Problems With a Planned Economy – RFS Edition

on March 25, 2014 at 3:30 PM

Farmland Tapped For Oil In The Midwest

With winter grudgingly giving way to spring, the guess here is discussion of the flawed Renewable Fuel Standard’s ethanol mandateshigher ethanol-blend fuels like E15 and the “blend wall” will rekindle debate in Congress.

Lawmakers must act, because while EPA has proposed lowering ethanol-mandate levels from 2013, the rule still isn’t final (it was due at the end of November last year) and would only temporarily address potentially harmful impacts of the blend wall – to consumers and the broader economy.

So, bring on the discussion. A refresher on what people are saying about the Renewable Fuel Standard (RFS), E15 and issues related to mandates for ever-increasing ethanol use:

“For every false signal to the market that tells you to put corn on your land this year when you had wheat last year, that then distorts the rest of the commodity markets.” – Mike Brown, National Chicken Council

“When E15 was approved my industry and our friends in the marine industry and the automobile industry … said you can’t do this. You can’t reverse-engineer the marketplace, the legacy equipment, the legacy fleet, legacy automobiles, the refueling infrastructure and people, frankly, who use it. These people have fueled their products since the beginning of engines the same way. Everything that goes into the car goes into the (gas) can, what goes into the can goes into the chainsaw or the generator or the bass boat, the ATV and the mower. … What happens is, failure of one of those products not only is an economic failure, this is engine destruction. So the product is destroyed. … Regrettably, if your boat fails 30 miles offshore, your snowmobile fails out in the wilderness in inclement weather, your chainsaw engages while it’s in neutral – somebody gets hurt. ” – Kris Kiser, Outdoor Power Equipment Institute

“This issue affects chainsaws and chain restaurants. And so it’s very unique, a broad coalition. … We’re not anti-ethanol, we’re just asking for the free market to work.” – Rob Green, National Council of Chain Restaurants

“We have serious, well-documented and data-driven concerns with the safety of high ethanol fuel blends which have been proven to cause damage to marine engines. This damage puts consumers at risk and hurts manufacturers during a time of important economic recovery. The RFS is a broken law which sets unrealistic fuel mandates and requires a long term fix from Congress.” – John McKnight, National Marine Manufacturers Association

“The RFS has destabilized corn and ethanol prices by offering an almost risk-free demand volume guarantee to the corn-based ethanol industry. Domestic and export corn users other than ethanol producers have been forced to bear a disproportionate share of market and price risk. Ethanol prices should reflect the fuel’s energy value relative to gasoline, not a corn price that is both inflated and destabilized by the inflexible RFS. As corn is siphoned off to ethanol, animal agriculture is losing jobs in rural America.” – Joel Brandenberger, National Turkey Federation

“The American Motorcyclist Association remains committed to its members—and all motorcyclists—as we continue to support legislation that prohibits E15 fuel. The bottom line is that this decision certainly slows the unnecessary rush on bringing E15 fuels to market for at least the next year, but it doesn’t address the central issue that real-world motorcyclists face, and that is that no motorcycle currently on the road is approved for E15 use, and the risk of inadvertent mis-fueling is tremendous once it is available at the pump.” – Former U.S. Sen. Wayne Allard, American Motorcyclist Association

Rob Green repeal RFS shareable reduced

“…the fact remains the RFS is a flawed policy that requires Congressional action. Even with a record corn crop expected this year, the damaging ripple effect of this defective policy has been moving through the meat and poultry complex for the past several years. The time for Congressional action is now.” – Mark Dopp, American Meat Institute

“Government studies show, at higher blend levels, ethanol’s chemical properties cause corrosion, reduce fuel economy, burn hotter and can wreak havoc with fuel mixtures and injectors (in historic/legacy vehicles).” – Historic Vehicle Association

“Chain restaurants aren’t all mega-corporations. Many are systems of small business franchises like the one my family owns. … The government picked winners and losers when they passed the RFS mandate. This mandate is costing me $20,000 to $30,000 per restaurant. It is blatantly unfair and we urge Congress to repeal it.” – Ed Anderson, Wendy’s franchise owner

“Ethanol has inherent properties that can cause corrosion of metal parts, to include carburetors and the degradation of plastic and rubber components. It can also reduce engine life and make them harder to start.” – Marv Klowak, OPEI member Briggs & Stratton

Manufacturers of outdoor power equipment and their engines say they will not honor the warranty of a product someone has been running with E15. The reason? Besides the above effects of ethanol, engines running even E10 gasoline run hotter. And with E15, the results can be dangerous, considering reports of “unintentional clutch engagement”—such as a powered-up chain saw that suddenly decides, because it’s running so hot, that you’ve pressed the button to start the chain. Manufacturers see a train wreck coming because their customers will ultimately blame them for problems. – Consumer

“The corn-based ethanol program and the Renewable Fuel Standard (RFS) continue taking their toll on the baking industry and consumers. Corn-based ethanol has accelerated the decrease of wheat acreage in the U.S. over the past 30 years and tightened food supplies around the world.” – American Bakers Association President & CEO Robb MacKie

“When you have a type of fuel that, if inadvertently used, has the potential to damage engines and fuel systems and void a manufacturer’s new-vehicle warranty, you really should move with caution when it comes to putting that fuel in the marketplace. Issuing rules that allow the sale of E15 at gas stations without adequate testing to be sure it’s safe in motorcycles and ATVs, not to mention engines in boats and power equipment, just isn’t wise.” – American Motorcyclist Association Board Chairman Maggie McNally

E10 fuel has 3% oxygen while E15 fuel has 5%-6% oxygen. On a typical marine engine, this additional oxygen makes the fuel burn hotter, and the higher temperatures can reduce the strength of the metallic components. In addition, ethanol can cause compatibility issues with the other materials in the fuel systems because of the chemical interaction. – David Hilbert, Mercury Marine

“This is much bigger than just oil or ethanol. This is all about consumers – consumer choice, the ability to pick products that actually work in the products they use every day. … As the consumer enters the debate, this does need to be fixed permanently. … The Renewable Fuel Standard as currently constituted is forcing fuels on consumers that consumers don’t want, number one, and number two, are impacting their products – their cars, small engines, etcetera.” – Jack Gerard, President and CEO, API –

By Mark Green

Originally posted March 21st, 2014

Energy Tomorrow is brought to you by the American Petroleum Institute (API), which is the only national trade association that represents all aspects of America’s oil and natural gas industry. Our more than 500 corporate members, from the largest major oil company to the smallest of independents, come from all segments of the industry. They are producers, refiners, suppliers, pipeline operators and marine transporters, as well as service and supply companies that support all segments of the industry