The People of America's Oil and Natural Gas Industry

Time for Action on the Broken RFS

Mark Green

Mark Green
Posted February 23, 2016

When Congress and the president acted late last year to end the decades-old ban on domestic crude oil exports, Washington showed it could generate the consensus to update energy policy so it matches America’s new energy reality, a reality of abundance created by surging domestic oil production. The same kind of change is needed on the broken Renewable Fuel Standard (RFS).

We saw how the crude oil exports ban buckled under the weight of economic research and reason, both of which argued that allowing U.S. oil to reach global markets would be good for America and American consumers. In the case of the RFS, there’s a compelling opportunity to protect U.S. consumers from potential harm wrought by a bad public policy.

Step No. 1 is a scheduled hearing this week on the RFS by the Senate Environment and Public Works Committee. Witnesses include EPA and U.S. Energy Information Administration officials. Frank Macchiarola, API group director of downstream and industry operations, discussed the stakes in the RFS debate during a conference call with reporters. The main point: The RFS is mismatched for the new era of U.S. energy abundance. Macchiarola:

“We continue to seek the repeal of or significant reforms to the RFS. Since the inception of the ethanol mandate a decade ago, the United States has undergone an energy transformation from a nation of energy dependence and scarcity to one of energy security and abundance. It is well past time to reform outdated energy policies to reflect the energy realities of today and tomorrow.”

Macchiarola listed some of the strikes against the RFS, which Congress created during a time of U.S. energy scarcity:

  • The impending ethanol “blend wall” – the point where RFS mandates for ethanol use force more of it into the national fuel supply than can be safely blended as E10 gasoline that is standard across the country.
  • Breaching the blend wall could have impacts on consumers and the broader economy. A 2014 report by the nonpartisan Congressional Budget Office found the price of gasoline could increase by up to 26 cents per gallon, while a NERA study warned of a possible 30 percent reduction to the fuel supply, resulting in significant economic harm.
  • Tests that showed higher ethanol-blend fuels like E15 could damage engines and fuel systems in millions of vehicles on U.S. roads today.
  • Warnings from automakers that higher ethanol-blend fuels could void new car warranties.
  • Concerns that corn ethanol mandates lead to higher greenhouse gas emissions.

Macchiarola said despite all of the above, EPA continues to press ahead with implementing RFS ethanol mandates. The policy is outdated and broken, and Congress should take corrective action. Macchiarola:

Simply stated, this is bad public policy that creates a potential harm to the American consumer.  And, it must be fixed. The American people agree.  U.S. consumers have already spoken with their wallets. They do not want these fuels.”

The time for action on the RFS is now. In ending the crude oil export ban, Congress came to grips with the lack of policy justification for continuing it. Lawmakers should do the same with the RFS. Macchiarola:

“We have a situation where we’ve gone from (being) an importer of oil to the world’s leading producer of oil and natural gas. We’ve gone from being an afterthought, frankly, a consumer of energy, to a mover of energy in the world. So our global strength in energy means that we really need to re-examine the public policies that are attached to that. And this is one of them. This is a big one.”

ABOUT THE AUTHOR

Mark Green joins API after spending 16 years as national editorial writer in the Washington Bureau of The Oklahoman newspaper. In all, he has been a reporter and editor for more than 30 years, including six years as sports editor at The Washington Times. He lives in Occoquan, Virginia, with his wife Pamela. Mark graduated from the University of Oklahoma with a degree in journalism and earned a masters in journalism and public affairs at American University. He's currently working on a masters in history at George Mason University, where he also teaches as an adjunct professor in the Communication Department.

Energy Tomorrow is a project of the American Petroleum Institute – the only national trade association that represents all aspects of America’s oil and natural gas industry – speaking for the industry to the public, Congress and the Executive Branch, state governments and the media.