Opinion: Refiners’ RFS agenda is to stop competition

Source: Bruce Dale, The Hill.Com • Posted: Wednesday, May 1, 2013

The oil industry hopes to protect its control over America’s fuel supply by undermining renewable fuels. By confusing us with misleading claims and outright falsehoods, oil companies hopeCongress will overlook the real dangers caused by our almost complete dependence on oil for transportation fuels. For our economy and our environment, we cannot allow them to succeed.

The oil lobby is not hiding its goal. It wants to destroy its competition by repealing the Renewable Fuel Standard (RFS), calling higher ethanol blends “unworkable” and “not the way to go.” That is nonsense. Currently, ethanol is blended at the 10% level (E10) into nearly every gallon of gasoline in America, saving consumers money and cleaning our air. Meanwhile, higher ethanol blends like E15 are the most tested fuels ever – with enough miles driven by testing agencies to travel to the moon and back 12 times.

The oil industry would like you to ignore the inconvenient fact that oil is both limited and disappearing fast. In the race to drill ourselves into “Saudi America” by increasing domestic oil production, we will be going after oil reserves that are harder and harder to access. And those oil reserves will cost us a lot more, both economically and environmentally.

According to the IEA, even with all that drilling at home, oil is still expected to top $200 per barrel by 2035. That’s a far cry from the $20/barrel price most of us baby-boomers grew up with. We won’t have lower oil prices until we have real alternatives to oil at the pump – and the oil companies know it.

So it’s no surprise that the oil industry is interested in killing policies that encourage competition to its legacy business model. That model is extremely lucrative: the five majors pulled inrecord profits in 2011 and more than $118 billion last year.

Some in the oil industry have tried to create a stir over Renewable Identification Numbers, or RINs, claiming that these free credits will somehow bring the economy to a grinding halt. The facts tell a different story. First, the oil refiners insisted on the creation of RINs when the current RFS was negotiated back in 2007 – a fact they are now loathe to recall since they’re using RINs to attack the RFS. After an unexplained spike in RIN prices earlier this year, many in the refining sector predicted a huge gas price spike. That spike has not occurred – indeed, gas prices have fallen in recent weeks. And since oil refiners essentially control the RINs trading market, it is not difficult to conclude that if there is a RINs “bubble,” the refiners themselves just might be responsible for it.

The fact is, if we want to break the stranglehold petroleum has on our country’s economy and our family budgets, then we must foster market access for renewable fuels and other alternatives to oil. Renewable fuels like ethanol (from both corn and advanced sources) provide cleaner alternatives to oil and a range of other benefits.

By increasing fuel supplies, the blending of ethanol into the gasoline supply lowered the cost of gas by over a dollar per gallon in 2011. Renewable fuel also provides clearenvironmental and public health benefits. Ethanol from corn emits 30-50 percent fewer greenhouse gases than gasoline, and other feedstocks improve that margin to as much as 90 percent. The emerging industry producing biofuels from advanced sources such as grasses, wood chips and municipal waste will provide much larger volumes of clean, renewable fuels in the longer term. But we must stay the course and not allow ourselves to bemisled by the oil industry.

The Renewable Fuel Standard is working for us. It providescleaner, inexpensive alternatives to oil, helps new fuel technologies gain access to the market and encouragesinvestment in the U.S. economy. At the same time, the RFS has built-in flexibility to ensure that refiners can meet their targets without endangering the fuel supply we need. Complaints from refiners to the contrary simply don’t fit the facts.

In short, renewable fuel is here and it’s working. That fact is why the oil industry’s efforts to stop renewable fuels are so desperate and disconnected from reality. We must ignore their efforts to protect their profits at our expense. To save at the pump and protect our environment, the answer is simple. We must protect the Renewable Fuel Standard.

Dale is professor of Chemical Engineering and former chairman of the Department of Chemical Engineering and Materials Science at Michigan State University.