WASHINGTON – Today, the
U.S. House Energy and Commerce Committee’s Subcommittee on Energy and Power
kicks off its hearing on the Renewable Fuels Standard (RFS). Joe Petrowski, CEO of
The Cumberland Gulf Group, is speaking before the committee today on behalf of NACS
and SIGMA.
Petrowski will summarize the
industry’s position:
- NACS and SIGMA do not
support the repeal of the RFS at this time. The groups do, however,
support the RFS being administered in a manner that reflects the realities
of the market as it actually exists today, rather than how Congress in
2007 projected it would.
- The motor fuels market in
the United States is on the cusp of hitting the so-called “blend wall,”
when the RFS’s annual volume obligations exceed the volume of renewable
fuel the market can reasonably absorb. This could cause gasoline and
diesel prices to increase, generating severe economic harm throughout the
United States.
- The Environmental
Protection Agency possesses and should exercise its statutory waiver
authority to adjust volume obligations to avoid hitting the blend wall.
- It is incumbent on
Congress to determine whether the Agency will use its waiver authority; if
it will not, legislation may be necessary.
“America’s love affair
with the automobile is not going away. Neither is the need for transportation
fuels that underpin the economy and create jobs,” said Petrowski in prepared comments, adding that
his company’s objective is to sell whatever fuels the customer demands.
“As new fuels enter the
market, we want to be able to sell them lawfully and with minimal volatility
and risk. While agnostic on fuel we do have a bias: We believe it is best for
the American consumer and our industrial position in the world marketplace to
have reasonably low and stable priced energy.”
He continues: “This can
best be accomplished by focusing on developing diverse fuel sources from at the
least secure, friendly regions and at best domestic sources for optimal
results. … While I support the spirit and intent of the RFS, there are problems
in the program that can be remedied without undermining the principles on which
the program is premised — diversifying the fuel supply, increasing the overall
fuel supply, encouraging domestic fuel production, and lowering fuel costs for
American consumers.”
Petrowski notes that
higher CAFE standards, combined with a struggling economy, have brought
gasoline consumption to a standstill. He also cites slow growth in flex-fuel
vehicles.
“Without regard to these
unanticipated market realities, the required RFS volume targets continue to
increase year after year. As a practical matter, these targets can only be met
if more ethanol is blended into gasoline. The market is not able to do this at
the present time, largely because … retailers fear that selling gasoline blends
greater than 10% ethanol (so-called E10) will increase their liability
exposure. There is simply insufficient consumer demand for such fuels to
justify the risk. Once the RFS’s volume obligations exceed the volume of
renewable fuel the market can absorb, the market will have hit the so-called
blend wall.”
In closing, he notes that
if Congress is serious about ensuring new and alternative fuels can enter the
marketplace, then it must do so by addressing the blend wall. “I urge you to
press EPA officials to confirm that their authority to waive volume obligations
under the RFS encompasses efforts to avoid the blend wall.”
Today’s hearing follows a
June 26 subcommittee hearing
that reviewed government implementation of the RFS and also comes on the heels
of the committee’s release of a series of bipartisan white
papers examining a range of emerging concerns with the current statute.
Each of the five papers solicited input from interested parties and the
committee has received an outpouring of responses.
Witnesses from nearly
every stakeholder affected by the RFS, including fuel users, developers and
representatives from the agricultural and environmental communities, are
offering their feedback on the future of the RFS mandate. A list of the groups
participating is available online here
and testimony will be available prior to the hearing.
Stay tuned to NACS
Daily this week for more on the hearing.