Lawmakers must repeal the Renewable Fuel Standard (RFS) and develop new legislation to meet the changing needs of the oil market, the Chief Executive Officer of Valero Energy Corp. testified this week before a Senate Energy Committee.
Speaking before the Senate Energy and Natural Resources (ENR) Committee, William Klesse, CEO of San Antonio-based Valero said lawmakers must revisit the current implementation of the RFS to allow the “orderly movement of renewable fuel into the fuel supply in a responsible manner that protects consumers and small businesses.”
“No matter what one’s view on ethanol and other alternative fuels, it is time to revisit the current implementation of the RFS,” Klesse testified. “The oil supply picture has changed, the basis of the original legislation has changed, the RFS should be repealed and new legislation developed.”
The Senate Energy and Natural Resources Committee held a hearing to explore how U.S. gasoline and fuel prices are being affected by the current boom in domestic oil production and the restructuring of the U.S. refining industry and distribution system.
Testimony was also heard from the Energy Information Administration (EIA) and the Petroleum Marketers Association of America, among others.
Lawmakers are preparing to review the RFS for the first time in five years. Among the top issues are the looming blend wall, which refers to the point at which adding the EPA-mandated volume of ethanol to gasoline supplies would result in ethanol blends that exceed 10 percent, and the rising price of Renewable Identification Numbers (RINs).
RINs for ethanol and biodiesel have been surging in recent weeks amid flat gasoline demand. Last week, ethanol RINs jumped to $1.34-$1.37, up from $1.15 a week earlier. Biodiesel RINs for 2013 traded at $1.345-$1.365.
Klesse said that some U.S. refiners are either being forced to reduce gasoline production, export more gasoline at discounted prices or buy more RINs, which he said may not soon be available.
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