Oil industry pushes Congress to axe biofuel mandate (video)

The American Petroleum Institute is ratcheting up its campaign against the eight-year-old renewable fuel standard with new nationwide advertisements and a website casting the mandate as something only a mechanic would love.

The oil industry trade group’s new TV, print and radio ads feature a car mechanic talking about the potential risks of engine damage from filling up with higher ethanol blends:

“AAA says too much ethanol could cause engine damage that’s not covered under warranty,” the mechanic character says in the TV commercial, just before wheeling under the hood of a car. “And that’s good news for me. I take cash or check.”

The punchline is delivered as lawmakers on Capitol Hill are evaluating whether — and how — to change the renewable fuel standard, which forces refiners to blend steadily increasing amounts of ethanol and other alternatives into the nation’s transportation fuel supply. By 2022, the mandate will require 36 billion gallons, up from 13.2 billion gallons last year. Under the mandate, refiners also are obligated to use cellulosic ethanol made from switchgrass and other non-edible plant materials, though production of those next-generation biofuels is just ramping up.

Video: Oil industry uses Clinton, Bush to push Keystone XL

As gasoline use has declined, the oil industry says it has hit the so-called “blend wall” — a point where they can no longer mix in enough ethanol to meet the mandate without exceeding a 10 percent threshold that is approved for use in all cars and trucks. The renewable fuel mandate is set annually on a total gallon basis — rather than as a percentage of the total gasoline sold.

A higher 15 percent mix, known as E15, is only approved for vehicles made since 2001. Some automakers have warned that using E15 even in newer cars and trucks voids their warranty, and using it in older vehicles may cause equipment damage.

“The ever-increasing ethanol mandates under the RFS will soon force refiners to blend more ethanol into gasoline than is safe for nearly 95 percent of the vehicles on the road today,” said Bob Greco, API’s group director for downstream and industry operations.

Food fight: Fast food chains put renewable fuel mandate repeal on the menu

API has taken a hard-line stance, insisting that the mandate is so fundamentally broken Congress should repeal it. But in the meantime, the trade group is pleading with the Environmental Protection Agency to loosen the requirements.

“EPA needs to lower the total mandate for ethanol to below 10 percent to stave off the blend wall and to …recognize the market realities and lack of production of (cellulosic biofuels),” Greco said. “We are hopeful that EPA will recognize reality and lower the mandates to below 10 percent volume for this year.”

Although legislation pending in the House and Senate would repeal the standard, key leaders of energy committees have not signed on to those measures or said they support a full repeal.

In the normally polarized House Energy and Commerce Committee, panel chairmen have so far taken a deliberative approach to the topic, by issuing a series of white papers exploring aspects of the RFS and inviting stakeholders to comment.

The Senate Energy and Natural Resources Committee is set to take a look at the issue during a hearing Tuesday with Valero Energy CEO Bill Klesse and Dan Gilligan, the president of the Petroleum Marketers Association of America, expected to testify.

Supreme Court: Oil industry loses legal battle against E15

Some oil companies have sunk capital in renewable fuels to comply with the mandate. Big changes — including a complete repeal — could undermine those investments and inject some uncertainty into their long-term planning.

Renewable fuel supporters argue that the mandate was designed to drive innovation in the fuels market and force potentially tough changes by refiners, automakers and motorists. They say rigorous testing proves E15 is safe in newer cars and trucks.

Tom Buis, CEO of Growth Energy, said the mandate “is the most successful energy policy enacted in the last 40 years” because it is reducing our dependence on foreign oil, while creating domestic jobs and helping the environment.

Buis cast API’s ad campaign as “more of the same from Big Oil.”

“They will stop at nothing to maintain their near-monopoly on the liquid fuels market, even if it means saddling consumers with ever-increasing prices at the pump.”

Fuels America said in a statement that API’s ads show the oil industry is out of touch with real Americans. But, the group added, “using stock images of blue collar workers to demonize our domestic renewable fuel industry, not to mention the nation’s auto mechanics, is a bizarre new low.”