NCPA - National Center for Policy Analysis

Soaring Renewable Fuel Costs Spark New Fight over Ethanol Mandate

July 24, 2013

Renewable fuel credit prices rose to record highs recently, reigniting the debate over repealing the federal government's ethanol mandate, says the Daily Caller.

  • For months now, refiners and the petroleum industry have been pushing for the full repeal of the Renewable Fuel Standard (RFS), which requires that 13.8 billion gallons of ethanol be blended into gasoline this year and 14.4 billion in 2014.
  • However, refiners are hesitant to blend more than 10 percent ethanol into the fuel supply over safety concerns.
  • Skyrocketing renewable fuel credit prices indicate that the industry is nearing the limits of what it can blend, or the "blend wall."

As renewable fuel credit prices increase, refiners are burdened with higher costs.

  • Valero Energy Corporation CEO and Chairman William Klesse said in a Senate hearing that his company expects cost increases between $500 million and $750 million in 2013.
  • Valero is also the third-largest corn ethanol producer in the United States.

But the ethanol industry contends that its product does not drive up the cost of fuels, instead making them cleaner and cheaper.

  • Ethanol producers have been pushing for the expanded use of gasoline with a 15 percent ethanol blend, or E15.
  • The Environmental Protection Agency approved the use of E15 in 2011, but only a handful of gas stations carry the fuel.
  • There are concerns that E15 could be harmful to engines, as most cars were only designed to handle 10 percent ethanol blended fuels.

Source: "Soaring Renewable Fuel Costs Spark New Fight over Ethanol Mandate," Daily Caller, July 16, 2013.


Browse more articles on Environment Issues