The Daily Caller: Industries spar over the future of renewable fuel subsidies

July 25, 2013

Michael Bastasch, July 23 – Industries as wide-ranging as oil refiners, biofuel manufacturers, chain restaurants and chicken farmers sparred over the future of the federal ethanol mandate Tuesday.

The Renewable Fuel Standard (RFS) mandates that 13.8 billion gallons of ethanol be blended into gasoline this year, and 14.4 billion gallons in 2014.

Refiners, however, are reaching the limit of what they can safely blend into the fuel supply, which is putting pressure on the petroleum industry.

“The RFS isn’t just a relic of America’s bygone era of energy scarcity, it is a grave economic threat,” said Jack Gerard, president of the American Petroleum Institute, in his congressional testimony. “Unless it is immediately halted, it will unnecessarily cost our economy and consumers billions of dollars.”

Refiners are reaching what is called the “blend wall” — the outer limit of what refiners are willing to blend into gasoline — which has driven up renewable fuel credit prices more than 2300 percent this year.

“When refiners are unable to purchase sufficient RINs for compliance, they may be left with only bad options, which force them to reduce the amount of fuel they supply to the U.S. market. Likewise, importers of gasoline, also obligated parties, will look elsewhere to market their product,” warned Charles Drevna, president of the American Fuel & Petrochemical Manufacturers.