The Edmond Sun

October 31, 2013

Ease of government regulation dropped gas prices significantly

James Coburn
The Edmond Sun

EDMOND — Congressman James Lankford was asked Thursday if there is momentum to remove federal subsidies for the production of corn ethanol in the U.S.

Lankford spoke Thursday to students and guests of the Herbert W. Armstrong College, located north of Waterloo Road off of Bryant Avenue.

“We literally are burning our food up,” said Lankford, R-Edmond.

The use of corn and other biomass to make ethanol suitable for mixing with gasoline began as a way to promote energy independence, Lankford said. One problem with regulation is that a standard was set in 2007 for the number of gallons to be used in the U.S., based on the projected use of gasoline, said Lankford, chairman of the House Oversight Committee’s Subcommittee on Energy Policy.

When the recession came, people started driving less and consuming less gasoline. More fuel-efficient cars are in use today, Lankford said. However, the requirement to boost ethanol production did not change, Lankford said.

“What happens is gas prices continue to go up, not because gasoline is going up, but because you can’t burn enough ethanol,” he explained.

The requirement to produce more ethanol continued to climb due to federal regulation. The trade-in value of Renewable Identification Numbers (RINs) or ethanol credits, went from half-a-cent to more than $1 for a RIN, Lankford said.

“It’s crazy. This is supposed to help us and it’s killing our economy; it’s choking us out,” Lankford said.

The free market is a better way to drive energy independence, Lankford said. People will grow corn only if it makes economic sense. It doesn’t yet, he added.

Lankford pointed out that gas prices dropped a month ago from about $3.50 a gallon to nearer $3 a gallon. Two things changed the market, he said.

“One is we shifted to a winter blend. The EPA gives us more latitude on it,” Lankford said. “And the second thing was, we actually got a waiver from the administration to do a waiver on the amount of ethanol that would be used.” Lankford’s subcommittee was instrumental in pushing the Obama administration for the waiver, he said.

“They did that waiver and in about three days, the price of gasoline dropped about 40 cents purely because of government regulations,” Lankford said.

This illustrates how much federal government regulations can impact the lives of Americans, Lankford said. A long-term remedy is not in sight as the U.S. Senate has no interest in modifying federal subsidies for the production of ethanol, Lankford said.

“I’ve got a bill that I’m actually a co-sponsor of to repeal that entire fuel manufacturer mandate — all of it — to say there’s no reason to do that. Let the market drive it,” Lankford said.

Although federal law requires the manufacturing of 1 billion gallons of cellulosic ethanol, a biofuel made from wood, grasses or plants, only 6 million gallons were manufactured in the U.S., Lankford said.

“You cannot legislate innovation,” Lankford said. “You can’t make a law to invent something and suddenly the market is going to run and create that.”

President Barack Obama has said his Strategy for American Innovation will harness the ingenuity of the American people for economic growth.

“What we can do — what America does better than anyone else — is spark the creativity and imagination of our people,” Obama said in 2011.

In November, the White House set new fuel standards to increase fuel economy to the equivalent of 54.4 miles per gallon for cars and light-duty trucks by model year 2025, according to whitehouse.gov.

The Obama Administration today finalized groundbreaking standards that will increase fuel economy to the equivalent of 54.5 mpg for cars and light-duty trucks by model year 2025. When combined with previous standards set by this Administration, this move will nearly double the fuel efficiency of those vehicles compared to new vehicles currently on our roads. In total, the Administration’s national program to improve fuel economy and reduce greenhouse gas emissions will save consumers more than $1.7 trillion at the gas pump and reduce U.S. oil consumption by 12 billion barrels.

 “These fuel standards represent the single most important step we’ve ever taken to reduce our dependence on foreign oil,” said President Obama. “This historic agreement builds on the progress we’ve already made to save families money at the pump and cut our oil consumption.”



jcoburn@edmondsun.com | 341-2121