NYC Letter: Checks & Balances -- EPA

Day 1,465 of CHOPE
D-minus 1,454 Days

The EPA gives its own peculiar government twist to the existential cogito -- regulamus, ergo est, we regulate, therefore it is.

A FINE FOR NOT USING
A BIOFUEL THAT DOESN’T EXIST

WASHINGTON January 9, 2012 (NYT) - When the companies that supply motor fuel close the books on 2011, they will pay about $6.8 million in penalties to the Treasury because they failed to mix a special type of biofuel into their gasoline and diesel as required by law.

But there was none to be had. Outside a handful of laboratories and workshops, the ingredient, cellulosic biofuel, does not exist.

... "It belies logic," Charles T. Drevna, the president of the National Petrochemicals and Refiners Association, said of the 2011 quota. And raising the quota for 2012 when there is no production makes even less sense, he said.

Penalizing the fuel suppliers demonstrates what happens when the federal government really, really wants something that technology is not ready to provide.

This administration regularly misrepresents its forecasts and goals as actual results, as the here-and-now, as done-and-done.

JUDGE RULES EPA CAN’T MANDATE
USE OF NONEXISTENT BIOFUELS

January 26, 2013 (TDC) - A federal court delivered a serious blow to the Environmental Protection Agency's renewable fuel agenda, ruling that the agency exceeded its authority by mandating refiners use cellulosic biofuels, which isn't commercially available.

The court sided with the country’s chief oil and gas lobby, the American Petroleum Institute, in striking down the 2012 EPA mandate that would have forced refineries to purchase more than $8 million in credits for 8.65 million of gallons of the cellulosic biofuel. However, none of the biofuel is commercially available.

The court added that the cellulosic biofuels program punished refiners for the failure of producers to make enough biofuel to meet the EPA's mandate:

Here, by contrast, EPA applies the pressure to one industry (the refiners), yet it is another (the producers of cellulosic biofuel) that enjoys the requisite expertise, plant, capital and ultimate opportunity for profit. Apart from their role as captive consumers, the refiners are in no position to ensure, or even contribute to, growth in the cellulosic biofuel industry.

Responding in a statement, API Group Downstream Director Bob Greco:

We are glad the court has put a stop to EPA's pattern of setting impossible mandates for a biofuel that does not even exist. This absurd mandate acts as a stealth tax on gasoline with no environmental benefit that could have ultimately burdened consumers. ... This decision relieves refiners of complying with the unachievable 2012 mandate and forces EPA to adopt a more realistic approach for setting future cellulosic biofuel mandates. The court has provided yet another confirmation that EPA's renewable fuels program is unworkable and must be scrapped.

Now consider this. Buying a credit (a claim) is not buying a contract (a claim at a set price). Cellulosic biofuel is not on the market because it is not in commercial production. Production is backlogged so when the biofuel finally comes to market pent-up demand will immediately inflate its price. The refiners' credits will need to be supplemented with additional refiners' cash, which will be priced into the refiners' product. Gasoline prices will remain high or climb higher. [Pause.] That, of course, has been the plan all along (and here).*

CHOPE.

"It belies logic."

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* When Mr. Obama was sworn in a gallon of gasoline was $1.89 (01/26/09). A gallon of gasoline is currently $3.36 (01/28/13), a 178% increase over the 2009 price.

All prices from "Weekly U.S. All Grades All Formulations Retail Gasoline Prices" in a spreadsheet provided by the U.S. Energy Information Administration here.

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