This week, the House voted on a piece of legislation that would-if signed into law-allow year-round E15 (ethanol-blended gasoline with 15% ethanol) sales. The Nationwide Consumer and Fuel Retailer Choice Act passed by a vote of 218-203. Under current law, E15 cannot be sold during summer months-a restriction that Midwestern representatives from corn-growing states have long fought to lift. I voted against this bill. Here's why:
The Renewable Fuel Standard (RFS), established in 2005, was designed as an artificial market mechanism to boost biofuel use-more akin to a command economy approach rather than a free market approach. The EPA mandates that refiners blend at least 15 billion gallons of ethanol per year, a target U.S. consumers have never actually reached. Rather than adjusting to real demand, the ethanol industry is pushing to.
Because of the requirements of the program, refiners who refine diesel but do not blend into ethanol are forced to purchase Renewable Identification Numbers (RINs) as an offset to cover the gap between the mandate and actual consumption. As that gap grows, RIN prices skyrocket, adding an estimated $70 billion annually in regulatory costs on refiners that quietly get passed on to you at the pump.
In Northeast Texas, we only have one refinery-Delek-who is classified as a "small refinery" and is exempt currently from much of the regulatory burden of this program because of its small size. Delek's geographic location in rural East Texas is especially helpful at the pump because they supply locally, which keeps costs down at the pump. Additionally, it is the source of hundreds of local jobs and is one of the largest property tax payers in the County, which helps to reduce the property tax burden on local families.
If the Nationwide Consumer and Fuel Retailer Choice Act goes into law, it will reinforce a program that does not align with the free market and it will severely hurt our only Northeast Texas refinery by effectively precluding them from exemption and heaping much more regulation and cost onto their operations, which will drive up costs at the pump for East Texans.
So, as an alternative, Rep. Arrington (R-TX) and I introduced the Fuel STAR Act-legislation that allows year-round E15, but goes a critical step further by addressing the burdensome Renewable Fuel Standard (RFS) and by making it market-driven.
The fix is straightforward: require that the annual ethanol mandate to match the projected demand. A recent analysis found this single change would cut RFS regulatory costs by $35 billion without reducing biofuel demand or undermining the benefits of year-round E15.
That's exactly what the Fuel STAR Act does. It is a win for the biofuel industry. It's a win for refiners of all sizes. But, most importantly, it's a win for the free market and the American people who are paying more at the pump. Now is the time to work together to bring a sensible solution.
I laid out the details in a recent op-ed in the Washington Examiner-read it here.
