U.S. regulators’ biofuels plan to cost at the pump: industry study

Source: By Chris Prentice, Reuters • Posted: Thursday, September 10, 2015

A biodiesel filling station is seen at Dogpatch Biofuels in San Francisco, California January 8, 2015. REUTERS/Robert Galbraith

The U.S. government’s proposal for biofuels use will hit consumers at the pump, according a study prepared for an oil group, just months after regulators refuted similar claims and as pressure mounts ahead of a deadline to finalize the plan.

The targeted volumes of ethanol use for 2015 and 2016 are impossible to achieve and will cause “severe economic harm,” said National Economic Research Associates (NERA) in a study commissioned by the American Petroleum Institute on the potential costs of the Environmental Protection Agency proposal due to be finalized by November 30.

The study echoes a 2012 report from the same consultancy examining the impacts of the controversial Renewable Fuel Standard program and comes just months after EPA dealt a blow to the oil lobby by saying the program does not increase consumer costs or net costs to refiners.

EPA in late May disappointed both the corn and oil industries with targets for biofuels use through 2016. Producers of corn-based ethanol criticized the proposal for falling short of a 2007 law and oil companies said the volumes pushed into the “blend wall” – the saturation point at which biofuels cannot be blended into the fuel stream without major infrastructure change.

Lobbying pressure is mounting ahead of a November deadline after years of delays that both industries have criticized for causing uncertainty.