by Brent Erickson (BIO/Biofuels Digest)  Despite oil industry claims of “$10 million in fines for non-existent fuels” – they paid exactly $19,010.16 for cellulosic ethanol waivers in 2010, costing US consumers 14 millionths of one penny per gallon.   So why exactly are refiners and their surrogates investing millions in an all-out effort to disable the RFS?

…Despite the overblown rhetoric, the RFS is indeed working – it is increasing domestic energy security, reducing reliance on foreign oil, and contributing to a cleaner environment. Moreover, it’s working according to the rules that everyone agreed on when the policy was adopted. In a tough economic environment, advanced biofuel companies are making herculean efforts to get new plants up and running. What opponents – the petroleum refiners in particular – seek is to undermine the policy and keep the playing field tilted in their favor.

The petroleum refiners are following an old playbook. Does anyone recall how long it took to “get the lead out” of gasoline? From passage of the Clean Air Act in 1970, it was 25 years before the sale of leaded gasoline stopped in the United States. The petroleum refining industry first denied that air pollution from lead was a problem, stoked fear that it would impact car engines and raise prices at the pump, then sought to ease regulations (particularly as gas prices rose during the Arab embargo), and finally sued the EPA to block or delay implementation of the rules.

These tactics have a strangely familiar ring today. As ethanol has gained market share and CAFE standards have kicked in, the sharp elbows have come out. You can’t blame incumbents for wanting to protect market share, except when it is not in the consumer’s or the national interest.

…For every dollar of gasoline purchased, the cost of the cellulosic waiver credits purchased by refiners cost less than one ten-millionth of a penny. Out of the more than $4,100 each American household spent on gasoline last year, the cost was less than two thousandths of a penny.

Refiners have said that they’ve paid EPA $6.8 million this year for the cellulosic waiver credits needed to meet the 2011 obligation – equivalent to the entire 6 million gallon cellulosic biofuel obligation at a cost of $1.13 per gallon credit. EPA has not posted the total number of credits obligated parties purchased for 2011, but this outcome is unlikely. There were still some valid cellulosic biomass ethanol RINs available for use. And the obligated parties have yet another option – they can simply defer their obligation until next year.     READ MORE and MORE (Reuters/Growth Energy) and MORE (Sioux City Journal) and MORE (DomesticFuel.com) and MORE (Renewable Fuels Association)