Renewable fuel standard decision will affect gas prices

On October 30, 2015, the U.S. Environmental Protection Agency (EPA) submitted a draft final rule for review to the White House Office of Management and Budget (OMB) that would reduce the amount of biofuels that must be blended into the fuel supply in 2014, 2015, and 2016 from statutory requirements, as reported by Bloomberg BNA’s Daily Environment Report on November 3, 2015. Details of the proposal are not public. EPA is working toward a November 30, 2015, deadline established in a settlement with the American Petroleum Institute (API) and the American Fuel and Petrochemical Manufacturers (AFPM) to finalize volume requirements for 2014 and 2015. (source)

This is the Renewable Fuels Standard that has been the subject of so much recent coverage and advertising campaigns pro and con. The decision on the level of this requirement will affect gas prices. If EPA uses its authority to keep the requirement at the 2014 level, there will be no upward pressure on gas prices; however, if the EPA requires an increase along the projected statutory lines, there will be significant upward pressure on gas prices, especially if the EPA does not limit the projected increase for “Advanced Biofuels” which are not commercially available in large quantities in the United States. “The price of E10—which is currently the most commonly used transportation fuel in the United States—would increase by 13 cents to 26 cents per gallon, or 4 percent to 9 percent.” (source)

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