Repeal the Renewable Fuel Standard

September 27, 2013

By: Hannah Fjeldsted

Earlier this year, Senators Pat Toomey, Mark Pryor, and John Barrasso introduced a bill (S. 1195) that will repeal the Renewable Fuel Standard (RFS) in its entirety. Established by the Energy Policy Act of 2005, the RFS requires a certain amount of renewable fuels to be blended in with gasoline. When arguing in favor of S. 1195, Senator Toomey stated that “Not only does the mandate likely harm our car engines, it drives up farmers’ and ranchers’ costs and causes increased prices in almost everything we buy in the grocery store.” Likewise, Senator Pryor claims that the RFS drives up Arkansas’ gas and food prices. These Senators are correct in their reasoning. For the economic well-being of hard-working families, Congress should repeal the RFS.

The RFS mandate could do considerable harm to our car engines, if it reaches the blend wall, the point at which the amount of ethanol required to be blended into our tanks exceeds the maximum that the average vehicle can tolerate. Most cars can only operate with an E-10 blend of gasoline, consisting of 10% ethanol. But, if the RFS mandate becomes too strict, fuel producers may have to sell an E-15 blend on the market in order to comply with it. It has been proven that when gas tanks are filled with more ethanol than their cars are designed run on, the cars suffer damage like damaged valves and valve seats, misfires, engine damage, and the destruction of a cylinder head, which costs $2,000 to $4,000 to replace.

In addition, Senator Toomey is right to make the assessment that the RFS drives up food prices. The RFS has artificially stimulated the demand for corn as it has required greater and greater amounts of ethanol, a corn-based product, to be blended in with gasoline. “The result is that corn prices have shot up… I have heard firsthand from many constituents just how damaging this policy has been,” said Senator Toomey. Indeed, corn prices have more than tripled since 2005. RFS proponents have tried to attribute this price escalation to last year’s drought. But, that is clearly not the case, since corn prices were increasing long before that drought began. Farmers all over the country have been forced to spend an additional $1.9 million per day on corn for animal feed and have passed the cost on to consumers in the form of higher food prices. It is estimated that the price of milk, eggs, meat, and other grocery store foods may have risen by as much as 68% due to the RFS mandate. Senator Toomey also points out that the impact of this price increase is especially damaging to low-income working class families “who spend a greater percentage of their paycheck on groceries.” In fact, last year, the average family of four had to spend an extra $2,000 on food primarily because of the RFS.

The RFS also dramatically impacts gas prices. To verify compliance with the RFS mandate, the EPA requires blenders and refiners to purchase Renewable Fuel Identification Numbers (RIN), which have increased more than 1000 percent in price. In the event that we reach the blend wall, gas stations will be required to install new pumps that dispense both E-10 and E-15, costing in excess of $1,000 per station. NERA Economic Consulting estimates that the RFS will cause a 30% increase in gasoline prices and a 300% increase in the cost of diesel fuel by 2015. Even worse, because ethanol blends are less efficient than gasoline, families must fill up their tanks more often to travel the same distances.

Repealing the RFS will save hardworking American families from the disastrous effects of this bureaucratic mandate. It is time we get corn out of our tanks and put it back on our plates.

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