The Renewable Fuel Standard, commonly known as the RFS, is a federal law requiring that a certain amount of renewable fuel be blended into the U.S. transportation fuel supply annually. The program is administered by the Environmental Protection Agency (EPA).
Congress enacted the RFS in 2005 to increase America’s energy security by reducing our dependence on foreign crude oil, in favor of domestic, environmentally friendly, renewable fuel. In 2007, the EPA promulgated regulations establishing the compliance program for refiners and importers.
However, a wide variety of voices with varying interests have noted problems with the RFS and have called for much needed changes since it was enacted.
WHAT IS THE PROBLEM WITH THE RFS?
The RFS has failed on many fronts, which has been detrimental to American consumers, merchant refiners, small refiners, importers and small fuel retailers. In fact, the RFS has done the opposite of what Congress originally intended. The problem is rooted in the RFS blender loophole, which places an unfair and costly burden on merchant refiners and small refiners, potentially driving up fuel prices for consumers.
The EPA holds refiners and importers responsible for ensuring the proper amount of renewable fuel has been blended into the nation’s fuel supply. However, most of these refiners and importers do not actually control the blending process.
Consequently, refiners and importers are forced to prove they’ve complied with the EPA’s blending requirements by purchasing blending credits called Renewable Identification Numbers (RINs) from third parties, who are mainly interested in raking in windfall profits rather than using their profits from RINs’ sales to invest in increasing renewable fuel use.
The RINs credit trading market is a highly unregulated, cornered market rife with fraud where sellers can charge merchant refiners and small refiners well above a RIN’s true value. The high cost of RINs disproportionately affects these businesses, meaning the government is inadvertently dividing the market into winners and losers – where some of the big winners are foreign-owned companies (take a closer look at who these companies are here). This reduces competition in the fuels industry, and ultimately can increase the price consumers pay at the pump.
Moreover, the EPA claims that the cost of RINs is in the crack spread. You have got to be joking. Take a look at the actual data here.
Instead of increasing energy independence, the misplaced point of obligation threatens our nation’s energy security by putting our country’s merchant and small refiners, which produce roughly half of all gasoline and diesel sold in the U.S., at risk of going out of business.
HOW DOES THE RFS AFFECT ME?
As it stands today, the EPA’s administration of the RFS puts merchant refiners, small refiners, importers and even small fuel retailers at a financial disadvantage. This reduces marketplace competition, creates a system of winners and losers and can ultimately increase the price you pay for gas.
The RFS puts these businesses on an unfair playing field that favors Big Oil and Big Retail companies at the expense of smaller businesses in the fuels industry. Allowing the EPA to pick winners and losers in the fuels industry is just plain wrong.
Send a message to our elected leaders in Congress and let them know the RFS is broken and needs to be fixed.
The EPA has been unwilling to take action on this issue, despite the burdens it is placing on consumers and businesses. Since the EPA has failed to address the broken RFS, we are calling on Congress to take action immediately.
Your voice is critical in bringing sensible, consumer- and business-friendly reforms to this misguided program.