EPA must roll back rising ethanol mandates, that put consumers at risk, until Congress can permanently repeal the program, API Senior Fuels Policy Advisor Patrick Kelly told reporters in a conference call to discuss comments submitted to EPA. Here is the transcript of his remarks.

Press briefing on 2014 RFS comments
Patrick Kelly, API senior policy advisor
Wednesday, January 29, 2013

Opening statement, as prepared for delivery

Good morning.  Today, I want to discuss our comments on EPA’s proposal for the 2014 biofuel mandates.

As you recall, our major concern is that ever- increasing biofuel mandates under the Renewable Fuel Standard could harm consumers and damage their automobiles.  They could also create supply shortages that severely harm our still fragile economy.

To that end, we shared research with EPA showing that cars currently on the road are not equipped to use fuel with more than 10 percent ethanol. This research by the auto and oil industries report that millions of American families’  cars could be damaged by higher ethanol blends.  And  the automobile companies have been clear that the use of an ethanol blend higher than 10 percent will void the warranties for millions of consumers. 

We also shared with EPA a study by NERA Economic Consulting showing these increased ethanol mandates could lead to fuel rationing and supply shortages that, by 2015, could drive up gasoline costs by 30 percent and the cost of diesel by 300 percent, ultimately resulting in severe economic harm.

And, livestock groups say the mandate – which now diverts more than 40 percent of the U.S. corn crop from food to fuel – has been the leading driver of food price increases we’ve seen in recent years.  In fact, rising food prices from the RFS have far outpaced the rate of inflation. Since 2005, the consumer price index for food rose nearly 25 percent compared with a 16 percent increase in core inflation during that same time, according to the Bureau of Labor Statistics. A recent study by food groups predicts the price of beef, chicken, and eggs will rise each year unless we repeal the RFS.

So that’s the bad news.  Here is some good news: For the first time, EPA has acknowledged that the E10 blend wall is a dangerous reality that must be addressed.  EPA proposed to lower the 2014 mandates to below 10 percent of gasoline demand, which helps to address the most serious impacts to our fuel supply, and the potential harm to American consumers.

While the agency took a step in the right direction, we still have concerns that the proposal doesn’t go far enough to protect consumers.

In our comments, we’ve asked EPA:

·         To further lower the 2014 ethanol mandate down to no more than 9.7 percent of projected gasoline demand. This will help to preserve the choice of ethanol-free gasoline for owners of boats and small engines that demand it.

·         Also, EPA must bring their mandates closer to reality on cellulosic biofuels, which do not exist in commercial quantities. Despite rosy projections four years in a row, cellulosic ethanol producers are still not producing nearly as much as EPA mandates.  And that means refiners could have to pay a stealth tax that adds to the cost of producing gasoline.

·         Finally, EPA must finalize these requirements as quickly as possible and get this annual rulemaking process back on track.  Refiners are responsible for producing the billions of gallons of fuel America needs each year, and EPA can’t wait to set requirements for the year after it’s halfway over.  EPA must finalize the next year’s requirements by November 30, as required in the statute.

We’ve had an overwhelming response from our grassroots supporters nationwide who are concerned about higher ethanol mandates.  Over 100,000 people in our extensive grassroots network sent in comments to EPA.

By making these adjustments, EPA can create a welcome stopgap for a disaster in the making. But ultimately, we need a long- term solution for consumers.  That’s why we’re still pressing Congress to repeal these ever -increasing biofuels mandates to protect consumers in the long run.