EnergyFactor By ExxonMobil | Pespectives has a new home

Punting on the renewable fuels “blend wall”? Block that punt.

With football season almost upon us, perhaps it’s not surprising the Obama Administration chose to punt last week when it had a chance to temporarily fix the Renewable Fuels Standard debacle I described not long ago. In issuing its final 2013 biofuels mandates, the Environmental Protection Agency largely upheld the preliminary volume targets it had proposed last year rather than address the blend wall that refiners are starting to hit.

By the way, if you’re wondering why the agency is issuing its final 2013 biofuels mandates when we’re nearly 60 percent through the year in question – rather than before it began – you are not alone. By law, the EPA was supposed to issue those numbers nine months ago to guide refiners’ 2013 compliance strategies.

What EPA should have done last week was offer relief to an industry that is being put in an increasingly untenable position – being forced to blend more ethanol into the gasoline pool than the market can bear. It didn’t, and the government’s unrealistic biofuels targets now could wind up raising costs and harming car and truck engines (not to mention for boats and lawnmowers as well).

EPA did suggest it might offer some relief in 2014, when the blend-wall problem looks to be a lot worse. But it offered nothing concrete. We’re all supposed to cross our fingers and hope for the best when EPA issues its 2014 guidance … which may come next August if history is a guide.

That’s not good enough, which is why two industry groups – the American Petroleum Institute and the American Fuel & Petrochemical Manufacturers – filed a joint petition Tuesday to block the administration’s punt, so to speak.

The groups are petitioning EPA to lower the 2014 ethanol mandate to below 10 percent of gasoline demand, and to do so on time and according to the law. That would be a sensible move the government could make to spare consumers the economic harm of crashing into the blend wall even harder in 2014. A study by NEA Economic Consulting estimates that U.S. GDP will take a $270 billion hit next year if no action is taken.

Even that would only be a temporary fix, however. The laws that established our federal biofuels mandates set increasingly higher requirements in future years, despite the fact that motor fuels demand in the U.S. has been shrinking.

Congress needs to scrap the RFS. If Washington wants to institute a national biofuels policy, it should start over and craft one that makes sense, not one that makes policymakers scramble to address unintended consequences that harm consumers.

  • Worth a deeper look...