The New York Times recently reported that, “the price of the ethanol credits skyrocketed 20-fold in just six months.” A credit that went for 7 cents at the start of the year traded for $1.43 in July, according to Bloomberg. And that price is simply passed along to consumers at the pump – a large factor keeping gas prices above $3 per gallon nationwide for 1,000 consecutive days.
But Congress has approached the RFS from a weak position, intimidated by powerful lobby groups who like these handouts. Though the Chairman of the House Energy and Commerce Committee, Fred Upton (MI), has assigned four members to find a solution, just one – Rep. Steve Scalise (LA) – has called for full repeal. The others – Reps. John Shimkus (IL), Lee Terry (NE) and Cory Gardner (CO) – are calling for “reform.” Such reform could even get attached to the must-pass bill that will raise the debt ceiling. According to recent reports, that could even include a one-year delay to the RFS mandates.
While a one-year delay will certainly help the stagnant economy, it does little but push the can down the road. As long as the RFS exists, it will damage the economy. Congress is just debating the degree to which they will let that happen. Conservatives in Congress need to stop trying to save the RFS – and repeal it in its entirety. Doing that will relieve some of the pain at the pump, stop the increase in food prices and save Americans $770 million in economic activity in 2015.