Big Ethanol: The RFS can help mitigate gas prices! CBO: The RFS is going to cause higher gas prices.
posted at 8:41 pm on June 26, 2014 by Erika Johnsen
Well, this is rich.
In light of the recent political turmoil in Iraq and the potential for disruption to the global oil supply, Big Ethanol would like you to know that the Renewable Fuel Standard — i.e., the mandate through which the federal government forces you to buy ethanol by forcing U.S. refiners to blend an ever-increasing volume of so-called biofuels into the country’s oil supply — is a great way to enhance our domestic energy security and mitigate the impact of any surges in gasoline prices. They even made an advertisement about it, via HuffPo:
The liberal group Americans United For Change released a new television ad Thursday tying the fight over domestic renewable fuel standards to the situation in Iraq.
The ad highlights concerns that the current violence in Iraq may cause an increase in gasoline prices. “More chaos over there means higher prices here,” the ad warns. …
The group said the ad buy is worth $400,000. The ads will run in the Washington, D.C. area this Sunday during “Meet the Press,” “Face the Nation,” “This Week,” “Fox News Sunday” and “60 Minutes.” They will also run on MSNBC, CNN and FOX News next week. In addition, the group said it’s planning an “aggressive digital media campaign.”
When Congress first enacted and later expanded the Renewable Fuel Standard in 2007, lawmakers were relying on the crucial assumption that Americans’ demand for gasoline would continue to increase ad infinitum. Instead, innovation, greater fuel efficiency, and an economic recession resulted in slackening demand for gasoline, making the RFS’s requirements and the inherent subsidy for ethanol producers therein costly and unworkable for everybody else. The EPA finally started to acknowledge this reality last year and is currently mulling over whether to relax the requirements for 2014; that’s an eventuality that the Big Ethanol lobby desperately wants to avoid, and it’s trying to capitalize on the Iraqi instability to gin up more support for the mandate that sustains the bloated ethanol industry.
We already knew that the ad’s argument that ethanol means “less pollution” is totally bogus, but as for this latest claim about the Renewable Fuel Standard being a helpful policy to put downward pressure on gas prices? Yeahhhh… no, via The Hill:
Gasoline’s price will increase up to 9 percent, and diesel fuel will rise by up to 14 percent by 2017 because of the Renewable Fuel Standard (RFS) if Congress does not repeal it, the Congressional Budget Office (CBO) said Thursday.
The CBO’s analysis estimated that, in order to comply with the increasing mandates called for under the Energy Independence and Security Act, fuel refiners would have to more than triple their use of advanced biofuels by 2017, and would have to use much more ethanol in gasoline than the 10 percent blend that older vehicles can tolerate. …
The agency predicted that the Environmental Protection Agency, which oversees the RFS, will keep the mandate levels similar through 2017, since increasing them “would require a large and rapid increase in the use of advanced biofuels and would cause the total percentage of ethanol in the nation’s gasoline supply to rise to levels that would require significant changes in the infrastructure of fueling stations.”
Breaking on Hot Air