Now Is a Good Time to Scrap the Renewable Fuel Standard
Regardless of the eventual outcome of the Chinese coronavirus pandemic, it has shown the American people, yet again, that the political leaders of both parties have made terrible decisions in the past. The decisions on offshoring production, especially that of antibiotics and drugs, and our weak and porous borders, have made it abundantly clear how vulnerable we are on the manufacturing and immigration fronts.
Those weaknesses, which are national security issues, must be rectified as soon as possible. But there are other issues, other decisions, that must be corrected as well. Those who have been paying attention realize that many industries are facing a critical time because the coronavirus is suppressing worldwide demand.
But one of the hardest hit sectors in the U.S. is the energy sector as it experiences the double blows of the Chinese coronavirus and the flooding of the oil market by Russia and Saudi Arabia, a move that has driven oil prices down while those nations fight for market share with the United States. So while demand is down, prices are also down.
To add to this problematic situation, small and large U.S. refineries are getting punished under an unrealistic Renewable Fuel Standard mandate. So in the middle of an economic downturn, as our energy sector is under tremendous stress, we are continuing the madness of unnecessary regulations on a key aspect of our economy (one that should also be considered a national security issue). These RFS mandates imposed on this core industry in America impose a heavy cost of RFS compliance credits (RINs) that is then draining cash from American-owned businesses at a time when draining cash can, and actually may, lead to bankruptcy.
How did we even get to this point? The RFS goes back to the 1970s when Americans were worried about running out of gasoline. Mario Loyola wrote in The Atlantic on Nov. 23, 2019, “With experts warning that the world was quickly running out of oil, the shocks of ’73 and ’79 led President Jimmy Carter to call for wartime-style rationing of fuel and other draconian measures to avoid a ‘national catastrophe.’” This fear resulted in a corn subsidy and not much more. Then in 2005, the Energy Policy Act mandated renewable fuels be blended with gasoline. According to a 2019 report from The Heritage Foundation, “to wean America off of its alleged dependence on foreign oil, President George W. Bush signed” legislation which “mandated that fuel suppliers blend renewable fuels into America’s gasoline supply.” The law didn't really do that but instead increased the blend of renewable fuels each year and set ridiculous targets. Which brings us to today: While the Trump administration has done a good job of not kowtowing to the radical Green New Deal lobby, it can do more.
As the U.S. economy is dealing with the economic consequences of the coronavirus, and oil and gas prices are at record lows, it makes absolutely no sense to continue the RFS. At a minimum, the Trump Environmental Protection Agency can issue waivers of the existing regulations to provide some needed relief during these difficult economic times. Issuing such waivers is well within the EPA’s authority and can and should be done immediately. It would at least, temporarily, also end the absurd credit-trading scheme that is based on a projection of consumption that results in a unique renewable identification number or RIN. When fuel meets the blending standard, the refiner qualifies for a RIN. This is a horrible system that creates perverse incentives and increases the cost of gas for consumers. Only in America would we, of our own volition, impose such stupidity on ourselves.
One would hope RFS would be removed permanently so that we would stop handicapping ourselves. But in the short term, while our economy is facing a difficult crisis, at a minimum it is time for the administration to suspend the RFS and set aside the regulations hindering economic growth.