RFS Proposal Doesn’t Protect Consumers Enough

Mark Green
Posted May 18, 2016

One unsettling aspect of the federal Renewable Fuel Standard (RFS) is that for some time it has appeared – from public statements anyway – that EPA considers the program an ongoing experiment, testing the ability of government policy to change or modify the behavior of free markets and the fueling choices of individual consumers, with consumers as the guinea pigs.

The results were logged in long ago: Flaws in the RFS and EPA’s management of the program mark it for repeal or significant reform. RFS mandates for increasing ethanol use in the nation’s fuel supply threaten breaching the ethanol “blend wall,” risking impacts to the broader economy and consumers’ wallets.

Just as unfortunate is EPA’s apparent lack of concern for U.S. consumers –reflected in the agency’s proposals for 2017 volume levels, which will test the blend wall, the point where required use of ethanol in the fuel supply exceeds the safe level of 10 percent.

API argued the ethanol volume level shouldn’t exceed 9.7 percent, to ensure the availability of fuels that consumers want to buy, including ethanol-free gasoline. EPA’s proposal would set the level somewhere between 10.3 percent and 11 percent, which could potentially make refiners produce more higher ethanol-volume E15 gasoline that studies have shown could damage engines and fuel systems in millions of vehicles in use today. Frank Macchiarola, API downstream group director:

“Consumers’ interest should come ahead of ethanol interests. EPA is pushing consumers to use high ethanol blends they don’t want and that are not compatible with most cars on the road today. The administration is potentially putting the safety of American consumers, their vehicles and our economy at risk.”

More broadly, EPA also appears tone deaf to the concerns of American voters. Polling last fall found that 77 percent of Americans are concerned that auto manufacturers have warned they may not provide warranty coverage for vehicle damage caused by ethanol fuel blends greater than 10 percent if the vehicle wasn’t specifically designed for it.

Polling also found that 77 percent are concerned that breaching the blend wall could increase the price of gasoline by up to 26 cents per gallon, as a Congressional Budget Office study estimated.

EPA’s proposal underscores the need for Congress to act –either to repeal the RFS or significantly reform it. Macchiarola:

“Members on both sides of the aisle agree this program is a failure, and we are stepping up our call for Congress to act.”

Consumer interests are at stake with the RFS. EPA’s proposal relies on unrealistic increases in the sales of higher ethanol blends, despite the fact most cars on the road today aren’t warrantied for them and that U.S. motorists have largely rejected them.