With the government shutdown, the rest of the country is left to bear the consequences of continued inaction. Reform to the ethanol mandate or RFS, which appeared to be moving forward, is now stalled with the rest of the government.
Eight months after the legal deadline the Obama Administration has released the 2013 Renewable Fuels Standard rule. More importantly it promised waivers next year that will supposedly keep this badly designed law from inflating gasoline prices.
As the blend wall approaches, the price of RINs skyrocketed from a few cents to around $1.40 per gallon of ethanol. RIN prices then declined sharply this week, to around $1.00, on hopes that the Obama Administration and Congress may be preparing to address the blend wall problem by easing the RFS.
The U.S. Court of Appeals for the District of Columbia Circuit vacated a three-year deferral put in place in 2011 by the Environmental Protection Agency (EPA) that temporarily exempted paper and wood product manufacturers and ethanol producers from curbing the release of greenhouse gases.
The RFS requires rising volumes of biofuels to be blended into U.S. gasoline and diesel supplies. Oil companies warn that the mandate could lead to fuel shortages and raise energy prices for consumers.
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.
The EPA provides support for cellulosic ethanol producers by driving demand for cellulosic biofuel RINs from refiners. The over-estimate adds to the impression of a policy lagging reality, where the separate corn ethanol mandate is on the cusp of exceeding distribution capacity at filling stations.
With gas prices above $4 a gallon in many parts of the U.S., consumers have a right to know why. Crude oil prices have fallen by 1% since the end of February even as gas prices are up 12%. So higher oil prices aren't the answer. Blame this one, at least in part, on Washington and ethanol.
Green schemes to fight climate change by producing more bio-fuels could actually worsen a little-known type of air pollution and cause almost 1,400 premature deaths a year in Europe by 2020, a study showed on Sunday.