Bob Greco's remarks at press conference call on RFS repeal

As prepared for delivery

Press briefing teleconference on RFS Repeal
Robert Greco, API group director of downstream and industry operations
Tuesday, September 17, 2013

Opening statement, As prepared for delivery:

Good afternoon and thank you for calling in.

As Congress considers what to do about the Renewable Fuel Standard, I wanted to share a few thoughts on why this mandate, to put it simply, is broken beyond repair and must be repealed. We’re calling it the RFS reality gap.

As you can see in our new analysis, the state of energy and the economy were very different when Congress passed the Energy Independence and Security Act of 2007.

For starters, demand for gasoline is down. The Energy Information Administration now estimates we will use 424 million fewer barrels of gasoline this year than it projected, a trend that is expected to continue.

Meaning, the mandated ethanol volumes are completely out of touch with today’s fuel market reality.

Second, the U.S. has drastically increased its domestic crude oil production and lowered imports. The EIA now projects the U.S. will produce 64 million barrels more and import 241million barrels of crude fewer than was projected back in 2007.

Translation: our nation’s energy security outlook is much improved not through ethanol mandates but through increased domestic production, a primary goal of the RFS.

Further, flex-fuel vehicles that can use higher ethanol blends have largely been rejected by consumers, representing less than 7 percent of the vehicles. And consumers that own flex-fuel vehicles choose higher ethanol blends only 1 percent of the time. The reason? The higher the ethanol blend, the lower the mileage. According to EPA’s own fuel economy website, fuel costs can be more than $1,000 higher per year when consumers use an E85 blend.

Finally, the assumed production levels of advanced cellulosic biofuels – which Congress envisioned would eventually make up the largest share of the RFS –have disappointed year after year. The volume mandates envisioned by EPA are more science fiction than science-driven public policy. Case-in-point, this year, EPA mandated that refiners use 4 million gallons. But as of July, only 142,000 gallons have been produced.

And the company EPA hopes will account for the lion’s share of this year’s cellulosic production recently announced, once again, that it would not come close to meeting its production targets this year.

All of this proves that while the RFS may have been well-intentioned six years ago, it is a dangerous relic of America’s era of fuel scarcity. Today, the RFS is not just outdated; it is bad public policy that is poised to harm millions of consumers

Let me give you two quick examples.

A study by NERA Economic Consulting shows that the RFS could cause a drastic reduction in America’s fuel supply, possibly leading to:

• Dramatic fuel cost increases and fuel supply disruptions rippling adversely though the economy, ultimately leading to;
• A $770 billion decrease in U.S. GDP and a $580 billion decrease in take-home pay for American workers.

Any one of these outcomes is a crisis; taken in total these consequences will cause severe harm to America’s economy as a whole and to virtually all consumers.

And that doesn’t even account for the potential damage to millions of car, motorcycle, marine and small engines as a result of higher ethanol blends in America’s fuel supply.

Not surprisingly, a growing chorus of concerned groups is urging repeal of the RFS, and we’re meeting with members of Congress to help them understand the severe economic consequences that could occur unless they take action.

But we understand that will take time. That’s why we’ve also petitioned EPA to provide a stop-gap measure and reduce the total renewable fuels volume requirement to a level below 10 percent of overall gasoline demand for 2014.

API has mobilized its grassroots network of more than 15 million voters, including hundreds in every single congressional district. So far, over 150,000 Americans have called the White House or contacted Congress to show their support for RFS repeal.

We also launched a TV, print and online advertising campaign and a new website, filluponfacts.com.

And we’re hosting refining executives in Washington tomorrow for a series of meetings with members of Congress to accelerate the pace of Congressional action.

Let me be clear that API’s member companies support the use of renewable fuels in the nation’s fuel supply, as evidenced by the fact that oil and natural gas companies are some of the largest investors in biofuels. The fact is that ethanol and other biofuels will continue to be blended into the fuel supply after the RFS is repealed, because they are an important part of America’s overall energy portfolio.

This is not a battle of one industry against another. It’s a battle against bad public policy. We cannot allow an ever-increasing biofuels mandate to continue when it is unsafe for consumers and could put our economy at risk.

Now, I’d be happy to take your questions.