As the Environmental Protection Agency (EPA) public comment period on the Renewable Fuel Standard (RFS) closes, NATSO is encouraged by the vast support to keep the current compliance structure under the RFS. NATSO, in collaboration with other industry stakeholders, has engaged a diverse group of more than 35 organizations and companies representing downstream blenders, fuel retailers, marketers, and end users at the federal and state levels.
“NATSO is heartened by the overwhelming number of stakeholders who are urging the EPA to keep the RFS compliance with refiners, importers and manufacturers,” said Lisa Mullings, president and chief executive officer of NATSO. “We urge the EPA not to shift compliance onto thousands of small business fuel retailers, which would inject massive disruption into fuels markets and raise fuel prices, ultimately harming the economy and hard-working Americans.”
The RFS has been an ongoing point of contention between major players in the fuel industry. A handful of refiners and investors have petitioned the EPA to shift compliance requirements down the supply chain. Doing so would undercut the program’s efforts to sustain the use of renewable fuels in gasoline and diesel fuel. The current structure creates a strong incentive for blenders, retailers, and marketers to integrate renewable fuels into the supply chain.
“The RFS is working as intended by creating stable gas prices and encouraging renewable fuels in our gas supply,” said Tim Columbus, general counsel of the National Association of Convenience Stores and SIGMA. “But if the EPA shifts compliance, it would unnecessarily complicate the program, needlessly disrupt the markets for motor fuels, and hurt consumers most.”
In addition to undermining the purpose of the program, this change would increase gas prices for consumers as downstream players’ ability to satisfy their obligations would be dictated by upstream counterparts, who have the leverage and incentive to raise prices. A recent Penn Schoen Berland (PSB) survey released earlier this year revealed that 86% of voters agree that a compliance shift would increase gas and diesel prices at the pump.
The change would also add significant compliance costs and burdens to freight shippers, which would ultimately raise the cost of consumer goods through higher shipping costs. For example, if the compliance changes, Class I railroads would need to expend between $112.5 million and $214 million just to acquire Renewable Identification Numbers (RINs) to comply with 2016 Renewable Volume Obligations (RVOs)--based on 2016 numbers. California’s enactment of the Low Carbon Fuel Standard is a cautionary tale. In light of the market’s experience in California, it would not be implausible for the railroads to have to pay between $260 and $447 million more for fuel.