New Energy Policy
The new U.S. energy
policy that is evolving within the Obama Administration emphasizes a
shift from vehicle fuels derived from imported oil to fuels derived
from new, renewable and domestic sources of fuel. In order to achieve
such a transformation, transportation fuel consumers MUST have access
to blends of renewable fuels at the pump.
How We Got Here
There
can be little question that soaring oil and gasoline prices which
peaked in July last year at nearly $150 per barrel and $5 per gallon
respectively, contributed to the current economic recession. With high
prices come decreased demand and economic slowdown. Concurrent with the
rise in oil and gasoline prices, the renewable energy industry faced
many setbacks and disappointments. Even the most optimistic expert and
advocate of the industry will admit that the task of trying to create a
new industry that competes with an established 900 pound gorilla that
has billions of dollars invested in infrastructure and inventory is
daunting. The oil industry, in its efforts to return maximum
shareholder value, has sold its product at the highest possible prices
and has spent increasingly more on producing from diminishing reserves
of oil to replace its inventories. We believe the industry leaders have
protected their interests and investments by refusing (for the most
part) to participate in a meaningful way to develop renewable fuels and
blended retail fuels infrastructure, such as facilitating the sale of
E85 at their own fueling stations.
What Needs to Happen
Our
leaders in government recognize that cycles of increasing volatility in
the price of imported oil will continue to be a problem, even one of
national security implications, as the global economy recovers. Today,
much is being said about our need to increase our production capacity
of renewable fuels, especially ethanol. According to the Renewable
Fuels Association, there is currently 12.5 billion gallons of annual
ethanol production capacity, of which 2 billion is idle. The Renewable
Fuel Standard (RFS), passed by Congress in December 2007, increased the
minimum quantity of renewable fuel required to be blended into gasoline
from 9 billion gallons in 2008 to 36 billion gallons by 2022. Where is
it going to go? The industry will need a plan to incentivize the
distribution and retailing of the product. A great deal of work has
been done in this regard and overall achievement is not as distant as
some might have you believe. Tests and research has been conducted by
groups in collaboration with the DOE that show blends of up to 20%
ethanol can be used in most legacy automobiles.