The U.S. oil boom means Congress should repeal the rule requiring ethanol in gasoline, an oil industry group argued Tuesday.
Frank Macchiarola, the group director for American Petroleum Institute’s downstream and industry operations, said the oil industry now produces 3 million more barrels of oil per day than it did 10 years ago when the Renewable Fuel Standard was passed.
When the standard was passed, Congress wanted to ensure the country’s energy security by replacing foreign oil with domestic ethanol, Macchiarola said. Now, domestic oil is more available so the ethanol is not as necessary, he argued.
“Back then, the idea that an American energy renaissance would dictate that the American people would seek an end to a decades-long export ban on crude oil would be unthinkable,” he said. “Just as the energy reality of today drove the need to examine that policy, reality dictates that we must re-examine the ethanol mandate.”
The Renewable Fuel Standard is the amount of biofuel, usually corn ethanol, required to be in the nation’s gasoline supply.
The updated Renewable Fuel Standard increases the amount of biofuel, mainly corn ethanol, in the gasoline supply to 18.1 billion gallons in 2016, up from 16.9 billion in 2015. That has angered oil industry groups and consumers who are concerned about pushing past the “blend wall,” or the point at which a car engine is damaged by burning too much ethanol.
While the regulation is enforced by the Environmental Protection Agency, the law mandates the amount of ethanol that must go into the nation’s gas supply. Instead of requiring a certain proportion of gasoline to be made up of ethanol, the law requires a certain amount be added.
While the oil industry has criticized the ethanol requirement for years, producers are concerned about the collapse in oil prices during the last year. Because of the oil glut, producers have laid off tens of thousands of workers as production has slowed.
With Iran set to enter the international market soon, industry officials are concerned prices could plummet further.
While low oil prices generally benefit consumers, Macchiarola said continuing the Renewable Fuel Standard could eventually produce gasoline that hurts car engines and consumers alike.
“We believe support for repeal or reform is growing,” he said. “And we are making this a top priority this year because we need Congress to act, and act quickly, to protect consumers from this harmful mandate.”
The Senate Environment and Public Works Committee is scheduled to hold a hearing about the Renewable Fuel Standard Wednesday morning. Senators are expected to question top Environmental Protection Agency officials who are in charge of implementing the standard.
