Convenience stores say RFS-CAFE combo will hurt their bottom line

Source: Jason Plautz, E&E reporter • Posted: Thursday, April 26, 2012

Convenience-store owners say the combination of federal fuel economy standards and the renewable fuel standard will cause severe harm to the retail market and could force renewable fuels to be too large a share of the market.

In a report released today, the National Association of Convenience Stores say the CAFE (corporate average fuel economy) standards and RFS cannot coexist without addressing concerns in the retail market. The store owners urge Congress to conduct a review of the two regulations to alight their goals while minimizing the impact on the vehicle and motor fuel industries.

“NACS members strongly support efforts to enhance the nation’s energy security and don’t oppose improving the fuel efficiency of the nation’s vehicle fleet,” said white paper author and NACS’s vice president of government relations, John Eichberger.

“However, we are very concerned that the policies being enacted and drafted are not effectively coordinated and could compromise each other. The result could force countless small businesses to examine whether they want to invest hundreds of thousands of dollars to retrofit their existing fueling equipment or exit the business.”

Under an agreement with automakers this summer, the CAFE standards set a fleetwide 54.5-mpg target by 2025. The RFS, meanwhile, requires 36 billion gallons of renewable fuels for the transportation market by 2022 in order to encourage more use of ethanol, biofuels and other non-petroleum sources.

According to NACS, the two concurrent standards will in fact overlap and could bump the share of renewable fuels in the market by 2022 to as much as 40 percent (under RFS, researchers estimate it would have only been 20-25 percent in that time). Based on estimates form the Energy Information Administration, NACS estimates that petroleum use would drop by 36 percent by 2025 while federal requirements would mandate a higher volume of fuels derived from ethanol, diesel and other biofuels.

Accommodating that volume of renewable fuels would require convenience stores — which represent the sale of roughly 80 percent of fuel in the United States — to purchase new tanks and infrastructure, estimated to cost at least $22 billion. The industry will already have to adjust infrastructure for renewable fuels, but NACS says the higher volume would raise costs to an untenable level.

That would come as CAFE standards make cars more fuel efficient and reduce the number of trips to gas stations — NACS estimates that transactions would drop from 100,000 a year currently to 64,000 in 2025.

Still, petroleum would remain the dominant fuel of choice under a variety of projections studied by NACS.

The RFS has been dogged with plenty of doubt with critics wondering if the mandate is sustainable and a National Academy of Sciences study saying it could lead to rising fuel and food prices. But supporters say it is necessary to push more renewable fuels into the marketplace and give producers incentive for higher volume.

Click here to read the report.