Oil industry trade group says delay by EPA on biofuel quotas could spell trouble at the pump
WASHINGTON — The federal government is already seven months late in setting biofuel quotas for 2014, with the risk that tardiness will translate into volatile gasoline prices, the oil industry’s leading trade group said Wednesday.
At issue are renewable fuel mandates for 2014, which the Environmental Protection Agency was supposed to make final by last Nov. 30, under a deadline set by federal law. The agency has unveiled a proposal that would require refiners to use 15.2 billion gallons of renewable fuels in 2014 but hasn’t issued final quotas.
The EPA is shying away from outlining a specific timeline and in a statement Wednesday said only that it hopes to have the final 2014 standards out “as soon as possible.”
But because the rule hasn’t entered a separate interagency review process at the Office of Management and Budget, final action is at least a month away — and even then, the mandates are certain to be challenged in court. Earlier this year, EPA officials had said they would impose the 2014 quotas “before summer,” which begins Saturday.
“Almost half of 2014 is behind us, yet EPA still hasn’t finalized the ethanol requirements for this year,” said Bob Greco, downstream group director for the American Petroleum Institute. “Companies are left to guess how much ethanol they must blend into gasoline, making it harder to pro- duce the fuels Americans need.”
“This is not a recipe for predictability and reliability in the gasoline markets,” Greco added during a conference call with reporters.
Two industries upset
The EPA’s tentative quota provoked anger from both the oil industry and biofuel producers.
Corn Belt politicians accused the agency of abandoning rural America because the proposal lowered the amount of renewable fuel — mostly corn-based ethanol — it would require refiners to mix in gasoline, the first year-over-year reduction.
Oil industry leaders said the proposed volume quota wasn’t low enough and approached what refiners call the “blend wall” — a point where they would be forced to mixa higher proportion of ethanol into fuel than the 10 percent approved for use in all cars and trucks.
In its statement Wednesday, the EPA acknowledged the importance of the renewable fuel standards decision, and of comments and data it receives onits proposal.
“Our overarching goal is to put the RFS program on a manageable path forward that supports continued, achievable, realistic growth in renewable fuels,” the agency said.
More miles
Some reports suggest the quotas could shift upward, justified in part because vehicle miles driven have been climbing in the United States.
The EPA also could move targets higher if regulators believe refiners can hit the marks by selling more gasoline containing 85 percent etha- nol, whichis suitable only for specially designed engines.
Greco said the uncertainty poses a problem for the nation’s refiners, which might have only until early 2015 to comply with this year’s quotas by blending in enough biofuel to meet the targets or buying credits called renewable identification numbers.
‘Limited flexibility’
But there’s not a lot of wiggle room to make modifications or adapt to any big changes in EPA’s proposed targets ahead of next year’s compliance deadline, Greco said.
“The challenge is that we’re so close to the blend wall right now that refiners have limited flexibility to accommodate EPA’s changes to what they proposed,” Greco said. “That could inject increased volatility into the gasoline market.”
In a letter to EPA Administrator Gina McCarthy, Greco called the continued delays “fundamentally unfair,” and said they “show a continued disregard for congressionally mandated deadlines.”
The American Petroleum Institute has threatened to sue over the lapsed deadlines, but Greco said Wednesday that the group is still weighing its options.
The timing has been slipping for years. Although the EPA hit the Nov. 30 deadline in 2011, it was a month late in 2012 and nine months late in 2013.