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How We Can Free America From the Foreign Oil Cartel

St. Louis Post Dispatch

November 22, 2015

By Jim Talent

Ten years ago, Congress took an important step toward the goal of energy independence. By establishing the Renewable Fuel Standard as part of the Energy Policy Act of 2005, Congress sent a clear message that it wanted to kick the addiction to foreign oil through a tried and true solution: American innovation. I was one of the chief authors of the RFS.

Ten years later, the RFS is the government’s most successful energy policy; in fact, it may be the government’s only successful energy policy. It has reduced dependence on foreign oil, created hundreds of thousands of jobs, and also reduced carbon emissions. Despite these achievements, the Environmental Protection Agency wants to move in another direction and actually scale back the RFS.

That’s right. The same federal agency that is promulgating costly regulations to reduce greenhouse gases also wants to weaken a program that is already reducing carbon emissions without costing the economy anything. Given the Obama administration’s emphasis on the climate change issue, the EPA’s hostility to renewable fuels only makes sense as a response to pressure from the oil industry.

The advantages of the RFS are clear. Ten percent of our fuel supply is now derived from biofuels, and our foreign oil imports are at their lowest level in 20 years. At the same time, the price of gasoline at the pump has gone down by over a dollar, in part because most gasoline contains an ethanol blend, and ethanol sells for about $1.60 per gallon. The University of Missouri Extension Service calculates that Missouri’s corn production industry generates approximately $4.3 billion in economic output and sustains 65,960 jobs. Across the river, the collective renewable fuel sector in Illinois generates $17.5 billion of total economic output annually and supports 73,156 jobs, according to the economic research firm of John Dunham & Associates.

Critics of the RFS claim that renewable fuels are subsidized. That’s not true; there are no subsidies or tax breaks for ethanol. At the time the RFS was passed, there were concerns about whether the supply of corn would be adequate to support both food and fuel production. Those of us who authored the RFS believed that it would stimulate efficiencies in corn production that would more than meet the demand. That’s happened; American farmers are growing more corn than ever before on the same amount of acreage.

Critics also claim that the RFS is an intervention in the free market. Actually, it’s the path to a free market for automobile fuel. For 40 years, the price of oil has been controlled by a foreign cartel that does not hesitate to use its market power to crush competitors.

Unsurprisingly, OPEC has already made plans to crush the U.S. oil boom, and regularly strategizes to batter competitors and dominate market share. Last November, OPEC colluded to drop oil prices so that it could squeeze competitors with higher costs. Saudi Arabia was the main architect of this strategy, driving many U.S. fracking companies out of business and into bankruptcy.

It’s alarming when you realize just how much control foreign governments and OPEC oil barons have on our everyday lives and paychecks. But they can’t exercise that power over renewable fuels, because of the RFS. The fact that the largest ethanol plant in the world just opened its doors for business in Iowa — a plant that is powered by discarded corncobs, husks and stalks — is another reminder of what American-style innovation can accomplish if it is allowed to succeed.

If you create a map of the world and size it according to oil reserves, Saudi Arabia is the biggest country by far. But if you size such a map according to agricultural production, the United States is the largest nation. That’s why the RFS was and remains such an important policy.

In the end, the RFS is not about a proposed policy change by a federal agency, it’s about who will be in charge of our nation’s energy. When you consider what is at stake, that’s something worth fighting for.

Jim Talent was U.S. senator representing Missouri from 2002 to 2007. He is the chairman of Americans for Energy Security and Innovation.

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