Renewable fuel standard key to lower gas prices — ethanol industry

Source: Amanda Peterka, E&E reporter • Posted: Thursday, March 29, 2012

Ethanol industry proponents of the renewable fuel standard this week are framing the mandate as the long-term solution to high gas prices, hoping to win over congressional support and block attempts to weaken its requirements.

In a letter sent to leaders of the House and Senate, industry trade groups are citing studies that show ethanol, spurred on by the renewable fuel standard, has reduced gasoline prices by up to 89 cents a gallon. They hope the message will resonate with lawmakers who are facing pressure over gas prices that have topped $4 a gallon in many places nationwide.

“With gasoline prices beginning to soar, we write today to express our strong support for the Renewable Fuel Standard and to highlight the critical role it has played in moderating gasoline prices,” the groups wrote Tuesday to Senate Majority Leader Harry Reid (D-Nev.), House Speaker John Boehner (R-Ohio), Senate Minority Leader Mitch McConnell (R-Ky.) and House Minority Leader Nancy Pelosi (D-Calif.).

The message is one being repeated on Capitol Hill this week by members of one of the trade groups, the American Coalition for Ethanol. Coalition members, who are in town for their annual legislative fly-in, have handed out the letter to House and Senate lawmakers and are stressing the need to keep the standard robust.

“Our primary message is that the renewable fuel standard is working and we would like to see Congress keep it intact,” Brian Jennings, executive vice president of the coalition, said yesterday in an interview.

There have been several legislative attempts over the past months to either change or weaken the standard. In October, Rep. Bob Goodlatte (R-Va.) introduced a bill, H.R. 3098, that would eliminate the RFS completely and another, H.R. 3097, that would reduce the RFS’s mandates when the country’s corn supply runs low.

At the time, Goodlatte objected to the “artificial” market created by the standard.

H.R. 3773, introduced in January by Rep. Pete Olson (R-Texas), would allow ethanol produced from domestic natural gas and coal to be included in the standard (Greenwire, Jan. 18).

While ethanol supporters have long been touting the gasoline price reductions associated with ethanol, only recently have they linked it with support for the renewable fuel standard.

The letter came a day before the House Energy and Commerce Committee deliberated a discussion draft of a bill that would require the president to appoint an interagency panel to study the impact of several rules, including those proposed under the renewable fuel standard, on gas prices, refining costs and other economic factors.

Other signers are the Advanced Ethanol Council, Biotechnology Industry Organization, National Corn Growers Association, Renewable Fuels Association, Growth Energy, 25 x ’25 Alliance and Energy Future Coalition.

The groups are citing a study last year by the Center for Agriculture and Rural Development, Iowa State University and the University of Wisconsin that found ethanol reduced gas pump prices an average of 25 cents per gallon between 2000 and 2010. In 2010, ethanol lowered pump prices by 89 cents a gallon, according to the analysis.

Nationally, gasoline now averages $3.91 a gallon, according to AAA’s Oil Price Information Service.

Biofuels will be one of the “relief valves” for American consumers as gas prices get even higher, BIO President and CEO Jim Greenwood said in a statement.

“We simply are highlighting that we need a long-term policy to address” high gas prices, said Paul Winters, a spokesman for BIO. “And the renewable fuel standard is the one long-term standard that is in place now, so we need to keep it in place.”