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Friday RFS Roundup – 7/18

This week, we saw continued coverage on the diverse effects that ethanol mandates have on American consumers. From increased food costs to environmental threats and governmental boondoggles, ethanol mandates harm consumers across the nation. And yet, the American people are still waiting for action from the EPA, which is now almost eight months late on releasing the 2014 blending requirements.

Learn more from this week:

NBC News, Heartland Water Crisis: Why the Planet Depends on These Kansas Farmers: Part two of a three-part series, journalist Brian Brown details America's Breadbasket crisis and the depletion of the Ogallala Aquifer, one of the U.S.’ major water sources. In this investigative piece, Brown finds that for US farmers, growing corn presents a morality problem, but US policy urges more growth. With $45 billion subsidized to produce ethanol since the 1980s, this large scale of production threatens our water & food supply.

In Short: “For farmers like Mitch Baalman, corn presents an immediate math problem. On average, a corn crop needs 24 inches of water during its growing season. But, under the rules of the new LEMA, that total would represent nearly half of his five-year allotment. ‘We’re going to have to change the mindset,’ Baalman says. ‘Pull the throttles back. Plant more alternative crops. We’re just not going to be corn, corn, corn—even though that’s what the insurance is telling us and that’s what the government is subsidizing. I would love to raise corn, too. But we can’t.’”

Chicago Tribune, Why is the EPA Stalling on Ethanol?: In this analysis, Chicago Tribune is just as perplexed as we are regarding the 2014 blending requirements that the EPA has already proposed to reduce, but hasn’t actually done so yet. This is a policy that increases consumer costs, takes away free market choice and favors one industry over all others. With each day that the EPA does not take action against this failing policy, consumers will continue to carry the consequences. 

In Short: “In the midst of all the political pressure, the EPA has stalled. The agency long ago missed a Nov. 30 deadline to set the final standard. It still hasn't issued a final decision, though we are halfway through 2014. The resulting uncertainty has left the motor fuel industry in the lurch. By making it impossible for fuel blenders to plan in a timely manner, the EPA's inaction has raised costs for them and consumers. Depending on what the agency eventually decides to do, it could temporarily disrupt fuel supplies. The EPA needs to resolve this now. But the ultimate answer lies with Congress. It's time to end the Renewable Fuel Standard.”

Consumerist, Get Ready to Pay More for Chocolate; Hershey Raises Prices for First Time in 3 Years: The headline says it all. Because of various rising commodity costs, including dairy prices, the global candy company is forced to increase its sales prices by eight percent next year. While we can’t speak for all the rising commodity prices, ethanol mandates have a direct effect on increasing dairy prices. As the price for corn and feedstock rises, these increases are passed onto the farmer, and eventually, the consumer.

In Short: “’Over the last year key input costs have been volatile and remain at levels that are above historical averages,’” said Michele G. Buck, President, North America, The Hershey Company, in a statement. “’Commodity spot prices for ingredients such as cocoa, dairy and nuts have increased meaningfully since the beginning of the year. Given these trends, we expect significant commodity cost increases in 2015.’”

Ethanol Lobby’s Solution to Ethanol Glut – Use More Ethanol.

Last November, the Environmental Protection Agency (EPA) acknowledged that the level of ethanol the government mandates be blended into fuel will soon exceed the level of ethanol that can safely go into the fuel supply -- a “tipping point” known as the blend wall.

In order to prevent Americans from hitting the blend wall, the EPA proposed lowering the 2014 mandate. With this proposal came major political pressure from ethanol makers and now the EPA is considering backing down.

So, what is the ethanol lobby’s solution to the blend wall? Surprising to no one, they recommend…more ethanol.

Ethanol companies say that the blend wall can be avoided if more motorists use higher blends of ethanol like E15 and E85—which contain 15 and 85 percent ethanol respectively, instead of the standard E10 which only contains 10 percent ethanol.

Unfortunately, this proposal is completely divorced from reality and is also a raw deal for consumers.

  1. Nonexistent Demand — Americans aren’t buying the flex-fuel vehicles necessary to run on E85, and the ones who do, aren’t filling up with it. Only a mere 5 percent of U.S. light-duty vehicles on the road are able to run on E85 and only 4 percent of those vehicles actually use it. Even by 2022, the Congressional Budget Office expects only 1 billion of the 125 billion gallons of blended gasoline to be used that year will be E85.
     
  2. Lower Fuel Economy — Compared side-by-side, ethanol is 33 percent less efficient than regular gasoline. E85 is estimated to deliver 25-30% fewer miles per gallon than the 10% ethanol blend that currently exists in most of today’s gas, which leads us to our final  point…
     
  3. Higher Adjusted Prices — When the price of E85 is price-corrected for miles per gallon, it is 40 cents a gallon higher than premium gasoline.

…And don’t get us started on the environmental and economic issues associated with ethanol mandates.

Tell Washington not to cave to Iowa – It’s time to reform ethanol mandates.

Is this the Worst Policy in America?

Even the government thinks so…

In late June, the non-partisan Congressional Budget Office (CBO) released a report detailing how much full implementation of the Renewable Fuel Standard (RFS), America’s ethanol mandates policy, would cost.

For the first time since the ethanol mandate was enacted, a government agency has confirmed what the refining industry has said for years…forcing ethanol into our fuel supply will increase gas prices.

How much? Up to 9 percent—or 26 cents—per gallon in just three years. Price increases of any size have impacts, but a jump that substantial is bound to create ripples throughout our economy and in Americans’ wallets.

Beyond the increase in gas prices, the CBO laid out some significant challenges to actually meeting the requirements of the RFS.

“The rising requirements in EISA would be very hard to meet in future years because of two main obstacles, which relate to the supply of cellulosic biofuels and the amount of ethanol that older vehicles are said to be able to tolerate.”

As we’ve mentioned before, cellulosic biofuels made from non-food supply sources do not currently exist and relying on them to meet the future mandate is unlikely. The chart below, from the CBO report, shows exactly how far away we truly are:

Notice even the government believes we’ll barely eke out any gallons of cellulosic biofuels by 2022, let alone the nearly 15 billion gallons mandated.

As for the use of higher ethanol blends in “older” cars, E15 is only approved for use in vehicles built after 2001. According to AAA, 95 percent of automobiles on the road today aren’t designed to run on gasoline that contains more than 10 percent ethanol.

And the CBO is hardly the only governmental organization taking issue with this broken government policy:

  • The Environmental Protection Agency — responsible for implementing the nation’s ethanol policy — has provided evidence that shows ethanol produced 33 percent more emissions in 2012 than gasoline, and could increase GHG emissions by an additional 10 percent by 2017.
  • The Department of Energy has concluded that higher ethanol fuel blends like E85 (gasoline containing 85 percent ethanol by volume) lowers vehicle fuel mileage by 15 to 25 percent than when operating on E10. This means consumers are forced to return to the pump more frequently and at greater cost. 
  • The National Academy of Sciences has demonstrated that high corn and soybean prices, prompted largely by the mandate, are driving one of the worst crop land conversion events in recent US history.
  • The Government Accountability Office is concerned that the largest increases in corn acres for ethanol production are projected to occur in the Northern Plains, which relies on irrigation and is already water-constrained. Parts of the region draw heavily from the Ogallala Aquifer, where water withdrawals for agriculture and other uses are already greater than the natural recharge rate from precipitation.

And yet, the American people are still waiting for action from Washington. Tell your friends and family to support reform of this broken policy.

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Legislative Updates will be coming soon.

A Coalition Against Bad Policy

We’ve said it once, and we’ll say it again… the ethanol mandate is everyone’s problem.

Oil refiners do oppose the ethanol mandate (primarily because of the looming blend wall), but they are hardly the only ones who take issue with the policy. Environmentalists, taxpayers, food producers, consumer protection groups of all types, anti-hunger advocates and even farmers have all spoken out against the RFS.

This year alone, our coalition has joined arms with even more poultry farmers who are struggling to feed their flocks due to the skyrocketing price of feed; gasoline retailers forced to stock a fuel that consumers neither know about nor want; and outdoor equipment groups grappling to find fuel that won’t damage their small engines.

On Thursday, April 10, Congressman Pete Welch (D-VT), Scott Faber of the Environmental Working Group, Rob Green of the National Council of Chain Restaurants and others will discuss how the ethanol mandate is impacting all Americans in an event hosted by The Hill Magazine in Washington, DC. You can watch the event on The Hill’s website or join the conversation on Twitter using #TheHillLive and #RFS2014.

The price you pay

NBC Nightly News shone a light this week on rising food prices that are impacting consumers across the United States.

While Brian Williams and the gang focused on the drought in California, it is important to note that these recent price increases are part of a longer-term trend.  Beef, poultry, milk and cheese prices have all been on the rise for nearly a decade—in fact, food prices are up 17.8 percent.

With the introduction of the Renewable Fuel Standard in 2005, the demand for ethanol increased making it more and more difficult for ranchers to feed their herds. By increasing the competition for and price of corn, the ethanol mandate has unintentionally been driving up the cost at the grocery store. By 2022, the RFS will increase food costs for Americans by $3 billion—annually—according to the Congressional Research Service.

And now the drought, which has been affecting various parts of the country since 2012, is making what is already bad, worse.

We can’t change the weather, but we can make changes to this failing policy. Tell Congress it’s time for a real solution.

Ghosts of Ethanol Past, Present and Future

In the holiday classic A Christmas Carol, the cold-hearted, greedy Ebenezer Scrooge is given a glimpse at his Christmas past, present and future. In our version of the story, we’re going to let you peek at ethanol’s ghosts.

Ethanol Past

While opposition to the Renewable Fuel Standard (the government’s ethanol mandates policy)is growing today, some have been wary of diverting food to fuel for decades. An article published by Nicholas Wade in 1979 reveals some of the early concerns:

“The rule of thumb in Iowa is that a 1 percent decrease in corn supply raises corn prices by 2 percent.”

Yet today, we divert more than 40 percent of our corn crops to ethanol, and we’ve felt the results in corn prices from the butcher to the baker.

Further, government has been subsidizing “gasohol” for years. In 1979, the going rate was 40 cents per gallon of E10 (a fuel blend containing ten percent ethanol).

And the final lesson from the ghost of ethanol past is this: we’ve been hoping for cellulosic biofuels forever. More on that later…

Ethanol Present

Unfortunately, the realities of today’s ethanol mandate (the RFS) are no better. Refiners, environmentalists, ranchers, world hunger groups, wildlife advocates, journalists and even the Environmental Protection Agency all take issue with one part of the policy or another.

Ethanol Future

All wounds heal with time, right? Actually, no, according to Energy Information Administration. Despite   the ethanol lobby promising that cellulosic (non-corn) biofuels are “just around the corner,” the U.S. government’s Energy Information Administration’s (EIA) annual American Energy Outlook report tells us that even by 2040, it is unlikely that we’ll be anywhere close to the mandated level of cellulosics.

This means decades more subsidies for the industry and continued reliance on corn to meet the ethanol mandate.

Just like Scrooge, it’s time for Congress to see the error in its ways.

Tell your Congressman to reform the Renewable Fuel Standard.

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Comparing the Ethanol Mandate with Projected Ethanol Demand

Consumer Price Index Since Ethanol Mandate

Is your daily driver a race car?

During this weekend’s Daytona 500, you may see and hear a lot about how NASCAR runs on E15, a blend of gasoline with 15 percent ethanol — 50 percent more than in traditional gas. Big ethanol will try to use this as an opportunity to tout the benefits of E15 and lobby for its expanded use as an answer to the blend wall.

Unfortunately, your car’s engine likely doesn’t have a lot in common with NASCAR engines, which is where the problems arise. NASCAR teams specifically build engines to run on higher ethanol blends. Beyond that, the engines are rebuilt after every race. Unless you’re rebuilding your engine every day, you should probably take stock of the differences.

According to AAA, 95 percent of automobiles on the road today aren’t designed to run on gasoline that contains more than 10 percent ethanol.

The chart above shows where your car might shake out. If you drive a flex-fuel vehicle(FFV) or a Porsche, go ahead and fill ‘er up with E15, but beware of the lower fuel economy that comes with it.

If you don’t drive a FFV and you fill up using E15, you risk damaging your engine, which may or may not be covered by your warranty.

Luckily, E15 blends are currently only being sold at about 60 gas stations in 12 states, but the EPA has approved its sale across the country.

The simple fact is that outside of a minority of cars on the road today — supercharged NASCAR stock cars — E15 is a blend that isn’t the right fit for Americans. The EPA is currently considering making changes to the Renewable Fuel Standard, which is the right first step in creating a smarter fuel future for America. Tell Congress to take action on the RFS today.

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The Truth about Ethanol and the Renewable Fuel Standard

State of the Union BINGO

Tonight President Obama will address the joint houses of Congress, as well as the American people, setting the agenda for the executive branch for the coming year.

For those in DC, it’s a big night out, but if you’d like to play along at home while watching the State of the Union, we’re happy to oblige.

Download our SOTU Bingo cards and every time President Obama mentions an RFS consequence or something political ridiculous happens, mark your card!

Also – today is the last day for you to tell the EPA to lower the ethanol mandate. Make sure you tell the EPA you support lowering the mandate!

Bedfellows Coalition Letter to the House of Representatives Energy & Commerce Committee

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Friday RFS Roundup – 7/18

This week, we saw continued coverage on the diverse effects that ethanol mandates have on American consumers. From increased food costs to environmental threats and governmental boondoggles, ethanol mandates harm consumers across the nation. And yet, the American people are still waiting for action from the EPA, which is now almost eight months late on releasing the 2014 blending requirements.

Learn more from this week:

NBC News, Heartland Water Crisis: Why the Planet Depends on These Kansas Farmers: Part two of a three-part series, journalist Brian Brown details America's Breadbasket crisis and the depletion of the Ogallala Aquifer, one of the U.S.’ major water sources. In this investigative piece, Brown finds that for US farmers, growing corn presents a morality problem, but US policy urges more growth. With $45 billion subsidized to produce ethanol since the 1980s, this large scale of production threatens our water & food supply.

In Short: “For farmers like Mitch Baalman, corn presents an immediate math problem. On average, a corn crop needs 24 inches of water during its growing season. But, under the rules of the new LEMA, that total would represent nearly half of his five-year allotment. ‘We’re going to have to change the mindset,’ Baalman says. ‘Pull the throttles back. Plant more alternative crops. We’re just not going to be corn, corn, corn—even though that’s what the insurance is telling us and that’s what the government is subsidizing. I would love to raise corn, too. But we can’t.’”

Chicago Tribune, Why is the EPA Stalling on Ethanol?: In this analysis, Chicago Tribune is just as perplexed as we are regarding the 2014 blending requirements that the EPA has already proposed to reduce, but hasn’t actually done so yet. This is a policy that increases consumer costs, takes away free market choice and favors one industry over all others. With each day that the EPA does not take action against this failing policy, consumers will continue to carry the consequences. 

In Short: “In the midst of all the political pressure, the EPA has stalled. The agency long ago missed a Nov. 30 deadline to set the final standard. It still hasn't issued a final decision, though we are halfway through 2014. The resulting uncertainty has left the motor fuel industry in the lurch. By making it impossible for fuel blenders to plan in a timely manner, the EPA's inaction has raised costs for them and consumers. Depending on what the agency eventually decides to do, it could temporarily disrupt fuel supplies. The EPA needs to resolve this now. But the ultimate answer lies with Congress. It's time to end the Renewable Fuel Standard.”

Consumerist, Get Ready to Pay More for Chocolate; Hershey Raises Prices for First Time in 3 Years: The headline says it all. Because of various rising commodity costs, including dairy prices, the global candy company is forced to increase its sales prices by eight percent next year. While we can’t speak for all the rising commodity prices, ethanol mandates have a direct effect on increasing dairy prices. As the price for corn and feedstock rises, these increases are passed onto the farmer, and eventually, the consumer.

In Short: “’Over the last year key input costs have been volatile and remain at levels that are above historical averages,’” said Michele G. Buck, President, North America, The Hershey Company, in a statement. “’Commodity spot prices for ingredients such as cocoa, dairy and nuts have increased meaningfully since the beginning of the year. Given these trends, we expect significant commodity cost increases in 2015.’”

Ethanol Lobby’s Solution to Ethanol Glut – Use More Ethanol.

Last November, the Environmental Protection Agency (EPA) acknowledged that the level of ethanol the government mandates be blended into fuel will soon exceed the level of ethanol that can safely go into the fuel supply -- a “tipping point” known as the blend wall.

In order to prevent Americans from hitting the blend wall, the EPA proposed lowering the 2014 mandate. With this proposal came major political pressure from ethanol makers and now the EPA is considering backing down.

So, what is the ethanol lobby’s solution to the blend wall? Surprising to no one, they recommend…more ethanol.

Ethanol companies say that the blend wall can be avoided if more motorists use higher blends of ethanol like E15 and E85—which contain 15 and 85 percent ethanol respectively, instead of the standard E10 which only contains 10 percent ethanol.

Unfortunately, this proposal is completely divorced from reality and is also a raw deal for consumers.

  1. Nonexistent Demand — Americans aren’t buying the flex-fuel vehicles necessary to run on E85, and the ones who do, aren’t filling up with it. Only a mere 5 percent of U.S. light-duty vehicles on the road are able to run on E85 and only 4 percent of those vehicles actually use it. Even by 2022, the Congressional Budget Office expects only 1 billion of the 125 billion gallons of blended gasoline to be used that year will be E85.
     
  2. Lower Fuel Economy — Compared side-by-side, ethanol is 33 percent less efficient than regular gasoline. E85 is estimated to deliver 25-30% fewer miles per gallon than the 10% ethanol blend that currently exists in most of today’s gas, which leads us to our final  point…
     
  3. Higher Adjusted Prices — When the price of E85 is price-corrected for miles per gallon, it is 40 cents a gallon higher than premium gasoline.

…And don’t get us started on the environmental and economic issues associated with ethanol mandates.

Tell Washington not to cave to Iowa – It’s time to reform ethanol mandates.

Is this the Worst Policy in America?

Even the government thinks so…

In late June, the non-partisan Congressional Budget Office (CBO) released a report detailing how much full implementation of the Renewable Fuel Standard (RFS), America’s ethanol mandates policy, would cost.

For the first time since the ethanol mandate was enacted, a government agency has confirmed what the refining industry has said for years…forcing ethanol into our fuel supply will increase gas prices.

How much? Up to 9 percent—or 26 cents—per gallon in just three years. Price increases of any size have impacts, but a jump that substantial is bound to create ripples throughout our economy and in Americans’ wallets.

Beyond the increase in gas prices, the CBO laid out some significant challenges to actually meeting the requirements of the RFS.

“The rising requirements in EISA would be very hard to meet in future years because of two main obstacles, which relate to the supply of cellulosic biofuels and the amount of ethanol that older vehicles are said to be able to tolerate.”

As we’ve mentioned before, cellulosic biofuels made from non-food supply sources do not currently exist and relying on them to meet the future mandate is unlikely. The chart below, from the CBO report, shows exactly how far away we truly are:

Notice even the government believes we’ll barely eke out any gallons of cellulosic biofuels by 2022, let alone the nearly 15 billion gallons mandated.

As for the use of higher ethanol blends in “older” cars, E15 is only approved for use in vehicles built after 2001. According to AAA, 95 percent of automobiles on the road today aren’t designed to run on gasoline that contains more than 10 percent ethanol.

And the CBO is hardly the only governmental organization taking issue with this broken government policy:

  • The Environmental Protection Agency — responsible for implementing the nation’s ethanol policy — has provided evidence that shows ethanol produced 33 percent more emissions in 2012 than gasoline, and could increase GHG emissions by an additional 10 percent by 2017.
  • The Department of Energy has concluded that higher ethanol fuel blends like E85 (gasoline containing 85 percent ethanol by volume) lowers vehicle fuel mileage by 15 to 25 percent than when operating on E10. This means consumers are forced to return to the pump more frequently and at greater cost. 
  • The National Academy of Sciences has demonstrated that high corn and soybean prices, prompted largely by the mandate, are driving one of the worst crop land conversion events in recent US history.
  • The Government Accountability Office is concerned that the largest increases in corn acres for ethanol production are projected to occur in the Northern Plains, which relies on irrigation and is already water-constrained. Parts of the region draw heavily from the Ogallala Aquifer, where water withdrawals for agriculture and other uses are already greater than the natural recharge rate from precipitation.

And yet, the American people are still waiting for action from Washington. Tell your friends and family to support reform of this broken policy.

Show More

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