21 February 2015 - E.P.A. - We’re still waiting

To set the stage for my comments on this week’s Samuelson Sez, I begin with a Reuters headline...”Brazil to raise ethanol blend in gasoline to 27% on February 15.” The higher blend is the latest of several measures taken by the government expected to have a positive effect on the struggling sugar and ethanol mills in Brazil. I don’t know how long it took the Brazilian government to decide to take that action, but I’ll bet it was a lot less time than it takes our Environmental Protection Agency, the E.P.A., to make a decision.

We are now nearly two months into 2015, and we still don’t have the Renewable Fuel Standards formula numbers for 2014; we are now 14 months late and the ethanol industry is still waiting so that it can make some long-range industry plans. What is the E.P.A. doing that it takes this long to decide on the formula? Most of us would be fired from our jobs by now if we were that late with an assignment.

The lack of action by the E.P.A. is causing serious problems, loss of jobs and loss of income, in the industry. Ben Wootton, owner of the Pennsylvania biodiesel plant, Keystone Biofuels, lost his business to bankruptcy last year and he says the uncertainty over the Renewable Fuel Standard was a key reason. He is a member of the National Biodiesel Board and he said...”It is beyond frustrating that an Administration I have supported has inflicted so much harm on an industry it says it supports.”

And now we add another element to the ongoing controversy over the role of renewable fuels in our energy supply. A bill has been introduced in Congress by four Congressmen; two Republicans , Bob Goodlatte of Virginia and Steve Womack of Arkansas, and two Democrats, Jim Costa of California and Peter Welch of Vermont. The bill would eliminate the RFS corn-based ethanol requirement and cap the amount of ethanol that can be blended into gasoline at 10%. Congressman Welch stated...”The RFS is a well-intentioned flop. The corn-based ethanol mandate is driving up the cost of feed for struggling dairy farmers. It’s driving up the cost of food for working families. it’s ruining the engines of boats, chainsaw s and snowmobiles in Vermont .”

The President of the National Corn Growers Association, Chip Bowling responded...”Once again, Congressman Goodlatte and his colleagues have put Big Oil ahead of America’s corn farmers. The Renewable Fuel Standard is working.” And he went to point out the renewable fuels industry drives an estimated $184-billion in economic output and supports more than 850,000 jobs. I stand with Chip Bowling on this one and I would urge Congress to vote no on this bill if it ever reaches the floor.

My thoughts on Samuelson Sez.