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Open Letter to the House of Representatives: Support Efforts to Halt “Blend Wall” Threat

by Nan Swift / /

Dear Member of Congress:

On behalf of the members of National Taxpayers Union (NTU), I write in support of H.R. 5180, the “Food and Fuel Consumer Protection Act.” This bipartisan bill, introduced by Representatives Flores (R-TX), Welch (D-VT), Goodlatte (R-VA), Costa (D-CA), Womack (R-AR), and Richmond (D-LA), would cap the Environmental Protection Agency (EPA) mandated ethanol content of transportation fuel at 9.7 percent, thereby eliminating the threat posed to consumers by the looming “blend wall.”

The blend wall describes the maximum amount of ethanol that can be safely blended into fuel supply without causing damage to engines. Industry experts estimate that this threshold is ten percent, which is the most commonly used blend across a majority of automobiles, recreational vehicles, and many small engines. The EPA is in the process of finalizing renewable volume obligations (RVO) for 2017 that are well above this average and will finally breech the blend wall. This leaves refiners with few options to comply – all of which could hurt consumers.

Refiners can reduce production of E0 (the preferred fuel for many boaters) and E10 – or increase exports – both would result in less consumer choice and higher fuel prices. Refiners can also create fuels with greater ethanol content, such as E15 and E85, however there is little consumer demand for such fuels.

This growing discrepancy between consumer demand and EPA’s efforts to force higher blends into the marketplace is the crux of what makes the Renewable Fuel Standard (RFS) increasingly unworkable in the real world. The underlying RFS statute assumed ever-increasing gasoline consumption, which theoretically could have accommodated increasing volumes of ethanol. However, thanks to more efficient engines, economic factors, and changing consumer behavior, gasoline consumption has fallen.

It’s clear that consumers can’t rely on the EPA to set volumes that are in step with market conditions. Volumes that exceed the blend wall only exacerbate the already widespread economic harm imposed by the RFS. Consumers need the commonsense guidelines of H.R. 5180 to forestall further market distortions that could raise gas prices (virtually eliminating the consumer gains from low crude prices), increase food costs, and force more ethanol into the fuel supply. Legislators should note that the bill doesn’t prevent gas stations and other distributors from providing higher ethanol blends of gasoline, it merely prevents the EPA from mandating volumes that would exceed 9.7 percent.

As Congress considers a long-term solution to the broken RFS policies, the “Food and Fuel Consumer Protection Act” is an essential stop-gap measure that will provide real relief to consumers. NTU is pleased to endorse H.R. 5180 and encourages all Representatives to work towards its immediate passage.

Sincerely,

Nan Swift, Federal Affairs Manager