Posted February 23, 2016
When Congress and the president acted late last year to end the decades-old ban on domestic crude oil exports, Washington showed it could generate the consensus to update energy policy so it matches America’s new energy reality, a reality of abundance created by surging domestic oil production. The same kind of change is needed on the broken Renewable Fuel Standard (RFS).
We saw how the crude oil exports ban buckled under the weight of economic research and reason, both of which argued that allowing U.S. oil to reach global markets would be good for America and American consumers. In the case of the RFS, there’s a compelling opportunity to protect U.S. consumers from potential harm wrought by a bad public policy.
Step No. 1 is a scheduled hearing this week on the RFS by the Senate Environment and Public Works Committee. Witnesses include EPA and U.S. Energy Information Administration officials. Frank Macchiarola, API group director of downstream and industry operations, discussed the stakes in the RFS debate during a conference call with reporters. The main point: The RFS is mismatched for the new era of U.S. energy abundance.
Posted February 16, 2016
The president’s $10 per barrel oil tax proposal has been out for about a week now, and the analysis from a number of experts – both in terms of politics and economics – could be boiled down to the social media acronym “smh,” which stands for “shaking my head.”
Political analysis first: “The president perennially proposes repealing the oil industry tax credits which Congress annually ignores,” Benjamin Salisbury at FBR Capital Markets toldBloomberg. “It seems overwhelmingly likely that this fee meets the same fate.” ClearView Energy Partners’ Kevin Book said there are “near-zero odds that the Republican-led Congress will grant the president’s request.”
Posted January 27, 2016
If the Renewable Fuel Standard (RFS) were a candidate in this election year, its track record would invite landslide defeat.
Editorial boards of major newspapers are now echoing what a diverse coalition of restaurant associations, grocers, producers of poultry, pork and beef, environmental non-profits and anti-hunger groups have been saying for years.
Posted November 30, 2015
In finalizing ethanol volume requirements under the Renewable Fuel Standard (RFS), the EPA is basically testing the limits of the ethanol “blend wall” and the potential impacts of breaching it. Unfortunately, the guinea pigs in the experiment are U.S. consumers – their wallets, their vehicles.
That’s what we draw from EPA’s requirements for levels of corn ethanol and other renewable fuels that must be blended into the U.S. fuel supply. EPA officially set requirements for 2014 (two years late), 2015 (a year late) and 2016. Requirements for 2016 are the most significant – 18.11 billion gallons, which is lower than what Congress originally required when it created the RFS, but higher than what EPA proposed in May (17.4 billion gallons).
Posted July 17, 2015
Lots of people are concerned that increasing the presence of E15 in the nation’s fuel supply could have adverse impacts on devices powered by gasoline.
Studies show E15 can damage engines and fuel systems in cars and trucks that weren’t designed to use it. (Click here for a matrix that shows most vehicles on the road today aren’t recommended for operating on E15 by manufacturers.) Motorcycles and outdoor power equipment could be negatively affected by using E15, too.
That’s a concern of marine engine manufacturers and boating enthusiasts as well.
Posted June 2, 2015
With EPA last week proposing ethanol-use requirements for 2014, 2015 and 2016 under the Renewable Fuel Standard (RFS), the ethanol industry no doubt will keep lobbying to foist increasing amounts of higher-ethanol blend fuels like E15 and E85 on the motoring public. This, despite studies that have shown E15 can harm engines and fuel systems in vehicles that weren’t designed to use it – potentially voiding manufacturers’ warranties – and historically small consumer demand for E85.
A subset of the argument for increased use of higher-ethanol blend fuels is the dismissing of concern that E15 also could damage existing service station infrastructure, including storage tanks, fuel lines and dispensers. Though service station owners and operators indicate otherwise, ethanol supporters say that a new National Renewable Energy Laborary (NREL) report – commissioned by the Renewable Fuels Association (RFA), a big ethanol advocate – found that E15 is compatible with existing equipment. It’s simply not true, and the report has some challenges. Let’s look at a few.
Posted May 29, 2015
With EPA already embarrassingly late in setting requirements for ethanol in the fuel supply for 2014 (due 18 months ago) and 2015 (due six months ago), the agency finally has proposals for those years and 2016 that would continue to drive ethanol use – though not at levels dictated by the Renewable Fuel Standard (RFS).
Top EPA official Janet McCabe called the proposals “ambitious, but responsible.” We’ll agree on the ambitious part – in that it takes a whole lot of something to thread the needle between marketplace realities and the flawed RFS – difficult for the nimblest of bureaucracies, much less a regulatory colossus like EPA.
Unfortunately, EPA comes up short, particularly for 2016. An RFS program that long ago went awry remains lost in the tall weeds of process over substance.
Posted January 16, 2015
Pacific Standard magazine (PS) has an interesting longread on honeybees in its January issue. While this is not our area of expertise and we can’t judge the veracity of the entire article, there was one part that we had, unfortunately, seen before:
Over a million acres of grassland were converted to crops in five Midwestern states from 2006 to 2011, according to a study by South Dakota State University. … Across the region more than 99 percent of what was originally prairie has been converted, mostly to corn and soy for animal feed, ethanol, and sweetener … Now the entire Midwest, several beekeepers told me, has become a “corn desert.” This has wrought devastation on most anything that used to live in the fields. Monarch butterflies no longer have milkweed for laying eggs. Birds no longer have insects to eat or prairie to shelter in. Native bees are disappearing.
The years 2006 to 2011 are not a coincidence, as the Environmental Working Group (EWG) explains:
After the federal Renewable Fuel Standard was signed into law in 2007, many corn growers decided to plant corn year after year to profit from higher prices, rather than switching between corn and soybeans, for example. This transition has greatly harmed air and water quality.
And apparently bees. But not to worry, the federal government is on the case.
Posted December 16, 2014
Chicago Mayor Rahm Emanuel and his allies on the city council deserve credit for putting a stop – for now at least – to an ill-conceived proposal that would mandate the sale of higher ethanol blend E15 fuel at city service stations.
We say ill-conceived because, as argued here and here earlier this year, the E15 requirement could be full of risk for consumers and small business owners – while mainly benefiting ethanol producers. Recently, AAA urged Chicago lawmakers to vote against the ordinance.
Posted November 3, 2014
Sometimes the public policy debate occurs at an academic level, and it’s easy to overlook the impact on real Americans. A good example is the campaign to push higher ethanol-blend fuels into the marketplace, which could negatively affect millions of consumers and hinder the broader economy. True enough, but we should also look at the real-world impacts of forcing increasing levels of ethanol into the fuel supply, impacts on individual Americans like Russell Garcia in Chicago.
Garcia owns five independent service stations in Chicago. He recently wrote a letter to the editor of the Chicago Tribune to point out the consequences of a city council proposal to require Chicago gas stations to carry E15 gasoline – fuel containing up to 15 percent ethanol, 50 percent more ethanol than the E10 gasoline that’s prevalent across the country.
Garcia wrote that E15 won’t deliver benefits promised by proponents, such as cost savings and environmental improvements. Instead, he wrote, it would impact consumers and small business owners like himself and ultimately be worse for the environment.