October 26, 2015

President Obama is Turning His Back on the Renewable Fuel Standard

Jim Talent, guest columnist
October 26, 2015
Originally appeared in The Gazette

I’m old enough to remember when energy first became a national security issue during the original energy crisis in the early 1970s. That was the first time America realized that we were dependent on a global oil market that was controlled by foreign producers who had the incentive, and the market power, to manipulate supply and price.

Since that time, every generation of politicians has talked about making the United States energy secure by diversifying supply and reducing dependence on the foreign oil cartel. Over the last 40 years, Washington has been able to produce and follow just one consistent policy to achieve that end: support for biofuels as the replacement for fuel supply in automobiles. And now the Obama Administration is trying to roll this policy back.

Ten years ago the Renewable Fuel Standard (RFS) was signed into law, requiring that a certain percentage of biofuels became part of the fuel supply. I was one of the prime movers behind its passage when I served in the Senate, and still believe that biofuels are the most feasible replacement for oil as automobile fuel. The RFS encourages private investors to develop the biofuels industry by giving them adequate assurance that their potential market cannot be destroyed by the manipulations of the foreign oil cartel.

The policy has been a success — 10 percent of the nation’s fuel supply now comes from biofuels, which are cost competitive. Additionally, the biofuels industry has created or supported over 850,000 well-paying jobs in small town America and across the country.

However, this summer, after a multiyear delay, the Environmental Protection Agency proposed renewable volume obligations that essentially guts the RFS and destroys the progress we’ve made over the past decade. With billions invested in this industry thus far, the Obama Administration’s new lackluster standards threaten the already frozen $13.7 billion in investments in advanced biofuels and signal to new investors in clean energy that they, too, are at risk of a potential bait and switch.

Critics of the RFS say that it’s a mandate and that if biofuels could be truly competitive in the fuel market, the government wouldn’t need a standard requiring that a certain amount be used. The problem is that we don’t have a competitive market for automobile fuel; as long as America runs its cars on gasoline and foreign producers have market power over the supply of oil, we don’t and won’t have market competition.

The organization of petroleum exporting companies, or OPEC, has been around so long that we tend to forget what it is — it’s a cartel, and a quite effective one. A perfect example of this is Saudi Arabia’s decision, taken last year, to drive down the price of oil in order to attack the U.S. fracking industry. The result? We have seen a significant number of fracking companies cease operations and several declare bankruptcy.

The Saudis cannot have that impact on the biofuels market, because the RFS prevents it. They don’t and never will control biofuels the way they control the oil market, and if the biofuels market gets big enough, it will break the control of the international oil cartel over America’s fuel supply.

At the same time President Barack Obama is implementing a disastrous policy in the Middle East, the Administration is also taking step to cripple the production of a clean and renewable energy resource here at home. It would take a short history lesson to remind Americans of what happens to our economy when the Middle East becomes a tinderbox. Maintaining the RFS is a prudent and wise step to growing America’s energy independence.

The RFS is not an offense against a free and open fuel market; it’s the road to it. The standard lasts until 2022, by which time we hope that the biofuel industry will have sufficient size and resiliency to be able to withstand manipulation of the global oil market.

The leaders of OPEC have proved that they understand the leverage their energy production gives them, and they have the will to use that leverage to achieve their ends. The one policy they can’t defeat, unless they can convince our political leaders to abandon it, is the Renewable Fuel Standard.

Jim Talent represented Missouri in the United States Senate from 2002-2007. He is the chairman of Americans for Energy Security and Innovation. Comments: usaenergy.org