The EPA to Suspend the Requirement to Blend Gas With Ethanol

One of the side effects of the coronavirus pandemic lockdown has been the collapse of oil prices. At one point, oil was selling at negative dollars a barrel. The oil price cratering has, among other things, inspired the EPA to consider stopping the requirement to blend gas with ethanol.

The reason why oil is so cheap is not hard to understand. People are not driving as much or flying as much. Businesses ranging from factories to bars are closed. In the meantime, so much oil is being pumped that the world has been running out of places to put it, including oil tankers.

President Trump has been taking advantage of the situation by filling up as much of the national oil reserve as much as possible, presumably to be released and sold when the price of oil goes up to normal when the pandemic is over.

In ordinary times, such a price drop would have losers and winners. The losers are the oil and gas companies, their investors, and people who work for them. Drilling gets curtailed and wells get capped. Oil workers from people working in the oil fields to office workers get laid off.

The winners are ordinarily everyone else. Amazon and other delivery services are, naturally, benefiting from a drop in the cost of fuel. However, ordinary people, obliged to shelter in place at home, are not reaping any of the benefits. The joke on social media is that gas is cheap, but no one had any place to go.

The proposal to stop, at least temporarily, what is euphemistically called the renewable fuel standard, follows naturally from the oil glut. The EPA notes that the renewable fuel standard stems from a 2005 law.

“Congress created the renewable fuel standard (RFS) program to reduce greenhouse gas emissions and expand the nation’s renewable fuels sector while reducing reliance on imported oil. This program was authorized under the Energy Policy Act of 2005 and expanded under the Energy Independence and Security Act of 2007. “

At the time of the RFS, the price of oil was about $60 a barrel. Moreover, the United States was still highly dependent on oil from foreign sources, especially the volatile Middle East.

Whether or not adding ethanol reduced greenhouse gasses is debatable. In any case, the Green New Dealers will support nothing less than the abolition of the oil and gas industry, including private automobiles that use internal combustion engines.

More recently, thanks to the fracking boom, the United States achieved some measure of energy independence. Moreover, in some cases, putting too much ethanol in gasoline tended to wreck older automobile engines, causing a considerable expense in repairs or even replacement.

Abolishing the renewable fuel standard has been difficult for another reason. The RFS has been seen as a giveaway to corn farmers. Iowa, a big corn state, is the first in the nation presidential caucus state.

If one is running for president, one opposes the RFS at one’s peril. Ironically, Sen Ted Cruz, R-Texas promised to abolish the renewable fuel standard and won the Iowa Caucus in 2016. Donald Trump promised to retail the standard and placed a close second.

The Hill suggests that eliminating the RFS would lift a big expense from oil refineries, no little thing with the oil and gas industry being hammered by the fossil fuel price collapse.

“The Environmental Protection Agency (EPA) is weighing whether to let oil refineries skip on adding ethanol to their fuels, a move being requested by governors in oil-rich states who say the industry can’t afford the expense of blending in biofuels as oil prices plummet. “

Understandably, the ethanol industry is just as fervent for the renewable fuel standard to remain in place. The EPA has announced that it is observing the situation, with a decision to follow or not as political winds blow.

As Hot Air notes, a permanent abolition of the renewable fuel standard is not in the cards. Democrats and even some farm-state Republicans would steadfastly oppose such a move. But a temporary suspension for the duration of the current crisis is certainly possible.

State and local governments are doing some remarkable things that would be impossible absent the coronavirus pandemic, ranging from blue states shutting down gun stores to red states banning most abortions. But, as the old saying says, we live in an interesting time, when all things are possible.