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The Renewable Fuel Standard: Playing the waiting game with the EPA.
April 17, 2015 – By #South Dakota Farmer UnionOver the past year we have seen corn prices as low as $3.20 a bushel and as high as $5.10. Gas prices have fluctuated between a high of $3.59 and low of $1.90. Of course in an ideal world we would take the higher of the corn prices with the lower of the gas prices. However, we are not always that fortunate, as both markets are fairly volatile. But what if I told you the Environmental Protection Agency (EPA) can increase stability in both markets, raising corn prices and lowering gas prices with one single move?
Currently, the EPA is deciding on the fate of the Renewable Fuel Standard (RFS). The RFS is a federal program, under the regulation of the EPA, which requires transportation fuel to contain a minimum level of renewable fuels, including ethanol. The mark was originally set to reach 36 billion gallons by 2022. Levels are supposed to be set each year, however, the EPA has not established any levels since 2013 creating some instability in the renewable fuel markets.
The seemingly good news is that by June 1st the agency will propose the volume requirements for 2015-2016 and finalize the levels for 2014. The requirements for 2015/2016 will also be finalized on November 30th. However, what those levels will be remains to be seen. Optimistically, the levels will align with the original increases laid out in the standard. With proper increases in the new requirements, the EPA could inject both stability and optimism in the biofuels industry creating a greater demand in agricultural markets, specifically corn markets.
As the biofuel industry gets stronger so does its competition with oil industry, driving down fuel prices. In simple terms it is what we refer to as a win-win situation. National Farmers Union President Roger Johnson recently had this to say about the EPA and the RFS announcements:
“The timeline announced by the EPA is encouraging because it provides the biofuels industry with some measure of the certainty it has lacked during the delays to setting the RFS target levels… The RFS has been the best thing to happen to farm country in generations, and rural America and the biofuels industry look to the EPA’s target levels for certainty in planning and investment… The EPA needs to make sure the numbers ensure the success of biofuels in America.”
At the end of the day, a deal is a deal. The RFS needs to remain in place and adhere to the target levels established when the rule was issued. The implications of this standard affect our environment through clean energy, our energy independence through domestic biofuels, our biofuels industry, our agricultural markets, and by extension of all the latter, our local and national economies. South Dakota Farmers Union strongly supports the RFS and encourages ALL South Dakotans and ALL U.S. citizens to do the same.
Last Modified: 04/17/2015 1:47:14 pm MDT