While we await the announcement of 2014 ethanol blending levels by the EPA, Rep. Bob Goodlatte (R-VA) filed a letter to Gina McCarthy, head of the EPA calling for adjustments to the Renewable Fuel Standard, with the support of 168 other members of Congress from both sides of the aisle.
With the goal of reducing the nation’s dependence on foreign oil, Congress created the RFS in 2005. What has been the result? Greater reliance on imports of foreign sources of energy, mandates of next to non-existent fuel, and higher food prices.
When energy companies mix ethanol into gas, or import fuel blended with ethanol, they get a credit from the government. That credit can be sold to other companies that don’t blend ethanol to help them meet federal requirements, creating a marketplace.
The RFS created a market-based compliance system in which refiners must submit credits to prove that the required amount of renewable fuel is used or paid for by them each year. These credits, known as Renewable Identification Numbers, can be bought or sold like commodities.
The original law mandated the use of one billion gallons of cellulosic fuel in 2013. This may have been the worst government forecast in history. Even with taxpayer subsidies, total cellulosic volume in 2012 was about 20,000 gallons. The government was off by a mere 99.9%.
Environmentalists fantasize about cellulosic ethanol. Cellulosic ethanol will, they assure us, eliminate U.S. dependence on the Middle East and guarantee a cooler planet with less carbon dioxide. Unfortunately, fantasy dies hard in the cold light of the real world.
Even after yesterday’s 14 percent decline, the price U.S. refiners are paying to comply with a 2007 law that requires companies to blend ethanol with gasoline is at least 10 times more than at the start of the year.
The summer is high driving season, so $4 gasoline in many parts of the country will add to the cost of family vacations. The gas price is mostly dictated by supply and demand, but Washington is helping to keep prices high.
"Domestic gasoline demand was assumed to rise to 150 billion gallons in 2012 and 155 billion this year. Last year the country used merely 89% of that projection, and 2013 will probably come in at 80%. The decline is due mainly to slow economic growth and better fuel economy.
The chairman of the Senate Energy and Natural Resources Committee on Friday questioned whether the United States would be able to meet federal biofuel targets and pledged to take a closer look at the mandate's link to gasoline prices.
In 2007, Congress and President Bush passed a law mandating authorized the EPA to annually consult with the Energy Information Administration to project the amount of cellulosic ethanol that will be produced the next year. The EPA's projection would then be the mandated amount of cellulosic ethanol.
Ethanol benefits only those groups that sell the raw material comprising it and the politicians who receive their donations while wreaking immeasurable harm on the world’s most economically vulnerable and providing little to no environmental advantages.