It’s bad enough that government regulations and environmental legal defense groups have prevented us from building oil refineries for over 30 years. It’s even worse when the existing ones are forced to blend fuel mixtures that don’t exist.
We are all painfully aware of the Soviet style mandate that requires 10% of petroleum to be comprised of ethanol. This unconstitutional mandate has killed jobs, driven up the cost of fuel and food, lowered gas mileage, and damaged car engines – all to benefit corporate cronies in Big Ag. This odious fuel source is primarily made from corn. But since 2010, the EPA has mandated the blending of more than 20 million gallons of cellulosic biofuel into the nation’s fuel supply. The problem is that while creating efficacious fuel from grass, wood, and algae might sound great in theory, it doesn’t exist on the commercial fuel market.
On December 19, 2007, President Bush signed a disastrous socialist energy bill that contained numerous green energy mandates and subsidies. It also banned the sale of incandescent light bulbs. The “Energy Independence and Security Act of 2007” passed with support from 39 Republican senators and 95 Republican congressmen. It created a Renewable Fuels Mandate requiring that 22 billion gallons of renewables be blended into our gasoline supply by 2016 and 36 billion gallons by 2022. The bill also created a few sub-mandates, one of which required a blend of 100 million gallons of cellulosic biofuel by 2010, rising to 250 million in 2011, 500 million in 2012, and 16 billion by 2022. The bill also established a tax credit of $1.01 per gallon produced.
Despite the tremendous tailwinds of tax credits and the boot of the government used to force fuel blenders to purchase cellulosic fuels, the industry has failed to perform magic and become commercially viable during the past 5 years. Some of the plants that were given subsidies to produce this phantom fuel were never even built. Yes – this is a scandal far worse than Solyndra.
What is even more scandalous is that oil companies are forced to pay a tax for not blending this phantom fuel!
Because oil companies are deemed to be in violation of the renewable fuels mandate, they are forced to purchase waiver credits from the EPA or face large fines. Oil companies have been forced to pay $14 million in these credits so far (more than all the green energy companies have paid in taxes). Yes, indeed we already have a cap and trade program in place.
At present, there is a pending lawsuit against the EPA over the phantom fuel mandate filed through the D.C. Circuit Court by industry groups. However, we cannot count on the courts to uphold the Constitution. After all, liberal judges hold that government can regulate inactivity, presumably, even if that activity doesn’t exist. John Roberts would probably say that the mandates are fine because they morph into a form of taxation. As such, it is incumbent upon Congress to overturn this preposterous law – one that exemplifies the inanity of Washington bureaucracy.
To that end, Congressman Jeff Flake has introduced H.R. 6047 – the Phantom Fuel Reform Act. This bill simply prescribes that the EPA’s annual cellulosic biofuel mandates reflect more realistic production-based projections, which, in this case, would be 0 gallons. This is a no brainer bill that should be brought to the floor under suspension. Let Democrats go on record as supporting higher gas prices for the purpose of continuing a mandate that defies gravity.
This is just the first step. When Republicans win back the Senate and the White House, they must repeal the 2007 energy bill – lock, stock, and barrel. It is the Obamacare of the energy industry.
Cross-posted from The Madison Project