Texas Oil and Gas Attorney Blog
The American Petroleum Institute (API) has strongly, and rightly, criticized the Environmental Protection Agency (EPA) again over its rejection of petitions to waive requirements for cellulosic bio-fuels. These bio-fuels are created from plant matter instead of fossil fuels, and include corn-based ethanol. API joined with American Fuel & Petrochemical Manufacturers, Western States Petroleum Association, and Coffeyville (Kansas) Resources Refining & Marketing to file these petitions.
The basis for the petitions was simple and logical-the bio-fuels required by the EPA do not exist or are not available commercially. This latest rejection by the EPA was announced on May 22, 2012. In denying the petitions, the EPA said, “In all cases, the objections raised in the petition either were or could have been raised during the comment period on the proposed rule, or are not of central relevance to the outcome of the rule because they do not provide substantial support for the argument that the Renewable Fuel Standard program should be revised as suggested by petitioners.” The Renewable Fuel Standard is a yearly standard mandated under the Clean Air Act, but is supposed to depend on the volume of cellulosic bio-fuels available.That is not what is happening. Bob Greco, API’s downstream and industry operations director, said shortly after the rejection that “EPA’s mandate is out of touch with reality and forces refiners to pay a penalty for not using imaginary bio fuels. EPA’s unrealistic mandate is effectively an added tax on making gasoline.” That is borne out by what has happened already. In 2011, fuel companies paid the Treasury about $6.8 million in penalties because of this bio-fuel requirement. That was after the EPA rejected API’s petition on the impossibility of 2011’s bio-fuel requirement, as well. The unjust cycle continues. Mr. Greco called it “regulatory absurdity and bad public policy.”
People who are aware of this issue, including folks in the American oil and gas industry, are incredulous at the continuing requirements. The president of the National Petrochemicals and Refiners Association told the New York Times that the 2011 bio-fuel requirement “belies logic” and the 2012 numbers make even less sense. The reporter on that piece, Matthew Wald, characterized the problem as “what happens when the federal government really, really wants something that technology is not ready to provide.”
The idea behind this cellulosic bio-fuel requirement is the government’s goal of having 36 billion gallons of bio-fuels incorporated into the economy annually by 2022, particularly as part of the Energy Independence and Security Act. But the EPA requirements, and these statutory goals, have little basis in the reality of today’s marketplace. Regardless, the EPA maintains, despite all evidence to the contrary, that this 2012 requirement is “reasonably attainable” and that the EPA will push on with these bio-fuels requirements, because they want to avoid a theoretical problem of having too much cellulosic bio-fuel on the market. For now, it remains a tax on the industry. The only option seems to be to pay the fines, because there is no possibility of complying with the regulation.
The absurdity of the EPA position on this is only half the story. The other half is that the price of gasoline, and the percentage of our household budget that goes for gasoline, is going to get larger. As that happens, the persons hurt most are lower income families, who spend a larger portion of their family income on the basics: rent, food, utilities and gasoline.
Perhaps we should require every environmentalist to adopt a low income family and pay their gas bills, as the cost of supporting these insane federal policies.
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