people: ethanol producers, corn producers and “the rest of us.”

Quite a bit of truth there. The debate over the RFS finds ethanol backers fairly isolated in arguing that the RFS is fine the way it is and that higher-ethanol blend fuels – like E15 and E85 – should be pushed more aggressively into the marketplace to satisfy the program’s mandates.

The stance has them at odds a number of interests, including consumer and food groups, auto manufacturers, the makers of small-engine vehicles and equipment, turkey and chicken producers, restaurant owners and more. Strikingly, AAA, the venerable travel/motoring organization, has been criticized by Big Ethanol for opposing wider use of E15, which studies have shown could damage engines in vehicles not designed to use it. Pushing more E15 into the marketplace is no solution. USA Today reports:

The challenge to getting more stations to carry (E15) is an example of the age-old chicken and egg dilemma. If gas station owners need to spend money buying new storage tanks and pumps compatible with E15, they want to know they can recoup the costs by selling enough of the product. But drivers, in turn, may be wary of using E15 unless they know they can find enough gas stations to supply them while remaining confident that the fuel is safe for their cars.

The article quotes Bob Greco, API’s downstream group director:

"The ethanol industry is starting to grasp at straws. I think they are greatly concerned that they can't grow their market share," said Greco. "At the end of the day, refiners and gas stations want to sell fuel that their customers demand. The market is not calling for more E85. The market is not calling for E15."

Certainly, EPA’s hearing process is timely and important. Although the agency lowered its ethanol use  requirements for next year, the RFS remains broken,  a market distorter that has been rendered obsolete with the advent of falling gasoline demand and rising domestic oil production. Below, API President and CEO Jack Gerard framed the key RFS issues in an interview with Bill Loveless of Platts Energy Week:

Again, the RFS and mandates for increasing use of ethanol have become a consumer issue, with the potential to impact individual consumers and the broader economy, according to a recent NERA study. Worth repeating from the Gerard interview:

“This is much bigger than just oil or ethanol. This is all about consumers – consumer choice, the ability to pick products that actually work in the products they use every day. … As the consumer enters the debate, this does need to be fixed permanently. … The Renewable Fuel Standard as currently constituted is forcing fuels on consumers that consumers don’t want, number one, and number two, are impacting their products – their cars, small engines, etcetera.”

Consumer choice is best served by letting consumers choose. As Gerard said, this occurs by letting the free market work instead of continuing to distort it – and potentially bringing harm to individual Americans.

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.