07 February 2013 03:03 [Source: ICIS news]
LAS VEGAS, Nevada (ICIS)--The Renewable Fuel Association (RSF) on Wednesday defended the US ethanol industry as an “American success story,” despite criticism from lobby opposition in the food and oil industries.
The Renewable Fuel Standard - which establishes a fuel volume mandate in the US - is under attack by the “angry birds of the National Chicken Council, the mad cows at the American Meat Institute and the big spending oil companies", said Bob Dinneen, RFA’s president and CEO.
Dinneen made his comments during his state of the industry address at the National Ethanol Conference in Las Vegas.
“Our adversaries are not dedicated to destroying the RFS because it has failed,” Dinneen said.
“Our adversaries are dedicated to destroying the RFS because it is succeeding. When the RFS was passed in 2005, our nation’s dependence on foreign oil for liquid transportation fuels was 60%. Today, it is only 41%. That’s the definition of success.”
In the food industry, critics said the RFS is driving up food prices.
“Food prices aren’t rising any faster today than they were before the RFS was first enacted,” Dinneen said. “In fact, food inflation rates since 2005 have been lower, on average, than they were from 1980 to 2004.”
Dried distillers’ grains produced by ethanol also add value and protein to the nation’s livestock feed supply, he added.
Another criticism is an inflexible mandate would increase costs at the gas pump and grocery stores.
Dinneen argued that the RFS is “incredibly flexible” as it is designed to give refiners many ways to meet the standards and the Environmental Protection Agency the ability to adjust the program to accommodate market anomalies.
In the oil industry, critics said the RFS requires them to blend fuels that do not exist and tax them for obligations not met.
However, the costs equate to 0.0019% of the gross profits for the top five oil companies, in which they have spent more money lobbying against the RFS, Dinneen said.
“In an ironic twist, oil companies now point to the blend wall with almost as much urgency as we do, as if they’ve just discovered its potential impact,” he said.
“But the RFS was always intended to do two things - drive technology, as it is doing with advanced biofuels, and drive the marketplace, as it should be doing with E15, E85 and other higher level ethanol blends,” he added.
In response to the oil industry’s attempt to increase domestic production from nonconventional sources, Dinneen pointed out examples when expected production was overestimated, such as in Alaska, the Thunder Horse discovery in the Gulf of Mexico and the Elm Coulee field in Montana’s Bakken Formation.
“Domestic production from conventional sources continues to fall,” Dinneen said. “Increased production from nonconventional resources will make up some of the shortfall in the near term, but there will be no reduction in price.”
He added: “We cannot frack our way to energy independence. The need for domestic renewable fuels remains as important as ever. And our mantra must be: Don’t mess with the RFS.”
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