Why the RFS is wrong and solutions to help consumers until Congress can repeal it
Posted: Monday, June 17, 2013 2:43 pm
Rep. Pete Olson
Because government didnâ€™t make this country what it is, Americans should always be distrustful of big government solutions. The last few years have given us two prime examples: the stimulus package that cost taxpayers almost one trillion dollars and failed to deliver the economic growth promised; and, Obamacare, which hasn't even been fully implemented and its guarantee of lower costs has already been proven false. While less obvious, there is another failed â€œsolutionâ€ hurting American consumers: the ethanol mandate known as the Renewable Fuel Standard or RFS.
The RFS was a political contrivance born of the marriage of environmental and agricultural interests in 2005, at a time when estimates of available domestic oil and gas resources were much lower. The government "solution" became a mandate that billions of gallons of corn-based ethanol must be put into our gasoline supply. The RFS also requires that the amount of ethanol must increase every year, regardless of demand or price.
So it should not have been a surprise that the RFS became a market distorting boondoggle for the corn lobby that has helped spike corn prices to record levels. Last year, despite the worst drought in 50 years, the U.S. was forced to divert about 40% of its corn crop into our gas tanks to satisfy the RFSâ€”spiking corn and food prices across the country. Some reports indicate that as a result of RFS-induced hikes in food prices, the average American family spent an extra $2,000 on groceries last year.
Market price distortions, higher energy costs and higher food costs for families are just a few reasons why the RFS should be fully repealed immediately. Unfortunately, the inescapable fact is that we do not have the votes right now for repeal in the House or the Senate. President Obama is also a staunch defender of the RFS - his Environmental Protection Agency has defied logic, reason and court orders to defend it. Even if the stars aligned and the House and Senate passed a repeal bill, he will not sign it. So until we have the votes and a President willing to repeal the RFS, how do we crack the monopolistic RFS mandate?
Until a full repeal is possible, we can lessen the damage from the RFS by increasing the sources of ethanol eligible under the RFS. This is what my bill, H.R. 1959, the Domestic Fuels Alternative Act, would achieve. It cracks the monopoly that corn ethanol has been granted by the government by allowing cheap, abundant and domestic natural gas to be included in the mandate as well. My bill does not pick winners and losers and it does not increase or strengthen the mandate. It simply addresses the supply issue. The more alternatives that are allowed to compete under the RFS, the better it is for consumers.
The American energy landscape is vastly different today than it was in 2005. Directional drilling and hydraulic fracturing have opened up over a century of affordable gas, literally under our feet. U.S. crude-oil production also grew by more than one million barrels a day last year, the largest increase in the world and the largest in U.S. history. We don't need a broken government mandate to address our energy needs.
Ultimately, this bill is not the solution to fix the RFS mandate. The solution is repeal. My bill is merely a short-term attempt to bring some relief to industry and consumers who are saddled by the constraints of the RFS mandate until we can repeal this broken, big government mandate all together. Right now, we have to play the cards we are given and we have to play them smartly.
Pete Olson is the U.S. Representative for Texas District 22.