There's no denying that gas prices are out of control and hurting Pennsylvania's working families and small businesses as we emerge from the pandemic amidst a period of inflation. If Washington, D.C. is serious about helping Americans get through this turmoil, every option to help reduce our pain at the pump should be on the table. One specific way the Biden administration and Democrat leaders in Washington could bring fuel costs down now is by modifying the federal government’s Renewable Fuel Standard (RFS).
Created in 2005, the RFS artificially requires increasing amounts of renewable biofuels, like ethanol to be blended into U.S. transportation fuel each year. The rule was intended to improve American energy security and reduce greenhouse gas emissions. These are lofty goals, but the RFS isn't helping us meet them. In fact, costs to comply with the RFS have gotten so outrageous that domestic refiners here in the Northeast are now on the brink of closure unless something changes soon.
The problem is that the RFS blending mandate is grossly misaligned. Although refiners are responsible for meeting the mandate, the blending of the biofuels into gasoline does not actually happen at the refineries – it happens after the fuel is transported away from them. So, many refiners, including independent refiners without blending operations, must purchase tradable compliance credits instead to meet their compliance obligations with the RFS program and over the last few years, market conditions have caused RFS credit prices to soar. While these contrived credits once cost a few pennies, they are now over $1 per credit. As a result, refiners are now spending more on credits than they are on nearly all their operating costs. Bear in mind, these costly credits are entirely created by Washington and could be removed by Washington.
This is simply not sustainable. We can't lose our few remaining refineries here in the Northeast and the thousands of good-paying jobs they provide. Less than two decades ago, there were a dozen regional refiners; today there are just four. Within the past decade, the Northeast has lost 1.5 million barrels per day – or roughly 70% – of its refining capacity. Without meaningful RFS reform, these refineries will not survive, thousands of family-sustaining jobs will be lost, and we'll be forced to increase our reliance upon foreign fuels during this time of global instability.
Who ends up paying for all of this? American consumers. The RFS is making it more expensive to produce domestic gasoline and diesel fuel, resulting in increased prices for every gallon of fuel that leaves the refineries while increasing our dependence on foreign fuels. It's estimated that by reforming the RFS, consumers could save up to 30 cents per gallon on gas prices at the pump. That's the kind of common-sense change we need at this critical time when consumers and small businesses are being crushed by inflation.
This broken policy needs to be fixed so that it equally benefits the economy, the environment and energy security. The Biden administration has the opportunity to find a solution that will alleviate these artificially created dire circumstances that threaten our regional refiners, jobs and American fuel supplies and that action must be taken now - before it's too late.
Representative Sheryl Delozier
Pennsylvania House of Representatives
Media Contact: Katelin Morrison
RepDelozier.com / Facebook.com/RepDelozier