Retail fuel prices are at an all-time high, and as we move toward summer, we can expect them to continue to rise. This is an overwhelming problem for my constituents in Wyoming and for people across the country. We are paying record prices at the pump, and because fuel is an input cost into nearly every good and service, we are paying more for everything. When you add the increasing pressure of inflation from multiple government spending sprees, Americans find themselves in a difficult spot.
President Biden claims to take the problem of high gas prices seriously. In February, he said, “I’m going to work like the devil to bring gas prices down.” In March, the White House said the president would take “all action necessary” to limit rising fuel prices. But when it comes to ensuring small refiners have the flexibility needed to produce gasoline at lower costs, President Biden has done just the opposite.
Under the Renewable Fuel Standard (RFS) program, which the EPA administers, domestic refineries are required to blend increasing amounts of biofuel, primarily ethanol, into their production, or to purchase compliance credits. It will come as no surprise that the price of these compliance credits—like just about everything else—is approaching record levels. By some estimates, this adds between $0.30 – $0.50 to each gallon of gas purchased for consumers.
When Congress first wrote the RFS program, they understood the burdens this mandate would place on smaller refiners. That is why these refineries, mostly located in remote, rural towns, were exempted from this mandate if they could prove it was overly burdensome to their operations. Many small refineries seek these small refinery exemptions (SREs) annually. To remain competitive, they have no other choice. The cost of compliance credits is commonly their second-highest production expense, trailing only the cost of crude oil.
Recently, the EPA denied 36 SRE petitions submitted for 2018, 31 of which they previously granted in August 2019. If you are wondering why the administration is dealing with already resolved petitions from four years ago, you are not alone. Last year, the EPA asked a federal appeals court to return these petitions to the agency so that it could reconsider each of these decisions. As it turns out, the administration had predetermined to deny all relief, even to those small refineries that had relied on the relief for close to three years.
In the coming period, the EPA has said it will deny all other pending petitions for relief for the years 2019, 2020, and 2021. Without a doubt, the price of RFS compliance credits—and consequently fuel prices—will climb higher.
I brought this up to Administrator Michael Regan during an EPA budget hearing. He said, “I’m not quite in agreement that [SRE] relief would have that impact on gas prices. But more importantly, I’d like to point to the law and what the law specifies in terms of SREs. We’ve learned in the past four to six years where the Agency actually has legal authority to give these SREs. I think the Tenth Circuit recently spoke on how we look at the economic hardships and who qualifies for these SREs. I’d say the agency has taken a very close look at SREs at what flexibility we have and what we’ve learned from the past in terms of what the courts have told us what we can and cannot do.” The courts did not strike down the SRE program entirely; however, that is exactly what the EPA intends to do.
President Biden should support our country’s small refineries and direct his EPA to provide relief from this crushing mandate. It is what the law requires, it is what Congress intended, and it avoids the disastrous consequences that would follow the shutdown of these facilities. Without relief, that outcome is all but certain as refiners are forced to meet this ever-increasing biofuel mandate and the costs that accompany it. He should also grant this relief for the good of the people of Wyoming and all Americans, to provide some relief from the historic increase in prices that we’ve all experienced.
Wyoming families are suffering real economic pain. President Biden promised to fix the problems he created. Yet when presented with a simple and appropriate solution to reduce fuel prices and comply with the law, he instead sided with environmental activists and the far-left wing of his party instead. It is not too late to reconsider Mr. President, and I surely hope you do.
Cynthia Lummis is a member of the Environment and Public Works Committee.