While lower gasoline prices may dampen federal policy-making efforts for the development of biofuels, its proponents say the uncertainty of oil prices provides the perfect lesson on why more must be done to diversify the nation’s energy resources.
Joe Jobe, chief executive officer of the National Biodiesel Board, said the Organization of Petroleum Exporting Countries’ efforts to protect its market share — and force the shutdown of domestic production — shows the country still hasn’t reached its desired energy independence.
“When it [the price of oil] falls by half in six months based on, in part, manipulation by the cartel, that is when you need to be most vigilant,” Jobe said at the National Biodiesel Conference at the Fort Worth Convention Center. “They want to freeze out competitors and alternatives.”
To promote that diversification, Jobe and others are urging Congress and the Environmental Protection Agency to update the Renewable Fuel Standard outlining the amount of biofuel that would be required to be blended into gasoline and diesel.
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“It is our goal for 2015 to get the RFS back on track,” Jobe said.
Energy laws require refineries to blend fuels made from such things as recycled cooking oil, soybean oil and animal fats into the nation’s fuel supply in an attempt to reduce the United States dependence on foreign oil.
The renewable fuel standards program was created under the Energy Policy Act of 2005, and it required that 7.5 billion gallons of renewable fuel, mainly ethanol, be blended into gasoline by 2012. In 2007, biodiesel was added to the mix. The amount of biofuel mixed into conventional fuels was intended to grow through 2022.
But since then a lot has changed. The discovery of shale oil plays dramatically boosted the domestic output of oil. From 2013 to 2014, oil production jumped by 1.2 million barrels a day to bring U.S. output to nearly 9 million barrels a day. At the same time, cars became more efficient, driving down demand for oil.
Federal officials have also been concerned about the impact that imposing the alternative fuel rules would have on the economy. A June 2014 Congressional Budget Office report also predicted that the price of diesel could rise by up to 51 cents per gallon, for example.
The oil industry also has attacked the push for biofuels by saying the federal standards eventually will lead to fuel supply disruptions in the economy and cause the cost of diesel to rise 300 percent and gasoline by 30 percent.
As a result, the EPA in 2013 proposed holding the biodiesel volume at 1.28 billion gallons, and the agency has subsequently withheld a final rule and not established levels for 2014. But the industry produced 1.75 billion gallons last year and has exceeded the requirements every year.
Gas prices have continued to plummet and the U.S. Energy Information Administration predicted last week that diesel prices would be almost $1-a-gallon cheaper in 2015. It would almost be a “deliberate sabotage” not to set the production levels higher, Jobe said.
While admitting it faces stiff opposition, Jobe said the industry is “angry but energized.” He told the crowd during his speech to keep up the good fight.
“We are the ones on the right side of history, and we have a powerful force on our side. The truth,” he said.
Max B. Baker, 817-390-7714