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

Press Conference Call on the RFS
Bob Greco, API downstream group director
Thursday, September 11, 2014

Opening statement, as prepared for delivery:

Good morning, and thank you for joining the call today.

I’m going to take a minute to discuss the latest manifestation of just how much of a regulatory disaster the Renewable Fuel Standard is. . .namely, the almost year long delay in setting the 2014 Renewable Fuel Standard requirements.

As you know, the final rule was just recently sent to the White House Office of Management and Budget for inter-agency approval.

To review: the law requires EPA to finalize the year’s biofuel volume requirements by November 30th of the previous year. Right now, EPA should be proposing the 2015 requirements, not waiting to finalize the requirements for 2014.

Unfortunately, this is not shocking behavior when it comes to implementation of the RFS under this administration.

The administration hasn’t released the requirements on time since 2011. In 2012, the rule was one month late. In 2013, it was nine months late. And this year it could be 11 or 12 months late.

The result?

Uncertainty in America’s fuel supply, which only serves to make it harder to produce the billions of gallons of fuels Americans demand each year, potentially harms consumers.

But the problems with the RFS are certainly not limited to the administration’s dilatory implementation.

We remain concerned that, after first proposing to lower the ethanol mandate to better coincide with the realities of today’s gasoline consumption, EPA may raise ethanol requirements based on the specious reasoning that E85 – a mixture of up to 85 percent ethanol with 15 percent gasoline – is a workable solution.

It is not.

Only 6 percent of the current vehicle fleet can even use E85. But even those motorists have largely rejected the fuel because ethanol is less energy-dense than gasoline. That means lower miles per gallon – a tank of E85 won’t get you as far as a tank of E10. And Triple-A says it costs consumers more in the long term.

Nationally, E85 demand is only 0.15 percent of overall gasoline demand. Even in Iowa, E85 demand stands at less than 1 percent.

This lack of E85 demand stands in stark contrast to the consumer demand for E0 – non-ethanol gasoline – which has recently grown to 5 percent of gasoline demand.

Consumers want E0 for their boats, for lawn equipment, and for recreational vehicles.

In its comments and actions, EPA has shown more concern regarding mandating a market for fuels for which there is no demand, than it has for protecting the fuels for which actual consumers have shown a substantial demand.

We’re also concerned by recent statements from EPA Administrator Gina McCarthy that the agency will raise ethanol requirements based on the latest gasoline demand figures for 2014.

But refiners cannot plan for compliance with regulatory requirements that change later in the year. And when companies must comply retroactively like they will again this year, it borders on the impossible.

Bottom line, the ethanol blend wall is real, and the administration can’t use gimmicks to avert it.

Industry and government studies show that EPA can’t just force more ethanol into gasoline than the current automotive fleet is equipped to handle.

Higher ethanol blends can harm engines and fuel systems. Worse, studies show that higher ethanol mandates could cause severe fuel rationing, substantially raise fuel costs, and deal a blow to our economy.

Unfortunately, the administration seems to be playing politics with the RFS rule instead of doing what’s best for consumers.

You don’t have to be a political insider to see how the Iowa Senate race -- and the White House’s fear they will lose control of the Senate—plays into this decision.

The administration must avert the ethanol blend wall and the potentially severe economic damage that goes along with it.

The administration must protect consumers and set the 2014 ethanol mandate low enough to allow for non-ethanol gasoline for consumers who want it. The consumers’ interest should come ahead of the ethanol producers.

The administration must finalize the rule as soon as possible and move toward finalizing the 2015 rule, which is due by November 30th.

We’re taking our concerns to the White House by requesting meetings with OMB officials. And we’re launching a new television, print and online ad campaign this week asking President Obama not to let partisan politics get ahead of sound fuels policy. The ads are now posted on our website at WWW [dot] API [dot] org.

Thank you. With that, I’d be happy to take your questions.