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Ethanol Is a Critical Piece of America's Energy Strategy

  • Monday, 14 May 2018 14:34


May 11, 2018

By Senator Chuck Grassley

The conflict over the Renewable Fuel Standard (RFS) between the EPA, Congress and special interest groups have left hardworking people throughout rural America with a growing sense of uncertainty about their futures.

An honest discussion about this program is long overdue. In order to do that, it's necessary to understand where the RFS began, how it evolved and the role it plays in ensuring American prosperity and security.

For decades, refiners have used octane enhancers. Lead was the most common but was replaced in the late 1970s by an organic compound called Methyl tert-butyl ether (MTBE). Twenty years later, Congress passed the Clean Air Act Amendments of 1990, which required the use of oxygenated gasoline in areas with high levels of air pollution. The law increased MTBE's popularity because it helped reduced tailpipe emissions.

However, when MTBE was exposed as a public health risk, its use sharply declined, leaving refiners searching for an alternative. That alternative was ethanol.

In 2005, Congress passed the Energy Policy Act, which removed the oxygenate requirement for reformulated gasoline. It also instituted the RFS. Refiners eliminated MTBE from blending operations and switched entirely to ethanol.

In 2007, the Energy Independence and Security Act passed, expanding the RFS by extending yearly volume requirements and increasing long-term blending goals. The tax credit, what many called the "ethanol subsidy," given to oil companies to incentivize blending, was then allowed to expire.

Some continue to believe there is a federal subsidy for ethanol, but that hasn't been the case. The tax credit expired in 2011. Notably, the oil industry has yet to give up any of its specific tax incentives.

Ethanol supports nearly 350,000 jobs nationwide, largely in rural communities that need them most. It's the cleanest and most affordable fuel additive on the market and reduces polluting substances like carbon monoxide, exhaust hydrocarbons and toxins from tailpipe emissions. It also reduces America's dependence on foreign oil.

The addition of ethanol into the U.S. fuel supply and advances in shale production, which I also support, allowed for increased domestic energy production. In turn, imports of foreign oil have dropped significantly – a staggering 40 percent since the RFS was implemented.

In fact, the U.S. Energy Information Administration noted in an independent analysis that in 2017, net U.S. imports of "petroleum from foreign countries were equal to about 19 percent of U.S. petroleum consumption," which was the lowest percentage since 1967.

These developments have helped give America a stronger economic and strategic advantage on the world stage, empowering presidents to stand up to oil-producing adversaries like Venezuela and OPEC.

When refiners needed a clean, healthy alternative to MTBE, they embraced ethanol. But seemingly overnight, the relationship between ethanol and fossil fuels went from collaborative to combative. Efforts to thwart the RFS began in earnest and have led many to believe that the RFS is intended to distort the market. However, that's simply not the case.

Large oil companies, such as Exxon Mobil and BP, control the process from start to finish. They own the refineries that blend fuel and the gas stations that sell it. They oversee the delivery mechanisms and distribution process as well as the marketing of fuel.

Independent gas station owners are faced with contracts from fuel marketers that explicitly limit their ability to offer higher levels of ethanol blended fuels. In other words, oil companies control access to the market. Their continued attempts to limit the availability of ethanol products show that the oil industry is simply interested in oil's market share, not consumer choice.

As a free-market conservative, I believe that competition spurs innovation, encourages dialogue and ultimately delivers the best quality products to consumers. That's one of the many reasons I believe so strongly in ethanol as part of an all-of-the-above energy strategy.

The tone of our national energy policy discussions shouldn't be "us versus them." It must focus on how traditional and renewable fuels can both work to provide efficient, cost-effective and environmentally-friendly products to the American people and the world.

At the end of the day, U.S. energy policy shouldn't be determined by competing industry interests because a competitive energy strategy should be everyone's number one interest.

Commentary by Sen. Chuck Grassley (R-IA), a family farmer, and a member of the Senate Agriculture Committee. Follow him on Twitter @ChuckGrassley.

Read the original opinion piece: Ethanol Is a Critical Piece of America's Energy Strategy