Since its introduction more than a decade ago, the Renewable Fuel Standard (RFS) hasn’t cut gasoline prices outside the Midwest and has even led to a slight rise in pump prices in states far from ethanol production, while the standard has had a limited effect, if any, on greenhouse gas emissions.
These are the key findings of a new report from the United States Government Accountability Office (GAO) prepared at the request of Republican Senator for Oklahoma, James Lankford, who supports policies to lower the biofuel volumes to reflect market realities that gasoline demand turns out to be lower than what the legislators had predicted when enacting the RFS more than a decade ago.
Under the RFS, oil refiners are required to blend growing amounts of renewable fuels into gasoline and diesel. This policy has long pitted the agriculture lobby against the oil refining lobby. The Midwest farm belt benefits from the RFS policy because it increases demand for ethanol, but the oil refiners do not—they lose petroleum-based market share of fuels, and meeting the blending requirements costs them hundreds of millions of dollars.
In a recent blow to the ethanol industry in the farming vs. oil refining battle, a federal appeals court has denied a renewable fuel group’s attempt to block the Environmental Protection Agency (EPA) from issuing small refinery exemptions (SREs) to the Renewable Fuel Standard.
Now it looks like the RFS and its effects on prices and emissions are also pitting one government agency against another.
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