Feinstein and Toomey Have Got It All Wrong

Monday, 19 January 2015 00:00

On Jan 16, Senators Pat Toomey (R-Pa) and Dianne Feinstein (D-Calif) included an amendment to the Keystone XL pipeline bill that calls for the elimination of the corn-based ethanol requirements in the RFS. Needless to say, their arguments supporting the amendment weren’t fact-driven.

In a joint statement issued Jan 16, Toomey said :"The RFS requires fuel suppliers to blend millions of gallons of biofuels - most often corn ethanol - into the nation's gasoline supplies. It drives up gas prices, increases food costs, damages car engines, and is harmful to the environment."

Toomey later cites a fuel refinery owned by Delta Airlines in Trainer, Pa, as an example of a refiner that has had trouble complying with the RFS. Delta Airlines played an integral role in convincing the EPA's to propose a reduction in ethanol consumption in 2014.

Sen. Feinstein echoed his comments saying : "The federal mandate for corn ethanol is both unwise and unworkable. Roughly 40 percent of corn in the United States is currently used for fuel, which increases the price of food and animal feed while also damaging the environment. Additionally, oil companies are unable to blend more corn ethanol into gasoline without causing problems for some gas stations and older automobiles."

She added that with corn ethanol out of the way, the RFS will support the development of, among others, cellulosic fuel.

We'll now address the erroneous assumptions they made.

Drives Up Gas Prices

On the contrary, ethanol REDUCES gas prices. As concluded by the Iowa State University's Center for Agricultural and Rural Development, ethanol suppressed pump prices by $1.09 per gallon on average in 2011. Even now, with low gas prices, ethanol is still reducing prices at the pump. With RINs being traded at 63 cents, blenders can pass on the savings to the consumer which would result in a six cent reduction per gallon. Let's also not ignore the fact that ethanol is cheaper than other octane-boosting additives.

Increases food costs

An age-old theory that has been discredited on countless number of times but still resurfaces. In 2010, the World Bank said increased speculation in the commodities market was the reason for high food prices in 2008. Indeed, it pointed out that corn prices were high even when ethanol usage was on a downward trend.

Moreover, when corn prices hit over $7.50 a bushel in 2008, ethanol production that year was 9.3 billion gallons. In 2014, an estimated 14.4 billion bushels of corn was produced. And the current price of corn? $3.87 a bushel.

Damages Car Engines

Automotive expert Bobby Likis has said cars built from 1981 onwards have no problems burning E10 and that vehicles and rubber component parts are designed to operate efficiently with ethanol. Furthermore, after extended testing (6.5 million miles), the EPA approved the use of E15 in cars made in 2001 and newer. In fact, since 2014, many carmakers have explicitly approved the use of E15 in their vehicles.

Harmful To The Environment

There's a sense of irony that they would mention the environment in a bill to approve a CO2 multiplier like the Keystone XL pipeline. But we'll get to that a little bit. First, we’d like to refer them to the Argonne National Laboratory that concluded ethanol, on a lifecycle basis, emits on average 44 percent fewer greenhouse gases than gasoline.

By using data from the Energy Information Administration and the EPA's greenhouse emissions calculator, we have found that ethanol prevented 766,571 metric tons of CO2 from being emitted in Minnesota in 2012 which is the equivalent of removing 161,383 cars from Minnesota's roads for a year.

40 percent of corn is used for ethanol

Actually, based on the USDA's report, 35 percent of corn is used for ethanol production. But since 30 percent of every bushel of corn used to produce ethanol gets used to produce dried distillers grain (a high-protein animal feed), only 3.61 billion bushels of corn or 25% of the total crop output is used for ethanol.

Oil companies are unable to blend more corn ethanol into gasoline without causing problems for some gas stations and older automobiles

It's true that some gas stations may need to make some investments should they choose to sell fuels like E15 but the size of those investments vary and in some cases are minimal and offset by profits earned from selling fuels like E15. Moreover, many states - like Minnesota - have programs that are offered to offset these costs. With regard to older automobiles, it should be noted that eight out of 10 cars on the road can run on E15 while those that can't can still use E10.

With corn ethanol out of the way, the industry will focus on cellulosic ethanol

We'd just like to remind them that the first two facilities to produce cellulosic ethanol in the country are operated by POET and Quad County Corn Processors who are both corn ethanol producers. It's corn ethanol producers who are making the investments and taking the risks to bring advanced biofuels to our nation's gasoline supply.

Last but not least, as pointed out above, it seems ironic that these two senators would talk about the environment in a bill to approve the Keystone XL pipeline. According to the state department, the Keystone XL pipeline, when completed, would emit between 1.3 million and 27.4 million metric tons of CO2 per year.

The Keystone XL pipeline's supporters tend to talk about the number of jobs it will create - the state department expects it will create 42,100 direct and indirect jobs. However, these jobs are only expected to last two years and once the pipeline is operational, it will only generate 50 jobs.

It would seem prudent that lawmakers that are focused on jobs would not want to dismantle the RFS considering that it supports 386,782 jobs nationally on annual basis.