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Ethanol Industry Reacts to API Criticism of RFS

Ethanol Producer Magazine

January 6, 2016

By Erin Voegele

Representatives of the ethanol industry are speaking out to criticize comments on the renewable fuel standard (RFS) made by American Petroleum Institute President and CEO Jack Gerard during a recent speech.

On Jan. 5, Gerard delivered the keynote address at API’s sixth annual State of American Energy event. During the speech, he called for the RFS to be repealed or significantly amended. “It is relic of our nation’s era of energy dependency that poses a direct threat to our nation’s economy, risks reversal of important environmental improvements and could raise energy costs for American consumers,” he said.

Renewable Fuels Association President and CEO Bob Dinneen has spoken out to reject Gerard’s claims.  “I’m not sure what reality Jack is living in, but it is clear that he believes API’s actions and policies are making our nation more energy secure when nothing could be further from the truth,” Dinneen said. “Perhaps he has convinced himself that fracking will provide the answer to all of our nation’s energy needs. What Jack conveniently failed to mention is that as oil prices have crashed, so has the rig count. The number of active U.S. oil rigs has plunged 67 percent from its peak in 2014. Last week’s rig count was actually the lowest since May 2010, according to the oil field services firm Baker Hughes. If Jack spent time living in the real world, instead of his revisionist reality, he would find himself whistling past the graveyards of shuttered wells that have been abandoned in the bust that inevitably follows a temporary boom of an oil well.”

“Even though U.S. oil production has risen in recent years, U.S. refiners still import a substantial amount of crude oil,” Dinneen continued. “In 2015, U.S. refiners processed roughly 16 million barrels per day, while crude oil imports averaged about 7.3 million barrels per day. This means that roughly 45 percent of the oil processed by U.S refineries came from imports. And about one-third of our nation’s imports came from OPEC nations with Russia and Columbia also serving as major suppliers.”

 “The fact is our nation needs domestically-produced clean burning renewable fuels now more than ever,” Dinneen said. “Ethanol plants strengthen communities, they do not abandon them. Ethanol jobs are as stable and renewable as the fuel itself. Jack needs to wrap his arms around the fact that the era of unconstrained energy consumption is the real relic, and no longer exists. Renewable energy resources like ethanol provide the only real hope of a more sustainable energy, environmental, and economic future.”

Growth Energy co-chair Tom Buis has also spoken out to criticize Gerard’s comments. “API’s ‘State of American Energy’ speech, brought to you by Big Oil, is nothing new,” he said “While oil companies talk about the future of energy in this country, they seem fixated on a finite resource and fail to acknowledge that renewable fuels play a critical role in meeting the nation’s growing energy needs.

“Year after year, API attempts to drive the narrative that the renewable fuel standard (RFS) must be reformed or repealed,” Buis said. “This argument is fundamentally flawed. The claims that renewable fuels will increase the cost of energy or that they are worse for the environment are simply ridiculous. Countless independent studies have shown that renewable fuels like ethanol help drive down the cost of fuel. Furthermore, when it comes environmental damage, no one has a worse record than oil companies. Their record of ecological disasters is extensive and deeply troubling.”

“They claim the RFS is a ‘relic’ that is no longer useful, but the fact is that the RFS has been a resounding success, doing exactly what it was intended to do when a bipartisan Congress passed it over a decade ago,” Buis continued. “The RFS is the most successful energy policy this nation has enacted in the last 40 years. Not only is it creating jobs, it is revitalizing rural economies, reducing harmful emissions, improving our environment and reducing our dangerous dependence on foreign oil and fossil fuel. Additionally, it is providing consumers with a choice at the pump.”

Iowa Renewable Fuels Association Executive Director Monte Shaw noted the API continues to defend its special tax preferences while attacking the RFS. “You can’t help but laugh when API wraps themselves in the banner of market competition while advocating just the opposite, “he said. “They’ve done that for so long you get the feeling they actually have started to believe their own false rhetoric.”

“Big Oil simply does not want consumers to have the choice of higher ethanol blends because oil can’t compete in a free market,” Shaw continued.  “Ethanol blends are cheaper, cleaner, and higher octane.  Ask the pioneering retailers who give their customers a choice and the picture is clear—consumers prefer cheaper, cleaner E15 and E85.”

“Despite API’s claims that its oil monopoly worldview is gaining political support, the facts on the ground are clear.  First, the only vote in Congress to repeal the RFS failed by a 2 to 1 margin in the Senate Banking Committee,” Shaw said. “And here in Iowa, 12 out of the 14 candidates running for president have pledged to—at a minimum—support the Congressional RFS schedule through 2022 and to insist on a level playing field thereafter.  Quite frankly, we are likely closer to the end of Big Oil’s Century of Subsidies than to API’s goal of repealing the RFS.”

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