I want to thank Chairman Boucher for holding this important and timely hearing. One of the major components of the recently signed Energy Independence and Security Act was an ambitious Renewable Fuels Standard (RFS). I have always been – and remain – supportive of renewable fuels. However, as we all know, Congress doesn’t always get things right. The laws we write are not always perfect and often require reexamination, corrections, and oversight. Certainly there are some legitimate concerns with using food for fuel that we need to continue to examine.
I believe the goal of that legislation was to meet the needs of sound energy policy, environmental policy, as well as national security. Many of the provisions in this new energy package that President Bush signed into law, in fact, meet that criteria. Unfortunately, after further examination and recent economic and environmental studies, the RFS may miss the mark in a few areas. For example, if the goal is to increase our usage of renewable fuel, we should examine the impact on cutting the import tariff, which would certainly bring a flood of renewable fuel to the market. I will be asking our witness about this point.
I want to be perfectly clear – I support the use and development of renewable fuels. I introduced a bill last Congress and again in January last year, along with Mr. Doyle, that requires all gasoline sold in the United States after 2012 contain a minimum of 10% renewable fuel. We were careful not to specify any one technology or source of fuel, allowing the market to fill the need – be it corn based ethanol or cellulosic or fuel from algae or any other renewable source, perhaps even sugar. The new RFS doesn’t follow our technology-neutral and feedstock-neutral model. I believe this may be contributing to many of the problems with the RFS.
While bio-fuels, such as ethanol, are not the silver bullet to cut fuel prices or increase supply, they are an important part of the overall puzzle along with conservation, efficient technologies, and increasing domestic oil supply through increased production.
Under current law, there is no effective “safety valve” to allow for unforeseen difficulties in meeting the required ethanol volumes that last for more than one year, such as ethanol production shortfalls -- many proposed plants are being cancelled or delayed due to the high cost of corn; or inconsistent state laws that prevent refiners from meeting the national renewable mandate. For example, the Nation’s largest gasoline market, California, limits the amount of ethanol in gasoline to 5.7% until 2010 – in 2008, the federal requirement translates to 7.7%, in 2009 about 9.0%. The California deficit would need to be made up in the rest of the U.S. through increased blending and some refiners cannot easily meet the California deficit with refineries in the rest of the country since EPA regulations and car warranties currently prohibit blending above 10% for use in conventional automobiles.
Recognizing this problem, I introduced a bill this week with my friend Charlie Gonzalez that would provide refiners with more time to meet their bio-fuels mandates. Our legislation would allow a "carry-forward" of up to three calendar years for refiners to make up deficits in meeting the mandate in 2008, 2009 or 2010. For instance, refiners who do not blend in enough renewable fuel in 2008 would have until 2011 to make up that deficit. Current law provides refiners who do not blend in enough renewable fuel a shorter, one-year window to make up the deficit. This bi-partisan legislation will help avoid supply shortages and price spikes that might otherwise occur.
I am one who reads and signs all of my constituent mail. One of the top issues that my constituents are concerned about is the high cost of gasoline. The price of a barrel of oil is strongly entrenched above $100 – today the price is over $120 – with no sign of retreating. Gasoline prices are on a path toward $4 per gallon. Yet, America’s oil resources remain off-limits to exploration. According to federal government estimates, there is enough oil in deep waters many miles off our coasts and on federal lands to power more than 60 million cars for 60 years. Additionally, if we advance the commercialization of the nation’s 2 trillion barrel shale oil resource, we will meet the United States’ oil needs for over two centuries. It would be ideal if we could grow all our own fuel, however this is not a possibility and if we overreach we will be creating even greater problems.
Along with a strong RFS, if we were permitted to utilize our vast domestic energy reserves, prices would fall and the United States would achieve a greater level of energy security. Inexpensive energy helped build our economy into the most powerful and prosperous in the world. High energy costs will take us in the opposite direction.
We all talk about “alternative energy.” Well, the “alternative” to our existing policy is to achieve lower prices, along with energy security by relying on environmentally friendly American energy. American energy includes – renewable fuels, coal-to-liquids, oil shale, and the vast reserves of domestic oil and natural gas being blocked by sort-sighted policy. We owe it to working families to pursue an energy policy with a vision of the future. Congress cannot idly stand by for another year and allow gas to eclipse $5 a gallon. The American public deserves better. I yield back.
