Response To EPRINC Study: “Ethanol’s Lost Promise”
by Geoff Cooper (Renewable Fuels Association) About EPRINC: EPRINC is a non-profit group funded by Big Oil, staffed by former oil company employees, and directed by a board of trustees that is a veritable who’s-who of Big Oil executives—including AFPM’s president and top lobbyist. EPRINC was formerly (and less ambiguously) known as the Petroleum Industry Research Foundation, or PIRINC. That disclosure helps explain some of the biases and preconceptions that immediately rise to the surface of the EPRINC paper.
- The paper is rife with internal inconsistencies. For example, the author bemoans that “The RFS’ volumetric mandates have created inelastic demand for ethanol,” but then acknowledges that ethanol production has plummeted since the beginning of the year “…as high corn prices have caused many ethanol producers to idle production.” …
- The paper actually makes a strong case for protecting the RFS in the long term. While EPRINC agrees with numerous expert analyses that a one-year RFS waiver would have little or no effect on corn demand or prices, it suggests a “long-term waiver” (2-3 years) could cut ethanol demand in half. Notwithstanding the fact that EPA does not have the authority to grant more than a 1-year waiver, the paper suggests the lost ethanol volume under a multi-year suspension could be offset via several economically impractical and politically infeasible options:
- Extracting more gasoline and less distillate from each barrel of crude oil. This would, of course, drive heating oil and diesel fuel prices (already at record highs) substantially higher. …
- Increasing the capacity utilization of European oil refineries and increasing gasoline imports from Europe. Obviously, increasing imports of finished gasoline from Europe defeats the entire purpose of the RFS, which is to reduce dependence on foreign oil sources. …
- Adding oil refining capacity in the U.S. Curiously, this recommendation is at odds with EPRINC’s own contentions that current policy and regulations prevent the building or expansion of additional U.S. oil refining capacity.
The obvious takeaway is that none of EPRINC’s recommendations for replacing the lost ethanol volume that might occur under a “long-term waiver” of the RFS is economically practical or politically acceptable. Thus, the clear choice for policymakers would be to maintain the RFS as is. READ MORE and MORE (Brownfield Ag News) and MORE (National Post) and MORE (EPRINC Report) and MORE (Renewable Fuels Association update 9/21/12)
