WASHINGTON — A federal law mandating the use of ethanol in gasoline soon could force more production of a blend that uses 15 percent of the corn-based fuel, even though most carmakers won't honor warranties at that level, witnesses said at a House hearing Wednesday.
The Renewable Fuel Standard, which requires increasing amounts of ethanol and other biofuels to be used in gasoline each year, is “a government policy that is bringing us to the brink of a crisis,” said Jack Gerard, president and chief executive officer of the American Petroleum Institute.
Lucian Pugliaresi, president of the Energy Policy Research Foundation, said the mandate to use more ethanol each year is like “a massive excise tax” that is hindering economic growth.
The testimony came at a subcommittee hearing led by Rep. James Lankford, R-Oklahoma City, who pressed an official from the Environmental Protection Agency to say when a decision will be made on the next requirements concerning ethanol.
Christopher Grundler, director of the EPA's office of transportation and air quality, said a decision will be made sometime this summer on the amount of renewable fuel that must be blended with gasoline for 2013.
Supply vs. demand
The standard mix of ethanol has been 10 percent. But if the EPA requires the use of more gallons of ethanol — and the domestic supply of gasoline doesn't increase — then refiners will have to blend more ethanol to meet the requirement.
Lankford said his 2011 Ford truck has a written warning on the fuel door that the warranty would be voided if fuel with 15 percent ethanol — so-called E15 — is used.
The EPA has said that E15 is safe for most cars made after 2001.
“How many manufacturers disagree with you?” Lankford asked Grundler, of the EPA.
“Most of them,” Grundler said.
The Renewable Fuel Standard was approved by Congress in 2005 and then updated in 2007, at a time when domestic demand for gasoline was rising, along with oil imports; lawmakers wanted to encourage the production of alternative fuels.
The last few years, however, have seen a boom in domestic crude and natural gas production, along with falling demand for fuel.
And some critics, including the oil and gas industry, have called for repeal of the standard. Opponents also have blamed the standard for rising costs of feed and food, since so much corn is used to produce ethanol.
Lankford, the subcommittee chairman, did not invite a witness from the renewable fuels industry, though he had a panel of three strong critics of the standard.
In a written statement, Bob Dinneen, president and CEO of the Renewable Fuels Association, called the standard “the single most effective energy policy this country has ever known.”
He called Lankford's hearing biased and said “Big Oil” had created the barrier to using more ethanol in gasoline and was now complaining about it.
“They have had years to prepare and comply with the (Renewable Fuel Standard),” Dinneen said. “Instead, they've hired PR firms and lawyers to maintain their monopoly over the fuel market.”
The EPA can waive requirements of the fuel standard for a variety of reasons, including severe harm to the economy of a state, region or the United States.
Rep. Jim Jordan, R-Ohio, asked Grundler how the agency would define “severe,” and Grundler said the agency had no established definition.
“Then how are you going to make a decision?” Jordan said.
“We're going to do the best we can based on what the law states,” Grundler said.