Congress is preparing to return to work and there are two issues top of mind: The FAARM Bill and the Renewable Fuel Standard (RFS). During the break the Renewable Fuels Association (RFA) took a look at some of the Big Oil’s summer arguments against ethanol and created a narrative around why these are not valid.
“While Congress has been away, much has happened to set the record straight on ethanol,” explained Bob Dinneen, RFA’s President and CEO. “Rising gas prices have made the value proposition of ethanol compelling for consumers. Indeed, drivers turned out in large numbers over the summer to purchase record volumes of low cost, renewable E85. Academics and government officials spoke out on successfully scaling the blend wall.”
Dinneen also noted that the growing potential for a bin-busting harvest has undermined the food vs. fuel canard, and USDA’s data has proven food inflation is not being driven by ethanol and the RFS. “Slowly, but surely, Big Oil’s heavy handed scare tactics are eroding under the weight of honest data and consumer demand,” he said.
“By the way, in case you missed it, Summer 2013’s “Best Beach Read” award goes to the API/AFPM for their 2014 RFS waiver request,” continued Dinneen. “It has everything, except legal standing, that a fun breezy summer novel should have — futuristic fiction, scary twists and turns, and even a romance with monopolies. In return, RFA penned a compelling and critical review of the API/AFPM tome, laying bare the lack of legal and technical support for a waiver,” concluded Dinneen.
To read in full RFA’s review of the American Petroleum Institute (API)/American Fuel and Petrochemical Manufacturers (AFPM) 2014 partial-waiver request click here.
RFA has released a brief “Big Oil’s Fiction vs. Fact” Below are a few of these issues that Big Oil has raised and the ethanol industry has defended.
Fiction: Ethanol and RINs are driving up the price of gasoline.
Fact: As Congress returns, the first order of business will be a vote on Syria. While the U.S. imports no oil from Syria, an upset, uncertain Middle East is a reminder of how directly and indirectly vulnerable the U.S. fuel supply is to political events overseas. Since Congress recessed at the beginning of August as the Syrian conflict was beginning to peak, oil prices have risen 5-6 percent.
Fact: RINs were a hot topic on Capitol Hill in June and July, but did anyone notice what happened once the congressional hearings ended? RIN prices dropped. RIN prices averaged over $1.10 in July, but have averaged just 75 cents since Congress left town. This chart paints a picture that leaves one wondering if Big Oil wasn’t taking political advantage of an opaque, thinly traded market.
Fiction: Ethanol is using corn meant for food resulting in higher food prices.
Fact: The U.S. Department of Agriculture (USDA) projects a record-setting corn harvest of over 13 billion bushels in 2013, an increase over last year’s harvest and close to the previous record crop. USDA expects that farmers will achieve a very healthy yield per bushel per acre despite the current heat wave and one of the slowest, wettest planting seasons on record.
Fact: In mid-August, the U.S. Department of Agriculture report notes that food prices are rising at a slower rate than expected. In addition, the Food and Agriculture Organization of the United Nations’ (FAO) Food Price Index shows less volatility this year than at any time in the past five years even despite the U.S. drought of 2012. The FAO Index continues to trend downward since peaking in February 2011.
Fact: Exposing a cheap Big Oil/Big Food PR stunt for what it is was, recent news reports state McDonalds, not ethanol, was to blame for the chicken wing shortage and resulting higher prices.
Fiction: Cellulosic ethanol doesn’t exist and will never be commercialized. Refiners can’t be forced to use products that don’t exist.
Fact: In late July, Quad County Corn Processors broke ground on its cellulosic ethanol bolt-on facility, which will process cellulosic corn fiber into high octane ethanol. Quad County’s Adding Cellulosic Ethanol (ACE) project will add 2 million gallons of cellulosic capacity to their existing 35 million gallon plant, while also increasing ethanol yield, expanding oil extraction and creating a more protein-enriched animal feed.
Fact: INEOS Bio in Vero Beach, Fla., began producing plant/wood waste cellulosic ethanol at commercial scale.
Fact: The Environmental Protection Agency stated in its 2013 Renewable Volume Obligation (RVO) announcement that it will use its authority to reduce the 2014 Advanced Biofuel Standard and thus total RFS volume requirements. This action further highlights the agility of the Renewable Fuel Standard (RFS) to adapt to market conditions including the unfortunately slow pace of cellulosic ethanol commercialization. Refiners will not be required to blend fuels that don’t exist.
Fiction: We have hit the blend wall. Refiners just can’t blend more than 10 percent ethanol into gasoline.
Fact: The Center for Agriculture and Economic Development at Iowa State University issued a study stating the blend wall could be easily surmounted with the use of more E85.
Fact: Senators Chuck Grassley of Iowa and Amy Klobuchar of Minnesota sent a letter to the U.S. Department of Justice and the Federal Trade Commission in August asking for a review of possible anticompetitive practices by the oil industry to block market access. The bipartisan letter by the Senators follows one earlier this year by Bob Dinneen, RFA’s President and CEO, to the Environmental Protection Agency (EPA), the Federal Trade Commission (FTC), the Department of Energy (DoE) and the Department of Agriculture (USDA), requesting a multi-agency investigation into specific examples of Big Oil violating the Sherman Antitrust Act, the Gasohol Competition Act of 1980, and the Petroleum Marketing Practices Act…all that while skirting the intent of the Energy Policy Act of 2005 and the Energy Independence and Security Act of 2007.
Fact: The Iowa Department of Revenue reported a 43 percent increase in E85 sales in the second quarter of 2013. Drivers in Iowa clearly demand a low cost, renewable alternative to expensive petroleum.
Fact: Despite the repeated cries of wolf about E15 by API, AFPM, and AAA, E15 celebrated its one year anniversary. Approximately 2 million gallons have been sold and over 40 million miles have been driven on E15 and no cases of engine failure or inferior performance have been reported. In fact, Volkswagen recently announced all MY2014 vehicles will be warrantied for E15. Additionally in the past few weeks, new locations in Iowa and Nebraska announced they will begin offering E15.