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Newsletter - We Must Repeal the Renewable Fuels Standard


Location: Salt Lake City, UT

By Jim Matheson

One of the greatest privileges of serving in Congress is meeting Utahns across the state, sharing their stories and learning from their experiences. Last week I visited with 67-year-old Steve Frischknecht who, since 2008, has struggled to keep his dairy farm up and running in Sanpete County.

Frischknecht, who also serves as a Sanpete County Commissioner, has been farming his entire life, and invested $180,000 into his farm five years ago to keep from filing bankruptcy.

Frischknecht is not alone. Thousands of farmers, locally and nationally, are struggling to keep afloat as feed costs have skyrocketed, in large part, from a policy requiring the blending of corn ethanol in gasoline. Ethanol is an alcohol-based alternative fuel made primarily from the same corn crops that farmers use to feed their livestock. A federal policy called the Renewable Fuels Standard (RFS) sets required amounts of ethanol that must be included in our country's fuel supply, and the required volumes increase every year.

Due to the RFS required volumes of ethanol in our fuel supply, it is expected that this year over 40 percent of the U.S. corn crop will be diverted for use in ethanol production instead of being used as feed for livestock or processed for human consumption. As a result, the demand for corn has grown and prices have skyrocketed. This puts livestock farmers like Frischknecht, who says his checks barely cover the cost of fuel and feed, and food manufacturers, in a very tough spot, competing in a price-inflated market for limited resources.

Farmers of cattle, pork, chickens, and turkeys have told me about significant price increases they have seen in the feed for their livestock. This gets passed on to consumers, and we are all seeing higher meat prices at the grocery store.

But food costs don't just rise for meat due to this huge increase in corn prices. Other food products in our economy that are derived from corn -- like cereals, corn sugars and syrups, also experience price inflation. The end result is that, almost regardless of what they select, consumers are currently paying higher prices in the food checkout lane than they ought to be.

That's why earlier this month I introduced a bipartisan bill with my colleague Bob Goodlatte, R-VA, to help lower food and gasoline prices. This legislation, H.R. 1461, repeals the federal Renewable Fuels Standard. Beyond the increased prices of food and fuel, there are other arguments for repealing the RFS.

The RFS has outlived its usefulness in that technology and research conducted in the last 10 years have proven the initial goals of the RFS -- to provide an environmentally sound alternative to gasoline -- are in fact, unfounded. These goals may have seemed worthy during their initial discussion. I certainly also value the importance of looking for thoughtful ways to incorporate more domestic sources of fuel and have long advocated for an all-of-the-above energy policy that includes renewable sources.

That being said, for a number of reasons the RFS falls short in terms of making improvements to emissions. Specifically, Natural Resources Defense Council (NRDC) concluded in 2010 that "(W)hat the (ethanol) industry is actually producing today is causing more climate pollution than gasoline."

Furthermore, the CATO Institute also published a report that found that only between 5 and 26 percent of the energy content of ethanol is "renewable." The balance of ethanol's energy actually comes from coal, natural gas and nuclear power used to produce corn and process it into ethanol.

Once it is in the nation's fuel mix, according to the U.S. Department of Energy, vehicles will typically go 3 to 4 percent fewer miles per gallon on the current E10 ethanol blend than on straight gasoline because engines cannot burn it as efficiently. What we are left with is a blended fuel that costs more than traditional gasoline, is less environmentally friendly to produce than gasoline, and burns less efficiently than gasoline.

A final point that has convinced me that it is time to repeal the RFS is that fuel costs for consumers continue to rise with ethanol mandates. Fuel manufacturers face a federal requirement for a volume of ethanol use, that in the context of today's efficient cars, means the total amount of fuel sold isn't growing as fast as the mandate. As a result, fuel manufacturers have two choices to make. The first option is to purchase credits to meet the ethanol volume mandate. The cost of these credits has skyrocketed in the last year, and subsequently the price of fuel remains on the rise.

A second option for fuel manufacturers is to blend a higher amount of ethanol into gasoline to meet government standards. This product, called E15, may actually damage vehicles. The Alliance of Automobile Manufacturers, which represents American automakers, has expressed concern about this issue. Michael Stanton, president and CEO of Global Automakers, said a higher ethanol blend will cause "potential harm to vehicles not designed or warranted for such use."

The RFS has outlived its usefulness in that technology and research conducted in the last 10 years have proven the initial goals of the RFS -- to provide an environmentally sound alternative to gasoline -- are in fact, unfounded.
Substantiating Stanton's position is an American Automobile Association survey of vehicle manufacturers, which found that only about 12 million of the 240 million vehicles on the road today are built to use E15 gasoline. Foreign automakers are also warning against using E15. BMW, Chrysler, Nissan, Toyota, and Volkswagen have all said that their warranties do not cover problems caused by using E15, and another eight companies have said using it may void warranty coverage, if they determine that is what caused the problem.

Presently, 14 members of Congress from both parties have come together in support of the bill that Mr. Goodlatte and I have put forth repealing the RFS. I hope that in the coming months, as my colleagues hear from their constituents about continued increases in food and fuel prices, that there will be even more interest in addressing this issue. I look forward to holding hearings on the issue in the Energy and Commerce Committee on which I serve and to hearing more from you about other ways we can streamline federal spending, eliminate federal policies that are inefficient, and move our economy forward.

It is a privilege to represent the 4th Congressional District and our state in the U.S. Congress. There will be inevitable challenges ahead in coming months, but I also see the opportunity to take significant steps in the right direction. I am pleased to see there has already been willingness to get to work on important issues before us and to find solutions that draw support from members on both sides of the aisle. I see a positive start toward working together to help all Americans on important issues like lowering the cost of food and fuel.

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