The People of America's Oil and Natural Gas Indusry

Politics Underline the Folly of the RFS

Mark Green

Mark Green
Posted October 8, 2014

Others are picking up on how late EPA is in setting this year’s ethanol use requirements – as well as how political calculations appear to be affecting the administration’s management of the Renewable Fuel Standard (RFS). Politico (subscription required) has this:

The Obama administration is nearly a year late in setting its 2014 biofuels mandate, but both ethanol supporters and critics say with politics at play, the White House may delay its decision until after the midterm elections.

Politico adds:

Several sources following the issue closely say that the White House hoped that boosting the overall volumes would be enough to act as a boon to (Democrat Bruce Braley in Iowa’s U.S. Senate race). But renewable fuels advocates in the state aren’t happy with that compromise, so anything short of a clear victory for ethanol makers could hurt Braley’s campaign. … “If they increase the number, but it’s still tied to the (ethanol) blend wall, in our view, they will have killed the program, and that will be seen as a huge loss for Braley, and they’ll wait until after the election,” said one person in the biofuels industry. “If it’s good for Braley, it’ll be before the election. If it’s bad for Braley, it’ll be a punt. And people will see the punt.”

Indeed they will. They can’t help but see energy policy being contorted to serve political ends. It’s no way to conduct energy policy, and it’s no way to treat Americans who ultimately could be impacted by decisions (or the lack thereof) under the RFS.

The facts: EPA already is 10 months late with this year’s ethanol-use requirements. They should have been set in November 2013, as the RFS requires, so that the nation’s refiners could make production plans for the year that comply with the law.

late 

As it stands refiners may be handed 2014 requirements when 2014 is nearly finished – or worse, in 2015! Instead of looking for the right political moment to finish the 2014 requirements, EPA should be finalizing them for 2015. That’s how fouled up the RFS is.

The interjection of politics compounds RFS flaws. Instead of setting ethanol requirements that avoid the 10 percent blend wall – beyond which higher ethanol-blend fuel could damage vehicle engines and fuel systems while potentially putting vehicle warranties at risk – the administration has signaled it might increase ethanol levels above what it proposed last fall. Then again, we can’t know for sure because, well, the politics aren’t right just yet. Bob Greco, API downstream group director, during a recent conference call with reporters:

“Unfortunately, the administration seems to be playing politics with the RFS rule instead of doing what’s best for consumers.  You don’t have to be a political insider to see how the Iowa Senate race – and the White House’s fear they will lose control of the Senate – plays into this decision. The administration must avert the ethanol blend wall and the potentially severe economic damage that goes along with it. … Let’s base it on sound policy, protect the consumers. … EPA could have finalized this earlier in the year and been completely outside of the election cycle. Now it’s been dragged into the election cycle, dragged into election-year politics. That’s not the way to make this policy. It’s not the way to protect consumers.”

The administration’s actions are almost a perfect case study in why governments shouldn’t issue mandates to pick technological winners and losers. Because in the end, politics will always win over economic reality – and consumers will be the losers.

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.