In a suit with implications for Texas gasoline consumers, the American Petroleum Institute filed a petition for review in the US Court of Appeals for the District of Columbia last week against the Environmental Protection Agency over what it deems unachievable bio-fuels use requirements. These latest requirements are in the 2012 Renewable Fuel Standard. It seems that once again the government is trying to use the EPA as a cudgel to beat the oil and gas industry, and the API is having none of it.
The Clean Air Act requires that the EPA determine the required amount of cellulosic bio-fuels used in gasoline each year, depending on the volume available. This year, the EPA mandates that refiners and importers of gas and diesel use 8.65 million gallons of cellulosic bio-fuels, but in reality, there is an almost complete dearth of that type of fuel commercially available. Bob Greco, API’s director of downstream and industry operations, has been quoted as saying that the “EPA’s standard is divorced from reality and forces refiners to purchase credits for cellulosic fuels that do not exist. EPA’s unrealistic mandate is effectively a tax on manufacturers of gasoline that could ultimately burden consumers.” He went on to call it a “regulatory absurdity.”
The API has historically a realistic and workable Renewable Fuel Standard and wants the EPA to base its assessments on at least two months of actual cellulosic bio-fuel production in the current year when deciding upon the following year’s requirements. Instead, what the EPA does is rely on the promises of cellulosic bio-fuel production companies of how much they can produce, even though those promises have been, and continue to be, of questionable validity.
This lawsuit is the latest move in a ridiculous situation with the EPA mandating the use of a material that is simply not available. The New York Times reported on this problem and the lack of cellulosic bio-fuels in January. The president of the National Petrochemicals and Refiners Association told the New York Times that the 2011 bio-fuel requirement “belies logic” and the 2012 numbers make even less sense. In 2011, fuel companies paid the Treasury about $6.8 million in penalties because of this bio-fuel requirement, even though advocates of cellulosic bio-fuels admit that oil and gas companies are correct in complaining that it is not available!
The idea behind this cellulosic bio-fuel requirement is the government’s goal of having 36 billion gallons of bio-fuels incorporated into gasoline annually by 2022, as set out in the Energy Independence and Security Act. But that has little basis in the reality of today’s marketplace. Regardless, the EPA maintains, despite all evidence to the contrary, that this 2012 requirement is “reasonably attainable” and that the EPA will push on with these bio-fuels requirements because they want to avoid a theoretical problem of having too much cellulosic bio-fuel on the market.
While there is a whole separate debate about: 1) whether the EPA should be allowed to mandate the contents of gasoline; 2) the cost to all of us because of the damage that gasoline with bio-fuels causes to engines; and 3) the efficacy of using bio-fuels at all when so much fossil fuel has been discovered to be commercially accessible in the United States in the last few years, the actual facts of this situation are almost too ludicrous to believe. The federal government is mandating the use of a product that does not exist, and then functionally taxing companies for not using it!! Who knows what’s next in this anti-energy environment in Washington.
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