January 22, 2014
In November of last year, the Environment Protection Agency (EPA) proposed reducing the volumetric requirements of the Renewable Fuels Standard (RFS) for 2014. With this announcement, the EPA tacitly acknowledged that the program is irretrievably broke. But despite this welcome development, deep, structural problems of the RFS remain and are only now rising to the surface of the public’s attention.
EPA’s action kept the ethanol mandate to below the “blendwall” – or 10 percent of the total fuel supply. The blendwall is significant because if ethanol makes up more than 10 percent of each gallon of gas, it can cause serious damage to car engines and other small motors, to the point automakers have warned that owners of older cars are at a risk of their warranties being voided. Similarly, the Coast Guard has advised boaters to avoid blends of greater than 10 percent.
Consumers recognize the risk too. My state of Oklahoma is full of gasoline stations advertising no-ethanol fuel, which consumers pay premium cost for in order to avoid the ethanol. Unfortunately, the EPA’s “fix” only applies for one year and is complicated by the fact that it will be challenged in court, does not solve the program’s long-term structural problems, and does nothing to address the uncertainty that the entire program casts over those who make and consume fuels.
Unless Congress reforms the RFS, industry and consumers will face unclear costs due to the mandate and be forced to place hope in the EPA to keep the RFS’s mandated levels below the blendwall each year. A recipe for disaster, this scenario will subject American industries to a continuous cycle of litigation and regulatory uncertainty that will make it even more difficult to make long-term business decisions. Further, it will be impossible for consumers to know that the fuel sold next year will be safe for the cars they buy this year. An unchecked RFS will result in job losses and the potential for the nation’s transportation sector to be subjected to fuels that damage engines both large and small.
At the heart of the mandate’s problem is the expansion that was enacted when Democrats controlled Congress in 2007. That law doubled the biofuel production requirement for 2014 and increased it by nearly 5 times for 2022, to a level that is more than three times the safe level of biofuels in gasoline. Additionally, over time the law increasingly relies on advanced and cellulosic biofuels that are either prohibitively expensive or do not exist in order to meet the mandate’s demands.
What drove Washington’s decision to expand the mandate? In 2007, many in Congress believed that the nation faced a bleak domestic energy future, which seemed certain to include perpetual increases in oil and natural gas imports from unstable regions of the world. While this narrative convinced many that the RFS was appropriate, the recent turnaround in America’s booming domestic energy sector vitiates the argument for the mandate.
In just the last five years, breakthroughs in precision drilling and hydraulic fracturing have birthed an American energy renaissance. Thanks solely to the innovation of the private sector, domestic oil production has increased by 50 percent since 2008 and it shows no sign of slowing down. Just last fall the United States became the single largest producer of oil and natural gas in the world. We could be energy independent tomorrow if the Obama Administration would loosen the reins on developing our natural resources. Our energy security has improved, but it’s been in spite of the RFS, not a result of it.
If consumers want a future of uncertainty, higher gasoline prices, damaged engines, and meager job growth, then we should leave the RFS as it is. If not, then we should repeal the RFS and allow ethanol and other biofuels to compete on a level playing field with all other transportation fuels.
U.S. Sen. Jim Inhofe is a senior member on the Senate Environment and Public Works Committee and the senior Senator from Oklahoma.