The People of America's Oil and Natural Gas Indusry

RFS Needs Real Solutions, Not New Distraction

Sabrina Fang

Sabrina Fang
Posted February 23, 2017

The recent push to shift responsibility for compliance with the Renewable Fuel Standard (RFS), from refiners and importers to independent blenders and retail gasoline stations, is a flawed approach that could impact consumers at the gasoline pump and does nothing to fix the larger set of problems that plague the RFS – problems Congress must address by repealing the program or significantly reforming it. API Downstream Group Director Frank Macchiarola discussed these issues during a conference call with reporters. His opening remarks, as prepared for delivery:

Today API is submitting comments to the Environmental Protection Agency supporting the agency’s proposed denial of petitions to move the Point of Obligation for RFS compliance. Moving the point of obligation does nothing to alleviate the structural problems with the RFS, and will not materially impact the consumption of renewable fuels. Rather, such a change would create significant uncertainty in the RFS program, and in the Renewable Identification Number (RIN) market. It would also complicate the program, adding a time and cost burden for both EPA and regulated entities, particularly the small and mid-size businesses that would be newly designated as obligated parties. The RFS program is flawed, and changing the point of obligation only pushes these problems to a different group of entities.

The focus of policymakers should be on fixing the blend wall problem and setting fuel policy that is consistent with vehicle compatibility. Nearly 85 percent of vehicles on the road today were not designed for higher ethanol blends, such as E15. And many automakers say that using E15 could potentially void car warranties. These higher ethanol blends threaten engines and fuel systems – potentially forcing drivers to pay for costly repairs, according to extensive testing done by the auto and oil and natural gas industries.

The bottom line is the RFS must be fixed, and Americans should not be forced to pay more at the pump because of this broken policy. The Congressional Budget Office found that forcing ethanol consumption to statutory levels, mainly by using higher ethanol blends like E85, could cost consumers an additional 26 cents per gallon at the pump. Moving the point of obligation does nothing to relieve potential pressure on consumers created by the RFS mandate.

When Congress amended the RFS program in 2007, many of the assumptions behind the RFS have proven to be wrong. Congress expected ever-increasing fuel demand, increased reliance on imported petroleum, and the rapid development of next-generation advanced and cellulosic biofuel technologies. These assumptions were all proven wrong. Our domestic energy security has increased significantly since 2007, and reliance on petroleum imports has dropped.

These achievements are the result of innovation and technology in our domestic oil and gas industry.

An ever-increasing number of Americans are saying “No More” to the ethanol mandate, and lawmakers need to listen to them. We support the bipartisan efforts in Congress to repeal or significantly reform the program. But until Congress acts, lowering volume requirements in 2018 is a better way for EPA to address the RFS challenges facing the refining industry, and will avoid creating a new regulatory burden for small and mid-size businesses that could become obligated parties. EPA should base its 2018 RFS standards on realistic assumptions about the adoption of cellulosic technologies, E15 and E85 use, and recognize the real demand for E0 from boaters, classic car owners and owners of small engines like lawnmowers who prefer to use ethanol free gasoline.

The United States is the world’s number one producer and refiner of oil and natural gas, and we lead the world in reducing carbon dioxide and other emissions. For this success to continue, we need to do everything we can to help consumers benefit from this energy renaissance, and that means fixing the broken Renewable Fuel Standard.

ABOUT THE AUTHOR

Sabrina Fang is an API media relations representative. Before joining API she worked for the Washington Humane Society and was a reporter for Tribune Broadcasting and covered the White House for seven years. Fang studied broadcast journalism at Syracuse University before starting her career. She enjoys reading, watching movies and spending time with family.