The phantom biofuel menace

Last week, the U.S. Court of Appeals for the District of Columbia struck down fanciful mandates from the Environmental Protection Agency concerning the use of biofuels.  The really fanciful part of these mandates is that the biofuels in question don’t actually exist.  The American Petroleum Institute filed suit against a mandate that its members could not possibly meet, even if they wanted to.  Which they don’t.

The ostensible purposes of these mandates was, in essence, to spur production of the biofuels by artificially creating a demand for them.  The horses would be whipped until they cried loudly enough for hay, at which point the farmers would take up their pitchforks.  As the D.C. Court of Appeals noted cheekily, the strategy could be summarized as, “Do a good job, cellulosic fuel producers.  If you fail, we’ll fine your customers.”

Oil refiners, forced by law to incorporate an ingredient that they couldn’t actually buy, cried foul.  The New York Times relayed some illuminating comments from the court and the victorious plaintiffs:

While the mandate springs from a 2007 act of Congress meant to promote advanced biofuels to run cars and trucks, ???we are not convinced that Congress meant for E.P.A. to let that intent color its work as a predictor, to let the wish be father to the thought,??? the court wrote.

Bob Greco, the American Petroleum Institute???s director for downstream and industry operations, welcomed the decision, saying that the structure for setting the quota was flawed.

???There is no onus or accountability on the person who is producing the fuel,??? he said of the emergent cellulosic fuel ventures in an interview. ???They???re incentivized to pump up their projections via press release, and make rosy estimates because there???s no skin off their back if they fail to hit those.???

Then the E.P.A. sets quotas that are too high, he said.

The three-judge panel made a similar point in its decision. The cellulosic fuel rule is fundamentally different from other regulations, it said.

It is intended to force an industry to develop new technology to meet environmental goals, but in this case, the regulated industry was the refiner, not the producer, the court said.

???Apart from their role as captive consumers, the refiners are in no position to ensure, or even contribute to, growth in the cellulosic biofuel industry,??? the judges wrote.

They said the E.P.A.???s message was essentially, ???Do a good job, cellulosic fuel producers. If you fail, we???ll fine your customers.???

A government agency free of consequence allowing its wishes to become the father of thoughts, which rapidly grow into oppressive mandates?  “Captive consumers?”  There’s a great new term for the modern hyper-regulatory era.  The whole point behind the longstanding American aversion to monopolies and anti-competitive business practices is that consumers aren’t supposed to be captives.  Why does anyone suddenly decide it’s OK, as long as the hostage-takers work for the government?  One might argue that the ability of voters to influence the government provides a level of restraint that wouldn’t exist against an overbearing business monopoly… but that’s a laughably difficult attitude to maintain in the face of what regulatory agencies like the EPA have become.

Last week’s court decision didn’t wipe out the entire notion of creating a biofuel industry by fiat.  It was supposed to be a relatively minor injection of sanity into the system, but even that provoked a violent allergic reaction from the EPA, because the agency soon declared that it would ignore the court ruling  and literally double down on the biofuel mandates, raising the quota from 8.7 million gallons of non-existent “green” product to 14 million gallons.  All in the service of a “climate change crisis” that no one on Earth can prove is actually happening, much less directly link to the fuel in America’s gas tanks.  But it’s a very convenient “crisis” if you’re a political operator looking for control over a vast economy… or you happen to be selling into the new markets those regulators want to create.

Bob Greco of the API professed his astonishment, while the wishes of the EPA produced a whole new litter of thoughts:

“The court recognized the absurdity of fining companies for failing to use a nonexistent biofuel,” said Bob Greco, director of downstream operations for the American Petroleum Institute, the principal lobbying group for the oil and gas industry.

Greco said he was astonished that EPA would nearly double the mandate for biofuel in 2013. “EPA needs a serious reality check,” he said, calling the mandate a “stealth tax on gasoline” and an “egregious example of bad public policy.”

EPA spokeswoman Julia Valentine said the agency believes the proposed standards “are a reasonable representation of expected production” of biofuels this year.

This projection reflects EPA’s current estimate of what will actually happen in 2013,” she said, adding that EPA will consider public comments before setting the final cellulosic standard.

And why shouldn’t the EPA go right on making those crazy projections?  As Greco noted last week, it’s not as if they pay any penalty for being wrong, or that they care very much for what the ultimate consumers of all these products – we, the little people – want to pour into their gas tanks.  Separating the forces of demand from the people who pay for everything has a poor track record of success, but the government will never stop trying, because they view it as their sacred mission.

Another interesting thing about those gasoline end users is that they have a ton of money between them, and the government would like oil companies to help separate them from some of it.  That’s where the “stealth tax on gasoline” that Greco mentioned comes in.  You don’t really think the oil companies pay those fines for non-mixture of the non-existent fuel into their products, do you?  Of course not.  They pass it along to motorists.  If the government tried to directly extract such a sum from motorists through higher gas taxes, especially in a recessionary economy that’s already suffering under high gas prices, there’d be hell to pay.  Instead, there’s the EPA to pay, and the public is constantly instructed to hate the oil guys who will be serving as their bill collectors, while applauding the good intentions of everyone on the receiving end of the “green energy” scam.

You don’t have to love the folks at the American Petroleum Institute or the oil companies.  You don’t have to place blind faith in their good intentions.  What matters at the end of the day is that they’re selling a product you want to buy, and their existential “competitors” are selling something you must be forced to buy.  Well, they will be selling it, sooner or later.  Maybe sometime next year, if the EPA crystal ball is functioning properly.