Oil industry escalates attacks on biofuel mandate
Oil industry escalates attacks on biofuel mandate
By Zack Colman - 01/15/13 12:16 PM ET
The oil industry on Tuesday escalated its attacks on the federal biofuel mandate as it rolled out a national ad campaign aimed at promoting the nation’s refineries.
The ad blitz from the American Petroleum Institute will be an “all hands on deck” effort across TV, print, radio and online, Cindy Schild, the lobby's senior manager, said Tuesday in a call with reporters.
She said getting Congress to axe the biofuel rule is "one place to start" to strengthen the domestic refining industry.
“EPA [Environmental Protection Agency] has been unable and sometimes unwilling to make it workable. That is why we need Congress to scrap” the renewable fuel standard, Schild said.
Schild said also said API plans “to be devoting a lot of resources” to getting the Keystone XL pipeline approved.
“We certainly have been touting those benefits and the job potential,” Schild said of the project, which would bring Canadian oil sands to Gulf Coast refineries.
The Obama administration has final say on the pipeline’s northern leg because it crosses into Canada.
API CEO Jack Gerard said last week that the Keystone decision would serve as a bellwether for how Obama plans to work with the oil-and-gas industry in his second term.
But environmentalists have kept pressure on Obama to reject the pipeline, saying its approval would be out of step with the president's recent comments about making climate change a priority in his second term.
API declined to release a spending figure for the commercials, which will run nationally for a month, but the group did detail its concerns about the biofuel mandate.
After years of pressing EPA for piecemeal changes, the powerful industry group in November shifted to gunning for an outright repeal. API has said ending the fuel rule is one of its top priorities in 2013.
Patrick Kelly, downstream policy adviser with API, said the lobby group is waiting for the right opportunity to float a repeal bill.
“We are encouraging Congress to take it up this year. We have not seen specific legislation that we are pursuing at this time, but we are open to exploring avenues with congressional staff,” Kelly said in a call with reporters.
The rule requires refiners to blend 36 billion gallons of biofuel into traditional transportation fuel by 2022.
So far, the House Energy and Commerce Committee has said it plans to hold a hearing to look into claims that a high-ethanol fuel blend might damage cars.
Fiscally conservative detractors say the rule interferes with energy markets by propping up the biofuels industry. And some lawmakers have argued the domestic oil-and-gas boom makes the mandate unnecessary.
But theodds of getting a total repeal through Congress look long.
Support for the fuel rule is predominantly regional, getting strong backing from rural GOP and Democratic lawmakers who view it as a boon for their economies. Many lawmakers also defend the rule as a way to reduce dependence on foreign oil.
The biofuels industry vehemently defends the rule, and says any modifications would chill investment in “advanced” biofuels from non-edible feedstock. Some of those facilities are just now starting to reach commercial production levels.
Biofuels groups also contend API and its members are gunning for the rule because it cuts into the oil industry’s profits by requiring biofuel use.
“We agree that in order for the United States to achieve greater control over fuel and lower prices for consumers, we need to increase domestic production of energy. But what is ‘unworkable’ is a continued oil monopoly over our nation’s transportation fuel: we need not only the energy security that renewable fuel provides, but fuel diversity and savings that the industry is delivering to consumers,” Fuels America, a lobbying effort that includes several biofuels trade groups, said in a statement.
Kelly said API is concerned refiners would hit a “blend wall” this year. Crossing that threshold would require blending higher concentrations of ethanol fuel to meet accelerating targets established by the mandate.
Currently, most gasoline contains 10 percent ethanol. But EPA has approved sale of a 15-percent ethanol blend — known as E15 — for cars made in the model year 2001 or later.
API, along with motor club AAA, has pushed back against EPA’s determination — and the biofuels industry's assertions — that E15 is safe for cars.
They say the higher ethanol fuel blend damages cars and gasoline pumps, noting EPA tested E15’s impact on only vehicle emissions systems.
Kelly said that API’s “concern is [going] beyond 10 percent” ethanol in fuel blends.
When asked whether API could support a change that locked fuel blends in at 10 percent ethanol instead of a full repeal, Kelly said, “I don’t think we’d recommend an E10 mandate.”