Inside D.C.
Reinvent the RFS
Depending on whom you believe, the Renewable Fuel Standard (RFS) is either the savior of the fuel industry, key to U.S. jobs creation and will end this nation’s dependency on foreign oil, or it’s the single reason the developing world will go hungry for the next 10-15 years, while the cost of your taco shells and corn flakes will skyrocket.
As with any highly controversial politico-economic issue, the truth is somewhere in between. However, that reality escapes or is ignored by opposing RFS camps, along with the most folks on Capitol Hill who’ve chosen to wade into the issue.
The RFS is a federal program, enshrined in two different laws, which legally requires transport fuel refiners to blend various biofuels at specific annual amounts to hit a 10% blend in gasoline. The program was developed with a near-religious zeal to wean the U.S. off foreign oil.
The March 7 Iowa Ag Summit in Des Moines elevated the RFS to a national issue. Deep-pockets Iowa agribusiness footed the bill to get as many GOP presidential hopefuls to Iowa, the goal being to elevate ag and food issues generally within presidential politics, but to get as many candidates on record supporting biofuels and the RFS. While all of those who would be president said nice things about the fuels, a few said not-so-nice things about the RFS, a brave political move in the heart of ethanol country.
In Washington, DC, if you listen to Sen. Dianne Feinstein (D, CA) or Rep. Bob Goodlatte (R, VA) the RFS must die. Feinstein has it in for the RFS because California doesn’t produce much biofuel to speak of, so the state benefits very little from the program, and well, it is California. Goodlatte is the avenging political angel of the livestock and poultry industries – along with their allies in the petroleum and restaurant industries, and the environmental and anti-hunger movements – who vowed in 2005, as chair of the House Agriculture Committee, he’d make sure farmers and ranchers would always have access to affordable feed, which leads to affordable meat and dairy, which leads to afford groceries.
However, the RFS is a political mine field farm state lawmakers wish to avoid, so most are avoiding Feinstein and Goodlatte at all costs. To side with the biofuels industry is to make corn and soybean farmers happy, but tick off livestock and poultry producers. To attack the RFS risks alienating crop farmers to mollify animal producers. It’s a no-win situation for any elected official.
Is the RFS a tool of the devil? Is it the savior of U.S. democracy? It’s neither. It’s a great concept very badly constructed and even more poorly administered by the Obama EPA. Lawmakers 10 years ago actually believed it wise to put statutory RFS levels in the law as if they could somehow predict how much ethanol or biodiesel would be produced a decade hence. They were blind to the fact the most abundant biofuel – ethanol – is made from the most important food crop this country produces and exports, meaning they sanctioned hyper competition among feed, food, industrial and energy uses of corn. Most of the RFS architects in Congress feigned shock when a midwestern drought cut corn production, sending the price of corn from its expected $2 or so a bushel to over $10. They were completely at a loss when livestock producers liquidated herds they could not afford to feed, sending consumer food prices higher.
One wise poultry economist told these same lawmakers in 2007 they were making a big mistake with the RFS design, warning, “We’re one drought away from a disaster.” He was right.
My feeling is the RFS is a still-necessary tool in need of repair and renovation. Congress needs to bite the bullet, sit down and reinvent the RFS as a workable program, focused on developing fuels, and a program that sets fuel blend levels as a reflection of actual biofuel production, not at some arbitrary level. Once we get an RFS that reflects the real world of supply, demand and the economics of alternative fuels, then we can talk about whether and for how long the program should exist.
The RFS was invented in 2005 and “refined” in 2007, but the 2015-16 RFS needs to reflect the changing energy landscape in the U.S. Oil sand and shale, fracking, natural gas, oil exploration and drilling and reduced U.S. consumption have made the U.S. nearly energy independent. That’s the good thing; killing the RFS is a step too far unless lawmakers refuse to do the heavy lift of reinventing it.
-
-
With USDA telling farmers how much corn they will produce in Jan. before they even plant they should be able to know how much ethanol to produce. The truth is no end user wants to pay a fair price.
This country should have enough sense to isolate a corn reserve from the market to insure against a natural disaster without killing the price . the buyers want treat carryover of corn as a curse when it is a blessing . the truth is no one wants to do what is in the best interest of both sides and the nation. That is a shame.