Fuels Battle Heats up as Congress Mulls Law Change

by Christopher Doering (Des Moines Register) The battle between U.S. ethanol producers and oil companies has reached a turning point, with the winners poised to gain an advantage over the future of the country’s energy mix and the losers forced to cede profits and jobs to their bitter rival.

Ground zero of the battle is the country’s Renewable Fuel Standard — an 8-year-old law that requires refiners to produce alternative fuels from corn, soybeans and other products in an effort to reduce the country’s dependence on foreign oil.

...The American Petroleum Institute, the trade group that represents 500 oil and natural gas companies, including ExxonMobil and ConocoPhillips, has targeted the Renewable Fuel Standard as a top priority in its lobbying efforts in 2013.

If last year was any indication, ethanol advocates and other proponents of renewable fuels will be significantly outspent. The oil and gas industry doled out $140 million on lobbying Congress and federal regulators on a variety of issues in 2012, compared with about $4.2 million from the major ethanol trade groups and companies, according to financial disclosures analyzed by the Center for Responsive Politics.

...Not surprisingly, the bills to change or repeal the Renewable Fuel Standard have come from lawmakers representing states with little agriculture or parts of the Midwest where ethanol is not as big a part of the farm economy.

...Any success in significantly altering the Renewable Fuel Standard would likely thwart the ethanol industry’s long-term plan of expanding the use of its fuel in gasoline and diesel. More important, it would likely stymie the rollout of the next wave of renewable fuels known as cellulosic ethanol, which is made with crop residue, grasses, wood chips and other materials. Cellulosic fuels have advanced more slowly than envisioned, but they are viewed by the industry as a critical source of growth.

Iowa State University economics professor Bruce Babcock said it will be difficult for ethanol opponents in Congress, especially in the Senate, to gather enough support to usher in meaningful change.

“It only takes 41 senators to block anything. I think you probably have 41 (agriculture) senators. This is really important to agriculture,” he said. “Plus, the RFS has been the law of the land for a long time, since George Bush signed it, so it’s going to be an uphill struggle to get Congress” to act. Most of the important actions in the Senate require the support of at least 60 of its 100 members to proceed. READ MORE and MORE (Ethanol Producer Magazine) and MORE (Bloomberg) and MORE (American Family News) and MORE (Columbia Daily Tribune) and MORE (The Hill) Watch Video (E&ETV)

Excerpt from Renewable Fuels Association/Ethanol Producer Magazine: ...The only stakeholder to ignore the market signal of the RFS was the oil industry. From the beginning, oil companies refused to make the modest infrastructure investments necessary to provide market access for E85 and they have steadfastly opposed every effort to commercialize E15. A recent analysis by the RFA’s Geoff Cooper concluded the cost of RFS compliance for 2013 would amount to just 6 cents per gallon of capital investment to accommodate the additional ethanol needed beyond E10.

Oil companies say they’re not to blame, that it’s the gasoline marketers who own the downstream blending facilities where the investments have to be made. While that’s true to some extent, it is also true that they have used every tool available to them, including the terms of franchise agreements, to keep marketers from offering consumers choice at the pump. READ MORE