It's past time to repeal the RFS
Government-created markets are never a good idea. The Renewable Fuel Standard (RFS) created by Congress and managed by the Environmental Protection Agency is no exception.
This 2005 regulation, expanded on in 2007, mandates that a certain level of ethanol be included in the nationâ€™s fuel supply. When initially written, the mandate was passed out of concern for Americaâ€™s dwindling energy security and the hope that ethanol would be an environmental savior. The ground has shifted under both arguments.The American energy landscape is vastly different today than it was in 2005. Technological improvements have helped us tap immense new reserves of oil and gas across the country â€” literally a renaissance under our feet. According to the Energy Information Administration, since 2008, U.S. oil production has increased from 5 million barrels a day to well over 8 million barrels a day. This means that our demand for foreign oil is quickly falling â€” the free market has accomplished what the RFS tried to mandate.
At the same time, the RFS is hurting hard-working Americans. It was written at a time when many people felt that our demand for gasoline would continue to climb â€” a belief altered by the recession and improved fuel economy in cars. And yet the mandate is set to constantly creep higher and higher. That is why the Congressional Budget Office in June predicted that gasoline prices would increase between 13 and 26 cents per gallon by 2017 thanks to the RFS, unless the EPA accepts reality and trims the mandate significantly.
Further, we are now sending about 40 percent of our corn crop into our gas tanks to satisfy the RFS. Corn is a key component in our food chain â€” itâ€™s in countless foods that American eat at home and at restaurants. The mandate has helped to distort the market. In some years, it has been estimated that this costs an extra $2,000 out of the pocket of a family of four.
From an environmental process, the method of converting corn into a gallon of ethanol requires more energy than it produces â€” there is no logic to this formula. Even groups like the Environmental Working Group (EWG) agree that continued production of corn ethanol hurts the environment, farmers and consumers.
â€œIt is now clear that the federal corn ethanol mandate has driven up food prices, strained agricultural markets, increased competition for arable land and promoted conversion of uncultivated land to grow crops,â€ the EWG said.
Last year, the EPA indicated a willingness to acknowledge the reality of the problems associated with the RFS. Many suspected they would lower the numbers to reflect the impacts the mandate has had on our economy. Yet, as of now, they still have not issued the new lower numbers, and some industry experts have raised concerns they will reverse course and issue new higher standards, as their political allies in the Midwest have called for. EPA Administrator Gina McCarthy recently hinted as much in a speech in New York City.
America canâ€™t afford an energy policy based on political calculations. The RFS is an unmitigated disaster. It has artificially created markets through a mandate designed to help a select few and has achieved none of its stated goals. Few of the original arguments that helped get it past Congress are still relevant.
We donâ€™t need a broken government mandate to address our energy needs. The private sector and an abundance of natural resources have extended our energy production to the point that American oil exports are a hot topic of debate. The RFS mandate is a relic that does more harm than good.
Itâ€™s time to allow the free market to dictate the levels of ethanol in our fuel supply and repeal the RFS once and for all.
Olson has represented Texasâ€™s 22nd Congressional District since 2009. He sits on the Energy and Commerce Committee.