I am old enough to remember the first energy crisis in the early 1970s. That episode was a tremendous shock for two reasons: Gasoline prices spiked, and Americans realized just how vulnerable our nation had become to the whims of oil ministers on the other side of the globe.
So it came as little surprise on Nov. 30 when the predominantly Middle Eastern members of the Organization of the Petroleum Exporting Countries announced an alliance with Russia to cut global energy production and push up the price drivers will pay at the pump. The cost for a barrel of oil leaped nearly $10. By joining in the cartel’s efforts to manipulate global prices, Russia helped ensure that unfriendly nations, reliant on revenues from fossil fuel production, will continue to profit from America’s dependence on oil.
The episode is a stark reminder that the lessons learned in the early 1970s will remain as relevant to President-elect Trump as they have been for every president since Richard Nixon. Fortunately, there is at least one policy that has been working consistently for over 11 years to ensure that consumers are increasingly protected against global manipulation in the oil markets. That’s the Renewable Fuel Standard, which requires that oil companies integrate a growing share of homegrown biofuels into the domestic energy mix, gradually reducing our dependence on oil.
I worked with then-Sen. Tim Johnson of South Dakota to pass the RFS in 2005. It was subsequently extended by Congress, and today, ethanol and other biofuels meet about 10 percent of our transportation fuel needs. Alongside rising U.S. oil production, the abundance of U.S. biofuels produced under the RFS has helped to cut American dependence on oil imports by half since 2005. And, because ethanol sells for about $1.60 per gallon, it holds down prices at the pump. That savings will only grow as Russia and OPEC work to push up the price of fossil fuels.
In the past, critics of the program have objected to government intervention, an argument that would normally hold sway with free market advocates, myself included. But it’s important to keep in mind that there is no free market in oil. The price is openly controlled by an international cartel that claims control over 81 percent of the world’s proven crude oil reserves, not including the considerable influence now added by an alliance with Russia.
In fact, the RFS is the path to a free market. As America’s renewables industry grows, the power of the cartel shrinks. And unlike the subsidies received by oil companies, the RFS is not a handout. It simply guarantees market access for biofuels in a sector where oil companies maintain a tight, monopolistic grip over consumer options.
Best of all, it works. Thanks to the RFS, the biofuel industry supports hundreds of thousands of jobs across rural America, including many in manufacturing and engineering. We produced enough homegrown biofuels in 2015 to displace 527 million barrels of oil — more than the U.S. imported from Saudi Arabia and Kuwait combined.
As an added benefit, these renewable fuels are better for our environment and for drivers. Ethanol boosts the octane content of fuel for better performance, a fact on display during every NASCAR event, where mechanics exclusively utilize a 15 percent ethanol blend to power their race cars. It replaces toxic fuel additives such as benzene, many of which are linked to asthma and drinking water contamination. And, according to the Department of Energy-sponsored research, ethanol reduces carbon emissions by 34 percent relative to gasoline, while advanced biofuels can curb emissions by 100 percent or more.
In short, the RFS has been one of the few consistent, successful energy policies adopted by Washington since the 1970s. It has shielded from monopolistic practices an industry which is benefitting the American economy and consumers, and it offers the tangible future prospect of at last freeing the United States from a 40-year threat to its energy security. Policymakers seeking to demonstrate American strength in the face of intensified efforts by OPEC and Russia should keep that in mind the next time the oil industry asks Congress or the Environmental Protection Agency to gut the RFS.
Former Sen. Talent currently serves as Chairman of Americans for Energy Security and Innovation (AESI), which supports homegrown, renewable energy to reduce our dependence on foreign oil. Thinking of submitting an op-ed to the Washington Examiner? Be sure to read our guidelines on submissions.
