There is no doubt that Congress had the best of intentions when it enacted the Renewable Fuel Standard in 2005 and expanded it in 2007. At a time of growing imports, seeking to achieve energy independence through renewable fuels was an easy talking point to show Americans that Congress was “solving the problem.” In the time since then, however, not only have we seen a domestic oil and gas boom that promises to make the U.S. the world’s leading producer of both, but the U.S. has recognized the folly of government mandates that convert feed and food to fuel, compound environmental challenges, and threaten millions of cars and small engines.
In fact, just last week the Congressional Budget Office released a new report predicting that if EPA allows the RFS to grow to the statutory volumes, by 2017 gasoline prices would rise up to $0.26 per gallon and diesel prices increase by a whopping $0.51 per gallon. In other words, in 2017 U.S. consumers could wind up paying up to $63 billion in additional fuel costs due to the RFS if the mandate is allowed to grow. Of course, this would increase the price to transport everything from food to diapers to iPhones. Ironically, it would also increase the cost of producing corn, as farmers continue to use 3 billion gallons a year on diesel to run tractors, combines, and other equipment.
This is not the first time CBO has found some negative impacts of the RFS. In 2009, it found that higher food prices as a result of corn ethanol production added up to $900 million dollars in cost to federal feeding programs (e.g. the Supplement Nutrition Assistance Program and the Women, Infants and Children’s Program) in fiscal year 2009 alone. The latest iteration projects that the incremental increase in the RFS scheduled between 2014 and 2017 would add an additional $3.5 billion to Americans’ food bills.
So what environmental benefit are we getting out of all this? According EPA’s own data, later verified by the National Academies of Sciences, the RFS will increase greenhouse gases in the short term, increase ozone and particulate matter levels in much of the country, and diminish water quantity and quality.
The CBO report confirms much of what AFPM has been saying for years—the RFS harms consumers at the gas station and in the supermarket. Importantly, EPA recognized some of these challenges in its proposed volumes for 2014, in which it proposed freezing the conventional mandate at 2013 consumption levels and bringing the advanced biofuel mandate more in line with domestic capacity. By doing so, the mandates would stay at a level that could be safely integrated into the fuel supply and would keep an additional 500 million bushels of corn from being diverted to our gas tanks. CBO found that this action would have minimal impacts on corn ethanol production, but would prevent the significant increase in gas and diesel prices.
This would seem to be a win-win for all involved. Unfortunately, however, there are reports that the White House is starting to play politics with the fuel supply and may force an increase in the mandates despite the clear evidence of the unintended consequences of doing so. There is still time for the Administration to do the right thing and reduce the volumes, and we hope they’ll do so. Ultimately, however, Congress should step in to repeal this increasingly outdated and unworkable example of government overreach into consumers’ gas tanks.