The Renewable Fuels Standard (RFS) has been a hot topic over the past several years. Small refinery exemptions have been handed out like Halloween candy to companies that do not qualify for them, and big oil has been doing all it can to keep their hold on the energy and fuel marketplace. The RFS was created by Congress to find a way to reduce greenhouse gasses.
Audio: Full interview with Senator Joni Ernst following EPW meeting
The rules will change slightly at the end of the year when the EPA has sole discretion to set the blending requirements. This concerns both sides of the argument. Big oil is worried they will be required to blend too many biofuels, and the biofuels industry worries that big oil won?t have to blend very much at all.
Both sides came to the table at a Business Meeting of the Senate Environment and Public Works Committee (EPW) on Wednesday. Iowa Senator Joni Ernst sits on that committee and was ready to have a discussion with stakeholders on both sides of the issue. However, big oil came out swinging early talking about how the RFS was destroying small businesses in the refining industry. The comments came from LeAnn Johnson Koch of Perkins Coie, LLP. Perkins Coie is a Seattle-based law firm in which Johnson Koch is a partner. She has spent the past thirty years representing the oil industry.
She also stated that Ethanol and E15 in particular, are doing nothing to lower greenhouse gas emissions.
Republican Senator Cynthia Lummis from Wyoming, another state which relies on oil production, claimed that the RFS and the blending of biofuels were solely responsible for the exorbitant prices being paid by consumers and that Congress needs to do something about the RFS to alleviate the burden on consumers.
Senator Lummis went on to describe the plight of one refinery in the ?small, rural community? of Cheyenne, Wyoming (the capital of, and largest city in the state of Wyoming). She described her definition of the hardships that ?rural community? is facing.
To put it into perspective, according to a 2021 analysis done by the Energy Information Administration, Wyoming holds about two percent of the U.S. Crude oil Reserves. It accounts for two percent of the oil produced in this country. Wyoming is the crossroads of pipelines moving crude from Canada and the Rocky Mountains. They have five refineries producing somewhere north of 169,000 barrels of oil per day. Wyoming has the sixth smallest consumption of oil, but when you factor in that they have the smallest population, its drivers consume the second-highest per capita amount of fuel a year. Wyoming does not have legislation requiring any ethanol to be blended into its fuel sources, even though it is sold in the state.
According to the 2019 numbers from the American Petroleum Institute, 26.3% of Wyoming?s GDP is contributed by the oil and gas industry.
Growth Energy CEO Emily Skor was also on-hand to testify on behalf of the biofuels industry. She was asked by Democratic Senator Tammy Duckworth of Illinois if there was any truth to the claims by big oil that the Renewable Identification Numbers (RINs) were responsible for the high cost of gasoline at the pumps. Skor explained that these claims are false and that RINs are a separate market from Crude Oil. She explained that if gas prices were the reason for high gas prices, ethanol-blended fuels wouldn?t be cheaper. Consumers would also not be paying up to a fifty-cent premium for fuels that are zero percent ethanol.
Senator Duckworth also asked for clarification for the EPW committee on how the RIN market works, where the volatility in the marketplace is coming from, and how that affects consumers.
Another member of the EPW is Senate Ag Committee Chairwoman Debbie Stabenow (D-MI). In her comments, she gave the audience a background on the history of the automotive industry all the way back to Edison and Ford, how big oil got their permanent tax breaks, and how they are doing anything they can to hang onto them. Big oil is throwing everything it can against the wall and hoping anything will keep the renewable fuels industry from having a level playing field. Every tax credit given to renewable fuels must be constantly renewed, where oil breaks are permanent.
Big oil?s reach grip on the energy marketplace isn?t just sitting in the United States Tax Code. It has long been lobbying to keep innovations held back. Whether it has been by direct buyouts of technologies, lobbying, or manipulating the marketplace to force innovators to just sit on the sidelines to avoid battling with the oil industry?s very deep pockets.
Iowa Republican Senator Joni Ernst then made statements at the hearing and questioned the witnesses. She first talked about the claims that the RFS and RINs were the reason for high gas prices. She brought in data showing the correlation of the price of crude oil and the price at the pump.
Senator Ernst talked about the fact that the RFS was an act of Congress to reduce greenhouse gas emissions, and farmers across the Midwest answered that call. She also responded to Senator Loomis?s claim that the RFS was damaging the rural economy because of what oil refiners are dealing with.
Right after the EPW Business Meeting, Senator Ernst called the Iowa Agribusiness Radio Network and talked to us about her testimony and questioning. She again pointed out the benefits of biofuels and the need for energy security.
I asked Senator Ernst for her take on the claims by the oil industry that the cost of RINs and the RFS are the sole reasons for the inflation of gas prices. She laughed off that claim and dismissed it as ?bunk.?
Senator Ernst reminds us that there are protections in place to help small refiners, and there are thresholds that must be met to obtain those waivers from the EPA. Big oil isn?t concerned truly concerned with ?small refineries?. Those facilities don?t even amount to a large drop in their bucket. What they are concerned about is continuing to obtain SREs for small-scale refineries owned by big companies, such as Exxon/Mobil. This practice has led to large-scale abuse of the SRE program by the industry and was allowed to happen under the EPA of previous administrations.
Senator Ernst agreed with the situation that has big oil and the biofuels industry nervous, and that is that the EPA will have sole discretion on the future of biofuels. She says this is something that both sides need to work together on, across the aisles to get contained.
However, with both sides of the issue with something major to lose in this arrangement, the fear is the default decision will, once again, side with the industry with the deepest pockets.
