[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
HIGH-OCTANE FUELS AND HIGH EFFICIENCY VEHICLES: CHALLENGES AND
OPPORTUNITIES
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON ENVIRONMENT
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
SECOND SESSION
__________
APRIL 13, 2018
__________
Serial No. 115-118
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
Available via the World Wide Web: http://www.fdsys.gov
__________
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COMMITTEE ON ENERGY AND COMMERCE
GREG WALDEN, Oregon
Chairman
JOE BARTON, Texas FRANK PALLONE, Jr., New Jersey
Vice Chairman Ranking Member
FRED UPTON, Michigan BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois ANNA G. ESHOO, California
MICHAEL C. BURGESS, Texas ELIOT L. ENGEL, New York
MARSHA BLACKBURN, Tennessee GENE GREEN, Texas
STEVE SCALISE, Louisiana DIANA DeGETTE, Colorado
ROBERT E. LATTA, Ohio MICHAEL F. DOYLE, Pennsylvania
CATHY McMORRIS RODGERS, Washington JANICE D. SCHAKOWSKY, Illinois
GREGG HARPER, Mississippi G.K. BUTTERFIELD, North Carolina
LEONARD LANCE, New Jersey DORIS O. MATSUI, California
BRETT GUTHRIE, Kentucky KATHY CASTOR, Florida
PETE OLSON, Texas JOHN P. SARBANES, Maryland
DAVID B. McKINLEY, West Virginia JERRY McNERNEY, California
ADAM KINZINGER, Illinois PETER WELCH, Vermont
H. MORGAN GRIFFITH, Virginia BEN RAY LUJAN, New Mexico
GUS M. BILIRAKIS, Florida PAUL TONKO, New York
BILL JOHNSON, Ohio YVETTE D. CLARKE, New York
BILLY LONG, Missouri DAVID LOEBSACK, Iowa
LARRY BUCSHON, Indiana KURT SCHRADER, Oregon
BILL FLORES, Texas JOSEPH P. KENNEDY, III,
SUSAN W. BROOKS, Indiana Massachusetts
MARKWAYNE MULLIN, Oklahoma TONY CARDENAS, California
RICHARD HUDSON, North Carolina RAUL RUIZ, California
CHRIS COLLINS, New York SCOTT H. PETERS, California
KEVIN CRAMER, North Dakota DEBBIE DINGELL, Michigan
TIM WALBERG, Michigan
MIMI WALTERS, California
RYAN A. COSTELLO, Pennsylvania
EARL L. ``BUDDY'' CARTER, Georgia
JEFF DUNCAN, South Carolina
7_____
Subcommittee on Environment
JOHN SHIMKUS, Illinois
Chairman
DAVID B. McKINLEY, West Virginia PAUL TONKO, New York
Vice Chairman Ranking Member
JOE BARTON, Texas RAUL RUIZ, California
MARSHA BLACKBURN, Tennessee SCOTT H. PETERS, California
GREGG HARPER, Mississippi GENE GREEN, Texas
PETE OLSON, Texas DIANA DeGETTE, Colorado
BILL JOHNSON, Ohio JERRY McNERNEY, California
BILL FLORES, Texas TONY CARDENAS, California
RICHARD HUDSON, North Carolina DEBBIE DINGELL, Michigan
KEVIN CRAMER, North Dakota DORIS O. MATSUI, California
TIM WALBERG, Michigan FRANK PALLONE, Jr., New Jersey (ex
EARL L. ``BUDDY'' CARTER, Georgia officio)
JEFF DUNCAN, South Carolina
GREG WALDEN, Oregon (ex officio)
(ii)
C O N T E N T S
----------
Page
Hon. John Shimkus, a Representative in Congress from the State of
Illinois, opening statement.................................... 2
Prepared statement........................................... 3
Hon. Paul Tonko, a Representative in Congress from the State of
New York, opening statement.................................... 4
Prepared statement........................................... 5
Hon. Greg Walden, a Representative in Congress from the State of
Oregon, opening statement...................................... 6
Prepared statement........................................... 7
Hon. Frank Pallone, Jr., a Representative in Congress from the
State of New Jersey, opening statement......................... 8
Prepared statement........................................... 9
Witnesses
R. Timothy Columbus, Counsel, National Association of Convenience
Stores and Society of Independent Gasoline Marketers of America 10
Prepared statement........................................... 12
Emily Skor, Chief Executive Officer, Growth Energy............... 26
Prepared statement........................................... 28
Dan Nicholson, Vice President of Global Propulsion Systems,
General Motors, on Behalf of the United States Council for
Automotive Research............................................ 39
Prepared statement........................................... 41
Answers to submitted questions............................... 125
Paul Jeschke, Chairman, Illinois Corn Growers Association........ 45
Prepared statement........................................... 47
Chet Thompson, President and Chief Executive Officer, American
Fuel & Petrochemical Manufacturers............................. 68
Prepared statement........................................... 70
Submitted Material
Letter of April 12, 2018, from Bob Dinneen, President and Chief
Executive Officer, Renewable Fuels Association, to Mr. Shimkus
and Mr. Tonko, submitted by Mr. Shimkus........................ 116
HIGH-OCTANE FUELS AND HIGH-EFFICIENCY VEHICLES: CHALLENGES AND
OPPORTUNITIES
----------
FRIDAY, APRIL 13, 2018
House of Representatives,
Subcommittee on Environment,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 9:00 a.m., in
room 2123, Rayburn House Office Building, Hon. John Shimkus
(chairman of the subcommittee) presiding.
Members present: Representatives Shimkus, McKinley, Barton,
Harper, Olson, Johnson, Flores, Hudson, Cramer, Walberg,
Carter, Duncan, Walden (ex officio), Tonko, Ruiz, Peters,
Green, McNerney, Matsui, Pallone (ex officio).
Also present: Representative Loebsack.
Staff present: Mike Bloomquist, Staff Director; Samantha
Bopp, Staff Assistant; Daniel Butler, Staff Assistant; Kelly
Collins, Legislative Clerk, Energy/Environment; Jerry Couri,
Deputy Chief Counsel, Environment; Wyatt Ellertson,
Professional Staff Member, Energy/Environment; Margaret Tucker
Fogarty, Staff Assistant; Jordan Haverly, Policy Coordinator,
Environment; Ben Lieberman, Senior Counsel, Energy; Mary
Martin, Chief Counsel, Energy/Environment; Drew McDowell,
Executive Assistant; Brandon Mooney, Deputy Chief Counsel,
Energy; Dan Schneider, Press Secretary; Peter Spencer, Senior
Professional Staff Member, Energy; Austin Stonebraker, Press
Assistant; Hamlin Wade, Special Advisor for External Affairs;
Jeff Carroll, Minority Staff Director; Jean Fruci, Minority
Policy Advisor, Energy and Environment; Caitlin Haberman,
Minority Professional Staff Member; Rick Kessler, Minority
Senior Advisor and Staff Director, Energy and Environment;
Jourdan Lewis, Minority Staff Assistant; Alexander Ratner,
Minority Policy Analyst; Tim Robinson, Minority Chief Counsel;
Tuley Wright, Minority Energy and Environment Policy Advisor.
Mr. Shimkus. I ask all our guests today to please take
their seats, and if we can get the doors being closed. Thank
you.
The Subcommittee on the Environment will now come to order,
and the Chair now recognizes himself for 5 minutes for an
opening statement.
OPENING STATEMENT OF HON. JOHN SHIMKUS, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF ILLINOIS
This subcommittee has jurisdiction over the EPA programs
affecting transportation fuels and vehicles, most significantly
the Renewable Fuel Standard, as well as the Corporate Average
Fuel Economy/Greenhouse Gas standards.
At our March 7 hearing on the future of fuels and vehicles,
we had a chance to learn more about the trends impacting
personal transportation in the years ahead. One takeaway was
that, although electric vehicles will continue to make inroads,
the internal combustion engine will still dominate the market
for another three decades or more, as will petroleum and
agriculturally based liquid fuels to power these engines. For
this reason, the RFS and CAFE/Greenhouse Gas programs will
continue to have a significant impact for years to come.
One potential flaw with the RFS and the CAFE/Greenhouse Gas
is that the two programs have never been fully coordinated with
one another. The RFS doesn't necessarily give us the liquid
fuel formulations that maximize energy efficiency, and the
CAFE/Greenhouse Gas doesn't necessarily result in the kinds of
engines that make the best use of the biofuel blends.
Fortunately, there is new research underway to do better
coordinating these programs. At the March hearing, we learned
about DOE's Co-Optima initiative that is looking to maximize
efficiency by using high-octane fuels and engines specifically
designed to run on these fuels. Ideally, this could benefit
everyone from corn growers to biofuel producers, refiners,
automakers, and most importantly, all consumers.
Today we seek to get the high-octane policy discussion
underway in earnest, and I welcome our witnesses.
High-octane fuels can improve fuel economy in engines
optimized for them. For automakers, it is also a relatively
low-cost tool to increase miles per gallon. And because ethanol
is the cheapest source of octane currently available, it also
may be a pathway to use at least as much if not more ethanol
than under the RFS.
But make no mistake, this is a major undertaking, and I say
that respectfully. For one thing, we must deal with the
proverbial chicken-and-egg conundrum. We can't expect refiners
and gas stations to invest in new fuel unless they know that
cars will be manufactured that will run on it. And automakers
don't want to commit to new engines until they know that the
fuel will be widely available. Significant investment dollars
and a great many jobs may be at stake.
And there are a lot of details yet to be decided, including
exactly what the high-octane standards should be, how many
years refiners and automakers need in order to make the
transition, and what gas stations must do in order to provide
this new fuel for new vehicles while still carrying the old
fuels for existing vehicles.
We also must figure out what other legal and regulatory
provisions need to be revised or repealed in order for a high-
octane transition to work. And most importantly of all, we need
to make sure that what we do is of a net benefit to consumers.
One point I do want to emphasize: This hearing is not a
discussion on EPA's midterm evaluation or the CAFE/Greenhouse
Gas standards for model years 2022 through 2025. Regardless of
the outcome of that process, we know for certain that fuel
economy standards are going to continue increasing from where
they are today and that automakers will need every cost-
effective option for complying. High octane is one such option
and is worthy of serious consideration, and today I hope we can
get a constructive dialogue underway.
Thank you.
And I have a minute left. Anyone seek time on the majority
side? If not, I would like to recognize the ranking member of
the subcommittee, Mr. Tonko, for 5 minutes.
[The prepared statement of Mr. Shimkus follows:]
Prepared statement of Hon. John Shimkus
This subcommittee has jurisdiction over the EPA programs
affecting transportation fuels and vehicles, most significantly
the Renewable Fuel Standard as well as the Corporate Average
Fuel Economy/Greenhouse Gas (CAFE/GHG) standards.
At our March 7th hearing on the future of fuels and
vehicles, we had a chance to learn more about the trends
impacting personal transportation in the years ahead. One
takeaway was that, although electric vehicles will continue to
make inroads, the internal combustion engine will still
dominate the market for another three decades or more, as will
petroleum and agriculturally based liquid fuels to power these
engines. For this reason, the RFS and CAFE/GHG programs will
continue to have a significant impact for years to come.
One potential flaw with the RFS and with CAFE/GHG is that
the two programs have never been fully coordinated with one
another. The RFS doesn't necessarily give us the liquid fuel
formulations that maximize energy efficiency, and CAFE/GHG
doesn't necessarily result in the kinds of engines that make
the best use of biofuel blends.
Fortunately, there is research underway to better
coordinate these two programs. At the March hearing, we learned
about DOE's Co-Optima initiative that is looking to maximize
efficiency by using high-octane fuels and engines specifically
designed to run on these fuels. Ideally, this could benefit
everyone from corn growers and biofuels producers, refiners,
automakers, and most important of all, consumers. Today we seek
to get the high-octane policy discussion underway in earnest,
and I welcome our witnesses.
High-octane fuels can improve fuel economy in engines
optimized for them. For automakers, it is a relatively low cost
tool to increase miles per gallon. And because ethanol is the
cheapest source of octane currently available, it also may be a
pathway to use at least as much if not more ethanol than under
the RFS.
But make no mistake--this is a major undertaking. For one
thing, we must deal with the proverbial chicken and egg
conundrum--we can't expect refiners and gas stations to invest
in a new fuel unless they know that cars will be manufactured
that will run on it, and automakers don't want to commit to the
new engines until they know that the fuel will be widely
available. Significant investment dollars and a great many jobs
may be at stake.
And there are a lot of details yet to be decided, including
exactly what the high-octane standard should be, how many years
refiners and automakers need in order to make the transition,
and what gas stations must do in order to provide this new fuel
for new vehicles while still carrying the old fuels for
existing vehicles. We also must figure out what other legal and
regulatory provisions need to be revised or repealed in order
for a high-octane transition to work. And most important of
all, we need to make sure that what we do is of net benefit to
consumers.
One point I do want to emphasize--this hearing is not a
discussion of EPA's Mid-Term Evaluation of the CAFE/GHG
standards for model years 2022 to 2025. Regardless of the
outcome of that process, we know for certain that fuel economy
standards are going to continue increasing from where they are
today, and that automakers will need every cost-effective
option for complying. High octane is one such option and is
worthy of serious consideration, and today I hope we can get a
constructive dialog underway. Thank you.
Mr. Shimkus. And I have a minute left. Anyone seek time on
the majority side? If not, I would like to recognize the
ranking member of the subcommittee, Mr. Tonko, for 5 minutes.
OPENING STATEMENT OF HON. PAUL TONKO, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF NEW YORK
Mr. Tonko. Thank you, Mr. Chair.
And thank you to our witnesses for joining us this morning.
I would like to think all of this subcommittee's hearings
are high octane, but none more so than today's----
Mr. Shimkus. [Groans.]
Mr. Tonko [continuing]. It's 9 o'clock--which will focus on
the challenges and opportunities of high-octane fuels and
vehicle efficiency.
Last month, we heard broadly about the future of our
Nation's transportation fuels. We learned more about DOE's Co-
Optimization program, which is setting how to produce fuels and
engines in tandem that will make our vehicles more efficient.
Today's panel represents a cross-section of the
transportation sector: refiners, vehicle manufacturers, fuel
producers, and retailers. This hearing comes as the
administration and some Members of Congress have considered
changes to our existing fuels and fuel economy policies.
Earlier this month, EPA Administrator Scott Pruitt
determined that emission standards for model year 2022 to 2025
light-duty vehicles should be revised. Personally, I do not
believe this decision is justified by the technical record.
Similarly, discussions on how to reform the Renewable Fuel
Standard continue. In both cases, we must be mindful of the
fact that greenhouse gas pollution from the transportation
sector has become our Nation's largest source of emissions and
needs to be reduced.
Currently refiners blend additives, most commonly ethanol,
into gasoline in order to increase its octane level. A number
of today's witnesses will express support for a 95 research
octane number--or RON--fuel standard, which would be similar to
fuels sold today as premium gasoline and generally cost about
50 cents more than regular unleaded. In theory, the standard
would phase in over time.
But before we sign up for an upending policy shift, we need
to better understand the consequences of this type of change.
Clearly, it would impact all transportation stakeholders,
including those represented on the panel, but also, and most
importantly, consumers.
During any fuel transition period, I believe it is natural
that consumers will gravitate toward the cheapest fuel option,
as they have always done. It is critical to consider how
consumers will deal with any potential fuel cost increase or
confusion around misfueling.
The other issue to consider is how an octane standard would
interact with or displace the RFS. Obviously, there are a wide
variety of views on the RFS. I believe in some ways it has been
successful in achieving its stated goals and in others it has
fallen short, particularly around the development of advanced
biofuels production.
In that case, the question that I will find most important
is, Will moving to a high-octane fuel standard do a better job
in incentivizing and creating market signals for advanced
biofuels? I think probably not, but I am open to hearing
otherwise.
One success of the RFS has been the reduction in carbon
pollution. The RFS supports fuels that are less carbon
intensive than gasoline. But unless there are certain
requirements, it is my understanding that a 95 RON fuel would
not necessarily be guaranteed to use ethanol or other low-
carbon biofuels and could potentially increase the carbon
intensity of our Nation's fuel supply.
We should consider how best to ensure a transition to
higher octane fuels does not permit a backslide on the gains
that have already been made to improve air quality and reduce
carbon emissions.
Similarly, how would this standard interact with CAFE
standards? There is potential for higher octane fuels, coupled
with turbocharged engines, to help achieve fuel economy
standards. But I don't think this can or should be done without
the certainty that these standards will continue and continue
to be strengthened into the future.
I don't agree that our Nation's existing fuels and fuel
economy programs are as problematic as some here. But I am sure
these programs can be improved, and I am open to hearing ideas
that seek to further the goals of these programs without
eroding the progress that has already been made.
Once again, I want to thank our witnesses for joining us
this morning. I look forward to hearing your testimony.
Mr. Chair, again, thanks for the hearing, and I yield back.
[The prepared statement of Mr. Tonko follows:]
Prepared statement of Hon. Paul Tonko
Thank you, Chairman Shimkus. And thank you to our witnesses
for joining us this morning.
I like to think all of this subcommittee's hearings are
high octane. But none more so than today's, which will focus on
the challenges and opportunities of high-octane fuels and
vehicle efficiency.
Last month, we heard broadly about the future of our
Nation's transportation fuels. We learned more about DOE's co-
optimization program, which is studying how to produce fuels
and engines in tandem that will make our vehicles more
efficient.
Today's panel represents a cross section of the
transportation sector- refiners, vehicle manufacturers, fuel
producers, and retailers.
This hearing comes as the administration and some Members
of Congress have considered changes to our existing fuels and
fuel economy policies.
Earlier this month, EPA Administrator Scott Pruitt
determined that emissions standards for Model Year 2022-2025
light-duty vehicles should be revised. Personally, I do not
believe this decision is justified by the technical record.
Similarly, discussions of how to reform the Renewable Fuel
Standard continue.
In both cases, we must be mindful of the fact that
greenhouse gas pollution from the transportation sector has
become our Nation's largest source of emissions and needs to be
reduced.
Currently, refiners blend additives, most commonly ethanol,
into gasoline in order to increase its octane level.
A number of today's witnesses will express support for a 95
Research Octane Number, or RON, fuel standard, which would be
similar to fuels sold today as premium gasoline and generally
cost about 50 cents per gallon more than regular unleaded.
In theory, this standard would phase-in over time.
But before we sign up for an upending policy shift, we need
to better understand the consequences of this type of change.
Clearly it would impact all transportation stakeholders-
including those represented on the panel, but also, and most
importantly, consumers.
During any fuel transition period, I believe it is natural
that consumers will gravitate to the cheapest fuel option, as
they have always done.
It is critical to consider how consumers will deal with any
potential fuel cost increase or confusion around misfueling.
The other issue to consider is how an octane standard would
interact with or displace the RFS.
Obviously, there are a wide variety of views on the RFS. I
believe in some ways it has been successful in achieving its
stated goals, and in others it has fallen short, particularly
around the development of advanced biofuels production.
In that case, the question I find most important is, ``Will
moving to a high-octane fuel standard do a better job in
incentivizing and creating market signals for advanced
biofuels?'' I think probably not, but I am open to hearing
otherwise.
One success of the RFS has been the reduction in carbon
pollution.
The RFS supports fuels that are less carbon intensive than
gasoline. But unless there are certain requirements, it is my
understanding that a 95 RON fuel would not necessarily be
guaranteed to use ethanol or other low-carbon biofuels, and
could potentially increase the carbon intensity of the Nation's
fuel supply.
We should consider how best to ensure a transition to
higher octane fuels does not permit a backslide on the gains
that have already been made to improve air quality and reduce
carbon emissions.
Similarly, how would this standard interact with CAFE
standards?
There is potential for higher octane fuels, coupled with
turbocharged engines, to help achieve fuel economy standards.
But I don't think this can or should be done without the
certainty that these standards will continue, and continue to
be strengthened, into the future.
I don't agree that our Nation's existing fuels and fuel
economy programs are as problematic as some here.
But I am sure these programs can be improved, and I am open
to hearing ideas that seek to further the goals of these
programs without eroding the progress that has already been
made.
Once again, I want to thank our witnesses for joining us
this morning. I look forward to hearing your testimony. And I
yield back.
Mr. Shimkus. The gentleman yields back his time.
The Chair now recognizes the chairman of the full
committee, Chairman Walden, for 5 minutes.
OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OREGON
Mr. Walden. Thank you, Mr. Chairman.
And I want to welcome our witnesses for being here and all
those who have been so engaged in this issue.
The Energy and Commerce Committee takes our obligation
seriously to get the fuels and vehicles policy right. It is
about time.
A vehicle and the gas it runs on is a major expense for
households, as well as millions of small businesses, farms, and
ranches. And the many companies that produce and sell fuels and
vehicles employ millions of Americans, as we all know, and
range in size from major automakers and refiners to small
companies like Red Rock Biofuels, which is looking to help
reduce the risk of wildfire in our forests by converting woody
biomass into biofuel and jobs for the rural areas in my
district in Lakeview, Oregon.
But getting the policy right isn't always easy--I think we
would all admit to that here--especially with complex and
sometimes contentious issues like the Renewable Fuel Standard
and vehicle fuel economy standards.
Today we explore an idea to facilitate compliance with the
RFS while also improving fuel economy. By transitioning to
higher octane blends and vehicles whose engines are designed to
maximize efficiency from those fuels, we could both incorporate
more ethanol into fuel supply while also increasing miles per
gallon.
At first look, it seems like an elegant way to make both
the RFS and CAFE standards work better together. Of course,
whenever something sounds too good to be true, it very well may
be, so we need to kick the proverbial tires of this policy idea
before moving ahead, and that is the purpose of today's
hearing.
We need to be especially mindful of the consumer impacts.
We want a policy outcome that brings down the cost of driving,
so questions about the impact on the price per gallon at the
pump and on sticker price of new vehicles will need to be
addressed, as well, as will questions whether this is the most
cost-effective means to improve fuel economy and to reduce
emissions.
But while looking at these concerns, we also need to
consider the upside potential of high-octane fuels and
vehicles. I look forward to the discussion today. And I would
just thank the chairman of the subcommittee and others who are
putting their shoulder to the wheel here.
This is a priority for me. It is a priority for this
committee. It is a priority for the country. And we intend to
move forward one way or another. So we appreciate that you all
take that seriously as we do, and we look forward to having
everybody at the table and working this out this year.
With that, I would yield back to the chairman of the
subcommittee.
[The prepared statement of Mr. Walden follows:]
Prepared statement of Hon. Greg Walden
The Energy and Commerce Committee takes our obligation
seriously to get fuels and vehicles policy right. A vehicle and
the gas it runs on is a major expense for households as well as
millions of small businesses, farms, and ranches. And the many
companies that produce and sell fuels and vehicles employ
millions of Americans and range in size from major automakers
and refiners to smaller companies like Red Rock Biofuels, which
is looking to help reduce the risk of wildfire in our forests
by converting woody biomass into biofuel and jobs for the rural
community of Lakeview, Oregon.
But getting the policy right isn't always easy, especially
with complex and sometimes contentious issues like the
Renewable Fuel Standard and vehicle fuel economy standards.
Today, we explore an idea to facilitate compliance with the
RFS while also improving fuel economy. By transitioning to
higher octane blends and vehicles whose engines are designed to
maximize efficiency from those fuels, we could both incorporate
more ethanol into the fuel supply while also increasing miles
per gallon.
At first look, it seems like an elegant way to make both
the RFS and CAFE standards work better together. Of course,
whenever something sounds too good to be true, it very well may
be, so we need to kick the proverbial tires of this policy idea
before moving ahead. That is the purpose of today's hearing.
And we need to be especially mindful of the consumer
impacts. We want a policy outcome that brings down the cost of
driving. So questions about the impact on the price per gallon
at the pump and on the sticker price of new vehicles will need
to be addressed, as will questions whether this is the most
cost-effective means to improve fuel economy and reduce
emissions.
But while looking at these concerns, we also need to
consider the upside potential of high-octane fuels and
vehicles. I look forward to today's serious discussion of this
concept.
Mr. Shimkus. The gentleman yields back the time.
The Chair now recognizes the ranking member of the full
committee, Congressman Pallone, for 5 minutes.
OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF NEW JERSEY
Mr. Pallone. Thank you, Mr. Chairman.
Some will say that establishing a high-octane fuel standard
can serve as an alternative to the current Renewable Fuel
Standard, or RFS, program. But others have very different
viewpoints. Today we will hear both sides and review whether
moving to a high-octane standard can satisfy enough
stakeholders to move forward with RFS reform legislation. I
remain skeptical.
As with any policy, the devil is in the details, and here
are just a few of my questions. First, at what octane level
would we set the standard? Second, is it a performance standard
only, or would we retain some discretion to designate clean and
renewable fuels as a source for that octane? And third, where
would advanced and cellulosic biofuels fit into this new
program? Fourth, what engine modifications are necessary, and
how quickly can they be integrated into new vehicle models? And
fifth, how would consumers be affected? And last, how will this
affect workers in the refining, automotive, and agricultural
sectors?
These answers make a big difference about how stakeholder
groups will be impacted. Unfortunately, today's panel does not
come close to representing everyone involved.
Congress enacted the RFS program to diversify the fuel
supply, reduce dependence on fossil fuels, promote rural
development, and deliver environmental benefits. While it
achieved many of these goals, especially in air quality, the
record on environmental benefits of the RFS is mixed. High-
octane fuel standards may or may not deliver environmental
benefits in terms of air quality, greenhouse gas emissions, and
resource use.
This is critical, particularly in light of last week's
announcement by EPA Administrator Scott Pruitt that the Trump
administration was going to roll back fuel efficiency standards
for passenger vehicles and light-duty trucks. Continued growth
of greenhouse gas emissions in the transportation sector must
stop, and fuel economy must improve dramatically.
A policy change that extends the dominance of fossil fuel
use in transportation, that slows improvement in vehicle fuel
economic standards, or keeps us on the path of increased carbon
emissions in the transportation sector is unacceptable, in my
opinion.
And the current RFS program is not perfect. In the past few
days, we learned that this administration's implementation of
the RFS is far from perfect. I have serious concerns and
questions about Administrator Pruitt's extensive use of secret
waivers to allow numerous refineries, apparently of all shapes
and sizes, to get out from their obligations under the law.
I support the judicious use of waivers as appropriate under
law to relieve the burden on small refiners facing real
hardship. However, these secret waivers by Administrator Pruitt
seem to have gone far beyond the scope of the law to include
refineries that are neither small nor in financial distress,
and that is absolutely not the way to address problems with RFS
implementation.
We must evaluate this proposal for changes to the RFS
program against its successes and shortcomings. The RFS has
encouraged a great deal of investment by companies and
individuals throughout the entire transportation, agricultural,
and biotechnology sectors.
Without careful consideration and analysis, we risk severe
disruption and hardship for businesses, farmers, workers,
consumers, and the environment, and trading one set of problems
for another is simply not progress.
So I know this is going to be a valuable hearing. And I
thank you, Mr. Chairman and our ranking member for doing this
today. Thank you.
[The prepared statement of Mr. Pallone follows:]
Prepared statement of Hon. Frank Pallone, Jr.
Some will say that establishing a high-octane fuel standard
could serve as an alternative to the current Renewable Fuel
Standard (RFS) program. Others have very different viewpoints.
Today we will hear both sides and review whether moving to a
high-octane standard can satisfy enough stakeholders to move
forward with RFS reform legislation. I remain skeptical.
As with any policy, the devil is in the details. Here are
just a few of my questions:
At what octane level would we set the standard?
Is it a performance standard only or would we
retain some discretion to designate clean and renewable fuels
as the source for that octane?
Where would advanced and cellulosic biofuels fit
into this new program?
What engine modifications are necessary and how
quickly can they be integrated into new vehicle models?
How would consumers be effected?
How will this affect workers in the refining,
automotive, and agricultural sectors?
These answers make a big difference about how stakeholder
groups will be impacted. Unfortunately, today's panel does not
come close to representing everyone involved.
Congress enacted the RFS program to diversify the fuel
supply, reduce dependence on fossil fuels, promote rural
development and deliver environmental benefits. While it
achieved many of these goals, especially in air quality, the
record on environmental benefits of the RFS is mixed. High-
octane fuel standards may or may not deliver environmental
benefits in terms of air quality, greenhouse gas emissions, and
resource use.
This is critical, particularly in light of last week's
announcement by EPA Administrator Scott Pruitt that the Trump
administration was going to roll back fuel efficiency standards
for passenger vehicles and light duty trucks. Continued growth
of greenhouse gas emissions in the transportation sector must
stop, and fuel economy must improve dramatically. A policy
change that extends the dominance of fossil fuel use in
transportation, that slows improvement in vehicle fuel economy
standards, or keeps us on a path of increased carbon emissions
in the transportation sector is unacceptable.
The current RFS program is not perfect. And, in the past
few days, we've learned that this administration's
implementation of the RFS is far from perfect.
I have serious concerns and questions about Administrator
Pruitt's extensive use of secret waivers to allow numerous
refineries--apparently of all shapes and sizes--to get out from
their obligations under the law. I support the judicious use of
waivers as appropriate under law to relieve the burden on small
refiners facing real hardship. However, these secret waivers by
Administrator Pruitt seem to have gone far beyond the scope of
the law to include refineries that are neither small nor in
financial distress. That is absolutely not the way to address
problems with RFS implementation.
We must evaluate this proposal for changes to the RFS
program against its successes and shortcomings. The RFS has
encouraged a great deal of investment by companies and
individuals throughout the entire transportation, agricultural,
and biotechnology sectors.
Without careful consideration and analysis, we risk severe
disruption and hardship for businesses, farmers, workers,
consumers, and the environment. Trading one set of problems for
another is not progress.
Thank you, I yield back.
Mr. Shimkus. I thank the gentleman.
We now conclude with Members' opening statements. The Chair
would like to remind Members that, pursuant to committee rules,
all Members' openings statements will be made part of the
record.
We want to thank all of our witnesses for being here today
and taking the time to testify before the subcommittee. Today's
witnesses will have the opportunity to give opening statements
followed by a round of questions from Members. So we will just
begin.
First, I would like to recognize Mr. Timothy Columbus,
general counsel, Society of Gasoline Marketers of America and
the National Association of Convenience Stores.
Sir, you have 5 minutes. Your full testimony is in the
record, and you are now recognized.
STATEMENTS OF R. TIMOTHY COLUMBUS, COUNSEL, NATIONAL
ASSOCIATION OF CONVENIENCE STORES AND SOCIETY OF INDEPENDENT
GASOLINE MARKETERS OF AMERICA; EMILY SKOR, CHIEF EXECUTIVE
OFFICER, GROWTH ENERGY; DAN NICHOLSON, VICE PRESIDENT OF GLOBAL
PROPULSION SYSTEMS, GENERAL MOTORS, ON BEHALF OF THE UNITED
STATES COUNCIL FOR AUTOMOTIVE RESEARCH; PAUL JESCHKE, CHAIRMAN,
ILLINOIS CORN GROWERS ASSOCIATION; AND CHET THOMPSON, PRESIDENT
AND CHIEF EXECUTIVE OFFICER, AMERICAN FUEL & PETROCHEMICAL
MANUFACTURERS
STATEMENT OF R. TIMOTHY COLUMBUS
Mr. Columbus. Thank you, Mr. Chairman. My name is Tim
Columbus. I am from the law firm of Steptoe & Johnson. I appear
today on behalf of our clients, the National Association of
Convenience Stores and the Society of Independent Gasoline
Marketers of America. These associations represent over 80
percent of retail fuel sales in the United States.
As a result of--as Mr. Tonko knows, my favorite term is
``the big stupid price signs''--that market is the most
transparent and price competitive commodities market on the
face of the earth.
Simply stated, retailers want to sell products in a legal
way to people who want to buy them. They don't buy them because
we sell them. We sell them because they want them.
Because they do not manufacture the products they sell,
they favor, as do all buyers, deep, diverse markets behind them
from which they can obtain supplies. And in that context I
should comment that the RFS has, in fact, diversified the
market from which our members purchase product.
As I told Chairman Shimkus and Ranking Member Tonko at
their first roundtable on this issue, retailers seek peace in
the valley. We believe that the concept that is being proposed
today offers, perhaps, a path to achieve that objective.
Implementing a program in which all new cars would be
required to run on higher octane fuels, fundamentally a
performance standard, would have the following salutary
effects, in our opinion.
Number one, consumers would benefit from, A, higher
mileage, and B, that the costs of fuels would be driven down
based on the economic advantage of their component parts. Today
the cheapest octane on earth is, in fact, ethanol. I believe
this opens a substantial opportunity for ethanol and that that
can, in fact, lower the cost of motor fuels overall.
Number two, the environment would benefit from decreased
auto emissions. High-compression engines are more efficient, we
get better mileage, and we spew less stuff into the air. It is
a technical term, ``stuff.''
Fuel marketers would benefit from a continued and evolving
diversity in supply, which will drive down their costs and,
therefore, the costs of their customers. I believe fuels'
manufacturers would benefit from their increased ability to
supply products which are marketed based on their economic
efficiencies in relevant markets, rather than based on a
formulaic approach.
For retailer marketers in particular, the specific benefits
of this approach, I think, are the following. The change in the
product mix would occur over time. That results in, at least at
the outset, minimal if any need to modify existing
infrastructure. RON 95 is in the market today, and it is
available at virtually every retail outlet in the United
States.
By assuring an ever-increasing market for those new fuels,
marketers will be in a position to make a decision to invest
knowing that there is a guaranteed demand for the product that
requires the investment and that they will be able to achieve
an economic return.
By opening the market to new fuels and properly allocating
responsibility for compliance amongst manufacturers, marketers,
and consumers, retailers will have the option of introducing
new fuels to the market to meet consumers' demand for those
fuels.
In conclusion, NACS and SIGMA believe the concept being
discussed today offers all the stakeholders in this debate the
benefit of going forward based on a performance rather than a
formulaic standard.
I have been around some of you for a while. It has been my
experience that, when manufacturers face a performance
standard, it is the instance in which the great American
competitive genius has produced the best economic results for
the consumers and all of us who serve them.
We congratulate the subcommittee for holding this hearing.
We urge you to move forward in an effort to alleviate the
ongoing plague of industry squabbles and enhance the interests
of fuel consumers in obtaining the most cost-effective fuels
for their vehicles.
Thank you. I am happy to answer any questions that these
comments or my statement may have raised for you.
[The prepared statement of Mr. Columbus follows:]
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Mr. Shimkus. The gentleman yields back time. The Chair
thanks the gentleman.
The Chair now recognizes Emily Skor, chief executive
officer of Growth Energy.
Welcome. You are recognized for 5 minutes.
STATEMENT OF EMILY SKOR
Ms. Skor. Good morning, Chairman Shimkus, Ranking Member
Tonko, and members of the subcommittee. Thank you for the
opportunity to discuss the contributions of ethanol to high-
octane fuels and future vehicle fuel economy standards.
My name is Emily Skor, and I am the CEO of Growth Energy,
America's leading biofuels trade association, proudly
representing 89 producers, 83 technology innovators in the
supply chain, and tens of thousands of supporters across the
country, including in Illinois. We work to bring consumers
better choices at the pump, grow America's economy, and improve
the environment for future generations.
Ethanol is a homegrown biofuel that is now blended into 97
percent of standard gasoline, meeting more than 10 percent of
our motor fuel needs. Ethanol-blended fuels have the highest
octane of any available liquid alternative and allow for
better-performing engines that deliver greater fuel efficiency.
American biofuels are ready to move America forward. With a
stable policy and access to drivers, we can deliver low-carbon,
low-cost, high-performing, sustainable vehicle fuel solutions.
Congress recognized the need for a more diverse and stable
fuel supply and enacted the Renewable Fuel Standard to drive
innovation and investment in renewable biofuels and open access
to the marketplace. This energy policy is successfully driving
advances in cellulosic ethanol, with plants operating at
commercial scale, converting corn kernel fiber, corn stover,
wood waste, and other biomass feedstocks into high-value
energy.
To continue our progress and fulfill congressional goals,
U.S. consumers must have greater access to alternative fuel
choices at the pump. Growth Energy has been working with fuel
retailers to build the marketplace for fuel with higher blends
of ethanol, such as E15 and E85, as well as install the
infrastructure that can be used for high-octane midlevel
ethanol blends, such as E30.
Today, low-cost higher blends are available at thousands of
gas stations around the country. Consumers have already driven
4 billion miles on E15 and are ready to use this fuel
nationwide year-round.
As fuel economy standards become increasingly stringent in
the U.S. and worldwide, auto manufacturers are working toward
more efficient engines that require high-octane fuels to
operate effectively and lower greenhouse gases. Ethanol is a
ready solution. With a natural 113 octane, ethanol has a lower
carbon content than the gasoline components it replaces and
provides increased engine efficiency to reduce greenhouse gas
and criteria pollutant emissions.
Growth Energy has been a leader in pushing for higher
octane midlevel ethanol blends. We submitted the first proposal
for a 100 RON E30 fuel nearly 7 years ago.
Robust research by national labs, automakers, and other
scientific institutions has explored the myriad benefits of
high-octane fuels and specifically a midlevel blend in the E20
to E30 range. When paired with various higher compression ratio
engines, these fuels increase vehicle engine efficiency, lower
tailpipe emissions, and increase use of renewable fuel.
There have been recent discussions about moving to solely a
95 RON or 91 octane fuel standard. While we applaud any move to
higher octane fuels, a 95 RON could easily be met with today's
premium gasoline and there would be little to no incentive for
oil refiners to move to higher biofuel blends. The past decade
has shown oil companies will actively ignore economic
incentives just to prevent market entry of higher ethanol
blends.
We cannot assume that such a modest increase in octane will
drive growth in demand for American-made biofuels and
agriculture without the access to market provided by the RFS.
Only by coupling a stable RFS to maintain market access with a
significant boost in octane from a midlevel ethanol blend can
consumers realize significant cost savings, increased engine
efficiency, and substantial environmental benefits.
Biofuels must be part of any long-term plan for engine
efficiency and greenhouse gas reduction. However, any
discussion of our future fuel mix cannot turn back the clock on
the RFS. We cannot support a modest move in octane at the
expense of one of the most successful domestic energy policies
and the only legislated carbon reduction program.
Thank you for the opportunity to testify, and I am happy to
answer any questions.
[The prepared statement of Ms. Skor follows:]
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Mr. Shimkus. Thank you.
The Chair how recognizes Mr. Dan Nicholson, vice president,
Global Propulsion Systems, General Motors, on behalf of the
United States Council for Automotive Research.
You are recognized for 5 minutes.
STATEMENT OF DAN NICHOLSON
Mr. Nicholson. Chairman Walden, Chairman Shimkus, Ranking
Member Pallone, and Ranking Member Tonko, and members of the
committee, my name is Dan Nicholson, vice president of Global
Propulsion Systems for General Motors Company. I am here today
representing General Motors, a member company of the United
States Council for Automotive Research, U.S. CAR. I appreciate
the committee's invitation to appear before you to discuss the
importance of increased octane in gasoline.
As you know, the automotive industry is changing at an
unprecedented pace. This requires all major mobility
stakeholders to be better coordinated and to develop
implementation strategies together.
As the committee explores options, such as changes to U.S.
fuel standards that may include higher octane gasoline, it is
necessary that the industries involved in this opportunity work
more closely together in order to ensure that consumers benefit
and our industries remain strong.
We believe increasing the minimum octane level in U.S.
gasoline for new vehicles will be a win for all industries and,
most importantly, consumers.
Today you will hear from many stakeholders involved in
changing the liquid fuel market. This change requires the
commitment of all parties. I would now like to take a few
minutes to discuss the role of the automotive industry.
Currently, many facets of the traditional automotive
business are being disrupted. Innovative technologies are
driving tremendous advancements in everything from safety and
vehicle connectivity, to fuel efficiency and electrification.
Additionally, societal trends, like urbanization and
sustainability, are changing the way customers think about and
interact with mobility. As GM's chairman and CEO, Mary Barra,
likes to say, ``The auto industry will change more in the next
5 years than it has in the last 50 years.'' We believe this
gives us opportunity to make cars cleaner, safer, smarter, more
efficient, and more fun to drive than ever before.
As part of this significant shift, the automotive industry
has taken unprecedented steps to improve engine efficiency
through downsized turbocharged engines, improved multispeed
transmissions, and a host of eco-friendly improvements, all
with the goal of meeting customer requirements while delivering
improved efficiency.
The global automotive market is growing, and multiple
technologies and solutions will be needed to match demand.
Octane is one of those solutions. We have an opportunity to
play a large role in offering consumers the most affordable
option for fuel economy improvement and greenhouse gas
reduction.
We believe a higher efficiency gasoline solution with a
higher research octane number, or RON, is very important to
achieving this.
U.S. CAR research shows that 95 RON makes sense from the
viewpoints of both refiners and fuel retailers. As you may
know, this is the same level of RON that Europe has used as
their minimum level for many years. Without this new fuel, we
will continue to endure the impacts of fuel variation and
forego related available fuel economy improvement
opportunities.
Ultimately, policy leadership is key to bringing about
fundamental change in the market. Your leadership is critical
here. We need to work together to improve the fuel in the U.S.
market to take advantage of engine designs that are more
efficient and provide significant large-scale fuel economy
improvements and corresponding reductions in greenhouse gas
emissions. And we must do so in a way that makes sense for
consumers, which means developing a favorable consumer model
for fuel and coordinated retail introduction.
Thank you again for the opportunity to be here today and to
discuss the advantages of high-octane fuels used in high-
efficiency vehicles.
[The prepared statement of Mr. Nicholson follows:]
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Mr. Shimkus. Thank you very much.
Now I would like to recognize Mr. Paul Jeschke, testifying
on behalf of the Illinois Corn Growers Association.
We want to welcome you. You are recognized for 5 minutes.
STATEMENT OF PAUL JESCHKE
Mr. Jeschke. Thank you, Chairman Shimkus, Ranking Member
Tonko. Thank you for inviting me here to speak about what high-
octane fuel can do for America's farmers.
As a corn farmer from the village of Mazon, Illinois, I
never imagined that I would be sitting in this chamber in our
Nation's Capital talking about corn-based higher octane fuels.
A growing body of evidence shows that high-octane midlevel
ethanol blends offer the most environmentally friendly and
cost-effective route to increased vehicle efficiency and lower
greenhouse gas emissions.
High-octane gasoline derived solely from hydrocarbons is
dirtier and more costly. Today's premium fuels can cost 40 to
80 cents a gallon more than regular unleaded gasoline.
Consumers deserve an affordable high-octane choice at the
pump. Ethanol is simply the most cost-effective octane additive
available in the marketplace.
A midlevel ethanol blend consists of 25 to 30 percent
ethanol. Splash-blend that in today's regular gasoline blend
stock and you would end up with an octane rating of 98 to 100
RON, higher than today's premium. This fuel would enable more
efficient vehicles and lower greenhouse gas emissions.
High-octane midlevel ethanol blends mean lower costs for
both refiners and consumers. These fuels could be made by
splash-blending ethanol into existing regular gasoline blend
stock with no change at the refinery. These blends would reduce
upstream greenhouse gas emissions because ethanol is less
carbon intensive, and it would improve air quality as ethanol
displaces harmful air pollutants from aromatic hydrocarbons.
Given our trend line gains in corn yields, I believe we can
meet the future demand for corn-based ethanol on the land that
we are farming now. Farmers are growing more corn, or more
octane, per acre now than ever before.
The growth of corn ethanol production has done more to
bring profitability to corn farmers than any of the many
Government support programs which I have experienced. And
ethanol's development was financed to a large extent with
farmer investment. This profitability allowed many young people
to return to the farm, including my nephew, in my case.
But domestic ethanol use has stagnated and our
profitability is again collapsing. Since 2014, Illinois farm
profit has been dismal. This projects a bleak future for all of
us, but especially these younger farmers.
What can be done? The answer seems clear to me. As our
vehicles of the future need higher octane, cleaner-burning
fuel, we should look to higher blends of ethanol. Our Nation's
fueling infrastructure can already accommodate midlevel ethanol
blends, and with only minor investments the needed fueling
infrastructure could be readily available nationwide, similar
to that of diesel fuel.
Unfortunately, the EPA regulations are stifling both fuel
and engine innovations, preventing consumers from enjoying the
performance benefits and fuel savings of midethanol blends.
Until these barriers are addressed, it is simply not true that
a minimum octane standard would provide the biofuel industry
with the opportunity to expand its market share.
For ethanol to be free to compete in the market on the
basis of its value as an octane enhancer, the EPA's
anticompetitive regulations must be corrected.
Some of these regulatory concerns are the same RVP
standards for all fuels containing at least 10 percent ethanol,
which may have happened yesterday: a new high-octane, midlevel
ethanol alternative certification fuel, such as a 98 to 100
E25; a fuel economy equation that does not penalize ethanol
blends; a technology-neutral fuel economy and GHG regulatory
scheme that treats all alternative fuels alike to the extent
that they reduce petroleum consumption and greenhouse gas
emissions; an accurate lifecycle analysis of the greenhouse gas
benefits of corn ethanol, like those that the USDA and the
Department of Energy have already developed.
EPA could address these issues through regulation, without
the need for new legislation.
In addition, automakers should warranty new vehicles for
ethanol concentrations of up to 25 percent, similar as BMW has
already done for some of their vehicles.
Removing these barriers would clear the road for high-
octane, high-efficiency vehicles. More details on these points
and other observations and suggestions are covered in the
written testimony that I have submitted.
I am proud of what we do on my family's farm. I am proud
that our corn crop can have a part to play in the high-octane
future that is heading our way if we are allowed to do so.
America's corn farmers are ready to do our part to deliver.
Thank you, Mr. Chairman.
[The prepared statement of Mr. Jeschke follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Shimkus. Thank you very much for joining us today.
And now I would like to turn to Mr. Chet Thompson,
president and CEO of the American Fuel and Petrochemical
Manufacturers.
Sir, your full statement is in the record. You have 5
minutes.
STATEMENT OF CHET THOMPSON
Mr. Thompson. Thank you, Chairman Shimkus, Chairman Walden,
Ranking Member Tonko, members of the subcommittee. Thank you
for the opportunity to bat cleanup this morning and provide the
AFPM's views on this important subject of higher octane fuel.
As you mentioned, my name is Chet Thompson. I am the
president and CEO of the American Fuel and Petrochemical
Manufacturers, AFPM. We believe we are uniquely qualified to
weigh in on this topic as we represent the U.S. refining
industry and supply virtually all of the gasoline used in the
country today. So I will use my limited time to focus on a few
aspects of my written testimony.
First, AFPM is absolutely intrigued by the possibilities
and opportunities that could be afforded by a higher octane
fuel. Such fuels, as you mentioned, Mr. Chairman, could be a
solution to the RFS that works for all stakeholders.
Again, also as you mentioned, today's hearing comes at a
critical time for the U.S. fuel and automotive sectors. The
auto industry faces enormous challenges to comply with CAFE
while at the same time meeting consumer preferences. The
refining industry is dealing with an inefficient and unworkable
Renewable Fuel Standard that is only going to get worse with
time.
Fuel marketers in the biofuel industry don't have it easy
either, to be sure. They are faced with constant uncertainty
and never-ending debates about the RFS, making for a very
challenging business environment.
Again, these uncertainties will grow worse with every
moment we move closer to 2022 when EPA takes over this program.
But we believe there is a potential solution for all of this:
higher octane fuel.
If done correctly--and by that I am going to get into what
``done correctly'' means in a minute--higher octane fuel has
the potential to make life better for everyone at this table
and in this room.
Over the last few years, we have been evaluating the
benefits of various octane levels. Our detailed analysis show
that a 95 RON performance standard could be an efficient and
affordable option to reduce emissions and meet the needs of the
auto sector.
A 95 RON standard would help auto companies, as Mr.
Nicholson said, comply with CAFE by meaningfully improving the
efficiency of the internal combustion engine. By our estimates,
95 RON would reduce greenhouse gas emissions in this country by
the equivalent of putting 720,000 EVs on the road each year.
So let me put that number in perspective. In 2016, 200,000
EVs were sold globally. So we are talking about tripling that
year after year through 95 RON. And if you look at figure 3 on
page 9 of my testimony, you can see that 95 RON is the lowest-
cost fuel option for making these gains. Ninety-five RON is the
lowest cost option for consumers.
So finally it also has the benefit, 95 RON, of being
available and scalable nationwide on the timeline needed by the
auto industry. No other octane level can make this claim, not a
single one.
So we believe a 95 RON would be good for the ethanol
industry, as well. I am sure they appreciate me saying that. We
would expect it to provide them with every bit as much ethanol
demand as they get under the RFS, and likely more. This is true
for a simple reason, because ethanol at the moment is a low-
cost source of octane. So it follows that they would thrive
under a high-octane performance standard, one done under the
free market and not through Government mandate.
Fuel marketers would benefit, as well, as Mr. Columbus
said. A fuel-neutral 95 RON performance standard would provide
marketers with optionality and flexibility. Importantly, this
would translate to the benefit of consumers by creating a
transparent and competitive market for all liquid fuels.
Finally, my members would certainly benefit, as well.
Sunsetting the RFS and transitioning to a 95 RON performance
standard would end mandates, reduce overall compliance burdens,
and provide achievable regulatory targets.
So such a standard would require enormous investments from
my industry. Tens of billions of dollars would be needed. So we
certainly don't take this hearing lightly.
We are, however, willing to entertain it for one simple
reason: frankly, as a compromise solution to the RFS that we,
again, believe could work for all stakeholders.
But for it to make sense to us, frankly, under any
circumstances a 95 RON standard would have to include three
elements. First, it would have to be accompanied by a sunset of
the RFS. The refining industry simply can't comply with the
burdens of the RFS at the same time making investments to bring
95 RON to market. Second, it would have to be implemented over
a reasonable period of time. And third, it must include
measures to prevent misfueling.
As to the latter, we are certainly in a process now to
evaluate all the obstacles that would be brought about by
bringing a new fuel to market. We are working on that. These
issues are real. But the good news is, through our analysis so
far we don't think any of these obstacles are insurmountable.
So in conclusion, AFPM believes that higher octane fuel has
the potential to better harmonize our country's fuel and
vehicle policies, and for that reason we believe it deserves
further consideration and analysis.
We thank you, Mr. Chairman, for the opportunity to be here
today.
[The prepared statement of Mr. Thompson follows:]
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Mr. Shimkus. Thank you very much. I appreciate everybody's
testimony.
To my colleagues on the subcommittee, welcome to my world.
I believe that we are closer than people think. And I want to
encourage my colleagues to really help now dig into this issue
specifically so we can address and work through some of these
concerns.
Having said that, I would like to recognize myself 5
minutes for my first round of questions.
For all you all--that is what we say in southern Illinois,
``all you all''--this hearing is more about the high-octane
concept overall and less about debating the specifics, such as
where that number should be set. So without advocating for a
specific number, can each of you sketch out what you need in
order for high-octane fuels to work for you and your member
companies?
Tim.
Mr. Columbus. We believe there are a couple things that we
would have to have. Number one, we would have to have a
regulatory regime that guaranteed retailers who complied with
warnings, signage standards, that if a motorist introduced the
wrong fuel into his new vehicle the Environmental Protection
Agency would not be holding the retailer accountable for that.
When we went from leaded to unleaded gasoline retailers
were prosecuted by EPA if consumers put leaded gasoline in a
vehicle meant for unleaded. That has got to change for us.
Number two, we would think it would be crucial that the
one-pound waiver Reid vapor pressure requirements afforded E10
be extended to any blend of fuels that has an RVP equal to or
less than E10.
And finally--and others can speak to this as well--I would
hope that you could do something to accelerate the approval
process for new gasolines. I think it took 3 years to do E15.
If we are going to go to higher blends--and I anticipate that
over time we would go to higher blends than just E10, E15--I
think the market will end up demanding more than 95 RON.
Ninety-five 95 RON is a floor for us, not a cap.
Mr. Shimkus. Ms. Skor.
Ms. Skor. Thank you. I would have to echo much of what Mr.
Columbus said in that, yes, first and foremost, the ability to
sell a legal fuel such as E15 year-round and any blends above
10 percent year-round is going to be absolutely paramount
because you look at that today, and that is really the largest
impediment to much further market adoption of E15.
I would second that the approval process of new fuels has
been very slow and cumbersome, so that, too, is something that
you would want to see expedited, again in continuance of this
quest for a free market and access to the consumer in the
marketplace.
And importantly, any discussion of high octane--and I
appreciate how much ethanol is recognized as the cheapest
octane source on the planet. Having said that, if you look at
the last decade of market behavior and dynamics, refiners do
walk away from that economic source of octane due to
competition. And so we would like to see and we would need to
see that there is a designation that that high-octane source is
renewable fuels as the source of octane.
Mr. Shimkus. Mr. Nicholson.
Mr. Nicholson. We need one national standard for the fuel.
That is important to us. And we would like to be part of making
sure the specifications are correct and that it is interrelated
with emissions criteria. But one national standard, I think, is
what we are seeking.
Mr. Shimkus. Mr. Jeschke.
Mr. Jeschke. Well, as a supplier of the raw materials for
ethanol, corn farmers are ready to do their part. We have got
piles of corn all over this country right now on the ground
yet. That is how much of a surplus of that commodity we have.
Those are being picked up now.
But, again, the raw material that we are providing can
easily be geared up. What we are growing naturally yields about
1 percent a year, and so I think we can do our part.
Mr. Shimkus. Mr. Thompson.
Mr. Thompson. We need the RFS to sunset. We cannot do both
high-octane fuel and the RFS.
Mr. Shimkus. Great. Thanks.
For Growth and the corn growers, would you support any
level of stringency that gives you at least as much ethanol
that you currently use today?
Ms. Skor. So I think if the conversation is simply high-
octane standards, that is a wonderful thing that we should be
moving toward as a country. If the conversation is a high-
octane standard coupled with some change to the RFS, that is a
different conversation.
If you look at the market potential that is the
congressional intent of the RFS, 90 percent of our market
access is yet to come, and that is on the advanced side. So
importantly, one of the things that we get that we have
provided with the market access of the Renewable Fuel Standard
is that innovation and that drive toward use of----
Mr. Shimkus. My time is about ready to expire, and I want
Mr. Jeschke to get a chance to answer. But you didn't answer
the question on stringency.
So, Mr. Jeschke.
Mr. Jeschke. We are wanting to grow the market. Again, I
talked about the piles of corn we have. So we are wanting to
grow our share of the fuel market ethanol production. We think
it is good for farmers and good for the environment.
Mr. Shimkus. Great. Thank you very much.
The Chair now recognizes the ranking member of the
subcommittee, Mr. Tonko, for 5 minutes.
Mr. Tonko. Thank you.
Mr. Thompson, if the RFS is replaced with the high-octane
standard, as you suggest, it is my understanding that there are
other petrochemical-derived chemicals that could be blended
into gasoline to achieve the octane rating of premium fuel. Is
that correct?
Mr. Thompson. Yes, that is correct. Gasoline is a blend,
and there are lots of blends that have octane in it. But our
analysis shows, if we went to a 95 RON standard, ethanol would
continue to be the dominant source of octane.
Mr. Tonko. Right. OK. But some refineries might choose to
meet the octane standard with an additive other than ethanol.
Would that be an option in the absence of the RFS program's
mandate or some other requirement to blend renewable fuel with
gasoline?
Mr. Thompson. Certainly that would be an option provided it
can be done consistent with air quality and their local
permitting, which absolutely our modeling shows that there
would be no environmental detriment due to other sources of
octane being used.
Mr. Tonko. Thank you.
I would point out that, when Congress mandated a
performance standard to increase the oxygenate content, the
industry used MTBE to achieve this standard, and we ended up
with a terrible drinking water pollution problem. So before we
open the door to increased blending with other additives, I
would like to know what risks might be involved in making that
decision.
Ms. Skor, the RFS program was intended to reduce petroleum
use and to increase the use of renewable fuels. If renewable
fuels are no longer specified and we replace the RFS with a
high-octane standard set at 95 RON levels, what is the impact
on the overall demand for renewable fuel?
Ms. Skor. Well, there would be no impact on the overall
demand. I mean, as has been stated by the other panelists, a 95
RON is a 91 premium fuel. It is currently sold on the
marketplace, often with a 10 percent ethanol blend. So if we
move to a national standard of 91 there would be little to no
incentive to further use biofuels in our national
transportation mix.
Mr. Tonko. So what might this mean for the development of
advanced biofuels and for the transition to greater use of
cellulosic biofuels?
Ms. Skor. Well this would eviscerate really all of the
innovation and investment that has taken place so far, if you
look at advanced biofuels. Just a few years ago, when the RFS
blending targets were put on hold, we as a Nation lost billions
of investments in next-generation technology because of the
lack of certainty that these fuels that I will say contribute
90-plus percent greenhouse gas reduction--the uncertainty that
there would be no market for them in the U.S.
Mr. Tonko. As we have discussed, the Department of Energy,
in collaboration with vehicle manufacturers, has been exploring
the optimal combination of high-octane fuels with advanced
high-compression engines, the Co-Optima study. My understanding
is the octane levels they are working with are 95 or 96 octane
or 100 RON, and that the source of octane is presumed to be
renewable fuels at blends that are E25 to perhaps E30. Is that
correct, Ms. Skor?
Ms. Skor. Yes, that is correct. And that program is similar
to a large body of work that is examining the sweet spot, if
you will, in an E20 to an E30 blend where you are optimizing
the cost savings for consumers coupled with that 90 percent
greenhouse gas reduction that you are going to be getting--or
excuse me, the greater greenhouse gas reduction--and the
reduced tailpipe emissions.
Mr. Tonko. Thank you.
And, Mr. Columbus, you and I have discussed that, when it
comes to fuels, there is one thing consumers care about above
all else, and that is the price.
Mr. Columbus. Yes, sir.
Mr. Tonko. I imagine during the transition to a 95 RON fuel
standard there will be some new vehicles that will require
something similar to today's premium fuel and many existing
vehicles which continue to opt for the cheapest option. How do
you envision consumer acceptance of a requirement to buy more
expensive fuel?
Mr. Columbus. Well, first of all, let's talk about premium
gasoline prices today as opposed to regular-grade gasoline. It
is a specialty product, Mr. Tonko. It is like going someplace
and trying to get ethanol-free gasoline. People pay a premium
for it because there is very narrow demand for it today.
Having said that, I envision that a 95 RON, if it is
coupled with a waiver of the one-pound waiver for higher blends
of ethanol, you are going to see prices come down on that
product. Why? Because ethanol is, in fact, the cheapest
product.
Something I want you to always remember, Mr. Thompson's
members are important to us, but they are not the only source
of blend stocks on the face of the earth. If, in fact, there
are cheaper forms of blend stock, my clients will do so. Many
of them today have introduced E15. Why? Because it is cheaper
in the retail market because of the ethanol component. So that
ability to use increased amounts.
There is, however, a cap on that, and that is you have to
have an infrastructure that will handle it, sir. And today
EPA's rules say if it is not certified to hold a higher blend
than E10, not warranted, and a retailer cannot affirmatively
demonstrate that that equipment is compatible, and it goes back
to the MTBE stuff, he has violated the Resource Conservation
Recovery Act. So prices will come down because component prices
will come down.
Mr. Shimkus. The gentleman's time has expired.
The Chair now recognizes the chairman of the full
committee, Mr. Walden.
Mr. Walden. Thank you very much, Mr. Chairman. And I very
much appreciate your willingness to chair this subcommittee and
take on this issue. I know how much fun it must be for you
being conflicted with all these things. But you are doing a
great job, and we appreciate it.
To everybody on the panel, in one capacity or another you
are all involved in the Renewable Fuel Standard or you wouldn't
be before us today. Can I get you all to agree that a high-
octane fuel standard, if done right, could be an improvement
over the status quo? And that is a pretty easy yes or no. Start
at that end.
Mr. Columbus. Yes.
Ms. Skor. A high-octane standard, provided that you couple
that with the market access and the drive toward growth that
you get with a Renewable Fuel Standard.
Mr. Walden. So I just want to make sure we are answering
the same question. Can you agree that a high-octane fuel
standard, if done correctly, could be an improvement over the
status quo, yes or no?
Ms. Skor. Possibly.
Mr. Walden. OK.
Mr. Nicholson. Absolutely, yes.
Mr. Walden. Thank you.
Mr. Jeschke. I will take a chance and say yes.
Mr. Walden. OK.
Mr. Thompson. Yes, sir.
Mr. Walden. Thank you.
Mr. Columbus, the gas station is where the fuel policy
either succeeds or fails, because that is the interface with
the consumer, and you have done a good job of representing the
consumers here. On balance, do you see a high-octane fuel
standard potentially working for the benefit of the consumer?
Mr. Columbus. I do, sir.
Mr. Walden. All right.
Ms. Skor, one of the exciting things about the high-octane
fuel standard--well, our version of it--is that it allows us to
take full advantage of ethanol's properties as an octane
enhancer. Would you agree that such a policy could lead to a
more advantageous use of ethanol?
Ms. Skor. I think the 95 RON policy discussed right now
will not necessarily lead to a more advantageous use of biofuel
for consumers.
Mr. Walden. You know, I was on this committee--there are a
few of us left that were in '05, '06, '07. The energy situation
we faced then is much different than it is today. That was an
era of scarcity. We were watching what was going on in Brazil
with ethanol. I mean, it was a different world.
And I supported the RFS then, and I have worked on it, and
I have got a little bit of that. And I think there is a
difference, by the way, between corn ethanol and the advance in
cellulosic, and you mentioned that in your comments.
I was in the radio business for 21 years. I would have
loved to have had a mandate that somebody has to buy my
inventory. I am just saying. I grew up on a farm, I get it. I
am an orchardist. I respect corn growers.
But as the chairman of this committee, I have this
advantage of looking at this broadly and trying to figure out
what is the best policy for American farmers, what is the best
policy for consumers, and how do we move this policy forward in
knowing that 2022 is out there?
Now, some people I know may want to just roll the dice and
go, ``We will see, we will just ride it, see what happens.'' I
don't think that is the responsibility of Congress. I think our
job is to set the policy as we did in '05-'07 to try and
resolve a problem then. I think it is time to modernize that
policy.
And I just want people at the table to understand we are
serious about this, one way or the other, and we want to get it
right for the American consumer so it is sustainable,
predictable, and we continue to make progress to reduce harmful
emissions, we continue to help our farmers, but we also put the
consumer first. The consumer first.
And so I struggle with this. This is a hard one for all of
us. And we know the realities of the Senate. We know the
realities in getting votes around here. I understand all the
market forces, political market forces, at work. I am not naive
to that. But I think we have a big responsibility to the
country here to do this right.
And so, I don't know if I have got any more questions on
it. I appreciate you all being here. I know you are all looking
at this seriously. I just want to implore that we continue
these discussions, because I think there is a path forward that
will work for our growers wherever ethanol is being produced,
grown, and that can work for the consumers and give the
stability.
And I want to thank the autos for coming to the table,
because we want to make sure we are not jamming something that
will not work for engines. And I would defer to you about that,
that issue.
If we do this right, you will create demand for this higher
octane, right? It will be predictable.
Mr. Nicholson. Yes, we are very happy about this. This is
the most cost-effective way to increase fuel economy and reduce
greenhouse gases. And so we are really happy to have the
hearings and to move this forward as quickly as possible.
Mr. Walden. And, Mr. Thompson, from your perspective, are
there issues in other States that could be adversely affected
if we get the number wrong?
Mr. Thompson. Absolutely. So, again, we can talk
conceptually about E20, E30, but if we put it in the context of
what we are trying to do is address CAFE in the near term, 95
RON is the only product that can be sold nationwide. California
and five other States do not allow the sale of E15 or higher
octane blends.
So how could we put the autos in a position of rolling out
a new product but not be able to get fuel to them? Ninety-five
RON is the only product that is scalable within the timeframe
of CAFE compliance.
Mr. Walden. I know I have exceeded my time. Thank you, Mr.
Chairman, for your leadership on this.
And, again, to everybody on the panel, we know you are
serious about it. We appreciate your working with us.
And I yield back.
Mr. Shimkus. The gentleman yields back his time.
The Chair now recognizes the gentleman from Texas, Mr.
Green, for 5 minutes.
Mr. Green. Thank you, Mr. Chairman, for having this
hearing, although I would at least ask for one more refiner on
there to match up with the corn folks here.
I want to follow up what the Chair said, that 2005, '06,
'07, and '08, this subcommittee had a hearing in 2008 on peak
oil. Obviously, it has changed to 2018.
Mr. Columbus, your members actually typically sell what we
call regular gas and premium gas.
Mr. Columbus. Yes, sir.
Mr. Green. What is the percentage right now that you are
selling of premium?
Mr. Columbus. Under 20.
Mr. Green. Under 20 percent?
Mr. Columbus. Somewhere around 15. Well, yes, I am not even
sure premium. Regular-grade gasoline is something north of 70
percent, sir, midgrade 89 octane. Premium gasoline is probably
10 to 12 percent.
Mr. Green. Well, most of our vehicles on the road today are
made for running very efficiently at regular gas. And if we do
it, and maybe the manufacturers will do it, so if we end up
going to 95 percent, you are going to increase the cost at the
pump for people running their vehicles.
Mr. Columbus. All right. Number one, perhaps initially it
is not clear to me, sir, that on a long-term that is going to
work. The reason E15 has entered markets where it is lawful is
it is offered at a price which is less than regular-grade
gasoline.
Mr. Green. Not in my area in Houston. Very often we don't
have a whole lot of----
Mr. Columbus. Well, not at all.
Mr. Shimkus. Everything is bigger in Texas.
Mr. Green. That is right.
But that is one of my concerns. And I am glad the
manufacturers are here, because they make the vehicles. And our
fleets turn over fairly regularly, so people may not notice it.
But by doing this, you will require that people pay more at the
pump, which is not a popular issue. And you are a marketer. You
are not the one.
Mr. Columbus. No. Again, sir, I believe experience shows us
that, if there is an absolute demand for a product, the price
of it tends to go down. This is a 7 percent shift in vehicles
every year. As that product comes in, I don't doubt that at
first it will be priced higher than regular-grade gasoline
simply because it will still be a specialty product.
As you evolve, as you transform the market, that price will
come down. And, again, if you give me the one-pound waiver on
higher blends and give me time to redo the infrastructure to
tolerate them, I suggest that you will find that that price
becomes very competitive and looks a lot like what regular
gasoline or less than regular gasoline would cost today.
Mr. Green. Well, my concern is right now that if we change
the fleet over the period of years, people are going to pay
more at the pump. And right now I am hearing people, even in
Houston, complaining that the price is going up, because we are
going to a summer blend in Texas, and that is more expensive to
refine. So that is one of the concerns.
I was on the committee in 2005, and I want to thank our
former chairman, Joe Barton, who was here a minute ago, who was
the chair of the committee. We did a really good energy bill.
And a lot of my environmentalists forget that that bill also
authorized the wind power, the solar power, and what we have
done on our electricity generation.
But the RFS I considered was a failure, because here we are
13 years later. And I have one relatively small biofuel
refinery in my district. We used to have three, but they
couldn't go with the market over the last number of years.
But when we talk about biofuels, what percentage is corn-
based, Ms. Skor, corn-based as compared to what some of us
thought back in 2005, it would be cellulosic, we would be
recycling things, instead of making the price of our corn
whiskey go up?
Ms. Skor. Right now the vast majority is blended with corn
ethanol, so conventional ethanol.
We do have advanced cellulosic ethanol on the market. And I
would say that, if you look at the progress that has been made
in the 10 years, one of the things that has slowed our ability
to innovate and get more cellulosic to the market was the
implementation of the RFS and the uncertainty in terms of what
was taking place at EPA.
That uncertainty sends the wrong market signal to
innovators and investors. And so it is with stable policy that
we will get more.
Mr. Green. I only have a few more seconds. And I agree,
because in my area in Texas we were reformulating our gas in
the 1990s, early 1990s, and it was an environmental benefit.
But we used MTBE, a product of natural gas. But the 2005 energy
bill, the House bill, actually had a waiver there for those
producers of MTBE, but the Senate didn't accept it.
We are still producing MTBE in Texas for export market, but
we can't use to it reformulate our gas. And now we have lots of
natural gas that we could be using that for.
Mr. Chairman, I know you and I have this battle for a
number of years.
Mr. Shimkus. Welcome to my world.
Mr. Green. I would like to reform the RFS, but I am not so
sure this is the way it needs to be reformed.
Mr. Shimkus. The gentleman's time has expired.
The Chair now recognizes the other gentleman from Texas, in
a bipartisan manner, the gentleman, Congressman Barton, for 5
minutes.
Mr. Barton. Thank you, Mr. Chairman. And I am here under
protest. I don't do getaway hearings, and I darned sure don't
do hearings that start at 9 in the morning.
Fortunately, we have a witness that represents one of the
companies that is one of the biggest employers in my district.
General Motors has an assembly plant in Arlington, Texas, that
is one of the most successful plants in their company. And so I
am honored to be at this hearing because of that.
I listened to Chairman Walden, and I will say, the country
is well served that he is the chairman right now. If I were
still chairman, I would be in a wrestling match with Chairman
Shimkus because I would be repealing the Renewable Fuel
Standard and I would take a go at repealing the Corporate Fuel
Economy standard.
I was chairman in 2005, and we have the RFS, the original
RFS, because the Speaker of the House was Denny Hastert from
Illinois. And he said, ``We are not going to have a debate
about this, Joe. You are chairman, but I am Speaker.'' And that
was pretty determinative. I mean, I said, ``Yes, sir, Mr.
Speaker.'' But it was a more lenient RFS, I think a more
reasonable RFS.
So there is no question that it is important to our corn
growers, our agricultural sector. But at the same time, nobody
can say ethanol is a struggling startup industry anymore. So
you don't really need all the protection, the mandates, the
quotas that we have today. So this high-octane alternative, I
think, is a very reasonable proposal. I really do.
So I guess my question to Mr. Nicholson would be, Is there
any doubt that the manufacturers can manufacture engines to use
that type of fuel?
Mr. Nicholson. There is no doubt. We are at the table. I am
representing U.S. CAR, and we are all prepared to do our part
to redesign the engines at great expense and great investment
in order to deliver this roughly 3 percent fuel economy
improvement from the 95 RON. It is very important. And we think
it is a consumer-facing way that consumers will get benefit
from and we will get reduced greenhouse gases. So we are here
and ready to support.
Mr. Barton. And I guess--is it Skor, is that how you say
it? You seem to be the proponent of the ethanol industry.
Ms. Skor. Yes, I am.
Mr. Barton. Is there any doubt in your mind that the group
that you represent, that if we were to move to allowing a high-
octane fuel, that your industry still wouldn't thrive?
Ms. Skor. You know, honestly, we wish that we could because
of all of the reasons, the benefits of ethanol as high-octane
and homegrown renewable fuel.
The challenge, and the reason that we believe we continue
to need the guardrails provided by something like the Renewable
Fuel Standard is it is not an open marketplace. We don't have
access to the consumer. And until there is a marketplace where
we can----
Mr. Barton. What do you mean by that? What do you mean you
don't have access to the consumer?
Ms. Skor. If you look at the fuel marketplace, so much of
the access to the----
Mr. Barton. You have guaranteed access.
Ms. Skor. Yes, with the Renewable Fuel Standard now we do
have the ability to compete. And what we would want to see in
conversations moving forward is, what is the path for continued
access to the consumer?
Mr. Barton. Well, I am going to give back a minute, Mr.
Chairman. I do appreciate you holding the hearing. I will yield
to Mr. Flores, if you want my last minute.
Mr. Flores. That is OK, Mr. Chairman, because I have got a
ton of questions. This is a great panel.
One of the things I am hearing is that everybody agrees we
need to have a higher octane standard, right? OK.
The second thing, the questions I am hearing are: How much?
How high should that go? How do we get there?
And then the third thing I am hearing is, How long should
we spend to go from where we are today to go to that new
standard, so that not only can the ethanol industry and the
retailers and the auto manufacturers and the refiners get ready
for that, but also get our consumers educated and ready for
this new world of higher RON?
I only have a few seconds left, so I will wait and use that
as my intro for the next round. But it does sound like it is a
win-win-win for the environment, for our consumers, for the
ethanol markets, including advanced and cellulosic conventional
for our marketers and retailers, and also for our refiners and
auto manufacturers. It sounds to me like everybody wins. So I
think we need to look at that versus status quo, which is
clearly a loser.
I yield back.
Mr. Shimkus. The gentleman's time has expired.
We are going to have votes pretty soon. I plan to come
back, Mr. Tonko is going to come back, so that we can finish
our questions and maybe go to a second round for those who want
to delve back in this.
The Chair now recognizes the gentleman from California, Mr.
McNerney, for 5 minutes.
Mr. McNerney. OK. Well, I appreciate the chairman jumping
over to me. And I appreciate the panelists here this morning.
Mr. Nicholson, I am very concerned about the Trump
administration's proposal to roll back greenhouse gas and fuel
economy standards for model years 2022 to 2025 automobiles and
light trucks. My State of California is committed to reducing
tailpipe emissions and getting vehicles on the market that use
less fuel and emit less carbon per vehicle mile traveled.
So given that backdrop, I would like to know where GM
stands on EPA Administrator Scott Pruitt's recent statement in
opposition to California's ability to set greenhouse gas
emission standards for automobiles under the Clean Air Act.
So does GM agree with Administrator Pruitt's opposition to
the California waiver?
Mr. Nicholson. Can you ask the last part of the question
again?
Mr. McNerney. Sure. Does GM agree with Administrator
Pruitt's opposition to the California waiver?
Mr. Nicholson. So that is not a question about the midterm
review or----
Mr. McNerney. That is right. It is a question about your
agreement with----
Mr. Nicholson. Yes, I am not really prepared to give
General Motors' point of view on that question. I am in global
propulsion systems and product development, and we are here to
talk about octane and engines. And I am not really informed
about the waiver or whether that is OK or not OK.
Mr. McNerney. Well, this is an important question,
especially to California, but to the Nation in general. If the
automakers understand, in my opinion, that the high fuel
efficiency standards are in their interest in the international
auto market, then they should be in opposition to this
potential opposition.
Mr. Nicholson. We do have a prepared statement on the
midterm review, and I would be happy to share that with the
committee.
Mr. McNerney. All right.
Ms. Skor, Mr. Thompson has proposed replacing the Renewable
Fuel Standard with 95 RON octane performance standards.
However, if the octane is not sourced from ethanol, wouldn't
this just lead to an increased oil use?
Ms. Skor. Potentially. Ninety-five RON is a 91 octane fuel.
That is the premium fuel on the market today. There is every
opportunity, in many instances, for refiners to make that
premium fuel with more ethanol, and yet, they are not doing it,
even with the economic incentive of ethanol as the lowest
octane. So 95 RON, at best it is status quo, and perhaps you
will be using less ethanol than today.
Mr. McNerney. Thank you.
It wasn't that long ago that we were hearing about E15
causing damage in engines. We had a Briggs & Stratton in here,
some of the auto manufacturers were concerned about that.
Is that still a concern about E15 damaging engines and
causing long-term damage?
Ms. Skor. Is that a question for me?
Mr. McNerney. You can answer it if you want.
Ms. Skor. Well, I will defer to the auto. But I will say,
kind of, I will provide part of an answer. E15 is approved for
9 out of 10 vehicles on the road today. And so, in fact, I
applaud GM for being the first company to warranty E15 when it
became a legal fuel.
So it is not approved for small engines. So all of the
retailers who sell E15 also sell E10. Some also sell an E0.
We did a survey with consumers who own motorcycles and
small engines last year and asked them, ``Are you satisfied
with the fuel choices on the market? Do you believe that you
are using the right fuel for your engine?'' And the resounding
response across the board was yes.
Mr. McNerney. Go ahead.
Mr. Nicholson. I can confirm that answer. So for U.S. CAR,
E15 is fine. We have been that way since 2012. But there are
lots of people filling up at the pump with all kinds of small
engines that have different answers. But for U.S. CAR, E15 is
fine.
Mr. McNerney. How far do you think we can go with ethanol
in our cars, in most cars out there today?
Mr. Nicholson. Well, E15 is where we are at today. It would
require redesign of fuel systems. You have to actually look at
every single part that touches the fuel in the car to go
higher.
So we are not prepared to really talk about anything higher
today. It may be technically possible. But for today, E15 is
what is OK.
Mr. McNerney. OK. Thank you. I yield back.
Mr. Shimkus. The gentleman's time has expired.
The Chair now recognizes the vice chair of the
subcommittee, Mr. McKinley, for 5 minutes.
Mr. McKinley. Thank you, Mr. Chairman.
I am just curious from your testimony. I was just Googling
the Federal Trade Commission, their website, and their consumer
division within ftc.gov says that higher octane gasoline offers
absolutely no benefits, it won't make your car perform better,
go faster, or get better mileage, or run cleaner.
I am trying to reconcile that with all the testimony we
have been hearing and all this debate. So who is right? The
Federal Trade Commission?
If it is not going to run cleaner, better, not going to
improve our quality of our cars, are we doing this just to
redesign our engines? Because I assume that is what we are
going to have to do, because typically our engines today aren't
designed to run on higher.
So I am trying to reconcile what we are doing here.
Mr. Nicholson. Yes, I can reconcile that. It is a true
statement that, if your entire vehicle, including the engine
and the way it is calibrated, is designed for 87 AKI pump fuel,
regular fuel today, that putting premium in it will provide no
additional benefit.
What we are talking about is something very different, a
coordinated fuels-and-engines-together-as-a-system approach in
the future. And if we redesign the engines to take full
advantage of the higher octane and we calibrate them
accordingly and introduce them in the market, then we can get
this 3 percent benefit that we are talking about.
Mr. McKinley. And the cost of retooling, what can we expect
that that would add to the cost of the car, let alone the cost
of the fuel when we have to change our engines entirely, our
whole fleet? I am just curious about this.
Mr. Nicholson. It is very costly. In fact, if we implement
this system, OEMs, such as General Motors and Ford, FCA and
others, would actually be investing billions of dollars to
redesign engines, remanufacture them at higher compression
ratios to accommodate this fuel.
The fact that we are willing to do that and that we believe
this is cost effective relative to other greenhouse gas and
CAFE improvements shows you how serious we are.
Mr. McKinley. If I could please, but you are going to pass
that cost on, right? I mean, that is what happens.
Mr. Nicholson. Well, we don't believe--I mean, we are
facing regulations for greenhouse gas and CAFE.
Mr. McKinley. I understand that, but the billions of
dollars is going to be passed on to the consumer, right?
Mr. Nicholson. But this is the most cost-effective thing
that we can do. Other things we will have to do will cost even
more.
Mr. McKinley. We will have to have more of a conversation
about this.
Let me--the last question, because I want to digest that
answer.
The other question has to do with, before I came to
Congress, apparently there was a move to go with flex fuels.
And we experimented. Congress must have passed that. What have
we learned? What have we learned from the flex fuel experiment
in trying to improve the RFS?
Mr. Nicholson. Fuels and engines are a system, and that is
the most important message. It takes all the stakeholders
working together to ensure success. And to me, that is really
the lessons learned. We all need to go together, and we need a
framework and a policy that really support that to makes things
happen.
Mr. McKinley. Has it failed? The flex fuel system
experiment, did it fail?
Mr. Nicholson. I think everybody can judge that for
themselves.
Mr. McKinley. How would you judge it?
Mr. Nicholson. I wasn't here at the time when it was
passed.
Mr. McKinley. No, right now, today. Has it worked? Was it a
good investment?
Mr. Nicholson. I don't really have an opinion on that.
Mr. McKinley. Anyone else want to comment on the flex fuel
experiment?
Mr. Columbus. It didn't work.
Mr. McKinley. It did not?
Mr. Columbus. It did not work.
Mr. McKinley. Thank you.
Mr. Columbus. Well, no. Some of my members created the most
expensive parking lot and parking spaces of any convenience
store in history.
First, most people didn't know that they had a flex fuel
vehicle, as surprising as that might be. Number two, taking E85
to market proved to be a disaster. People didn't understand it.
They worried that they weren't getting the same value, even if
you had to price it substantially below regular gasoline. And
you had to charge 50 to 70 cents per gallon less to have people
buy it. So, no, it didn't work.
I contrast that to what we have talked about today.
Mr. McKinley. Anyone else want to comment about that?
Ms. Skor. I would offer, one of the important learnings
from that experience that we have acted on--there is actually
Government, public-private partnership on building out the
infrastructure--is that one of the things that you needed to
make sure is that consumers had access to the fuel so that they
could optimize the flex fuel engines.
So one of the things that the biofuels industry has made a
concerted effort to do since then is work with the retailers to
build out the infrastructure for higher blends so that, when we
have higher blends come available, consumers can access them in
the marketplace.
Mr. McKinley. Mr. Chairman, I yield back my time.
Mr. Shimkus. The gentleman's time has expired.
The Chair now recognizes the gentleman from Ohio, Mr.
Johnson, for 5 minutes.
Mr. Johnson. Thank you, Mr. Chairman. I appreciate it.
Important topic, especially in a large agricultural region
and energy region that I represent in eastern and southeastern
Ohio.
Mr. Columbus, do you envision any problems for stations
continuing to carry today's fuels for existing vehicles while
also introducing a new high-octane fuel? I mean, would the
transition be a smooth one?
Mr. Columbus. I do not, sir. Today we have--almost every
retail outlet in the United States sells a premium grade of
gasoline, at least has one offer for that. That is a 95 RON
product.
As we go forward and we want to introduce and make the
price of those gasolines go down, we will need to add, I
believe, more ethanol, and that will drive the price of that
product down from where it is today. Today it is a specialty
product, and it is priced highly.
Mr. Johnson. OK. Do you envision gas stations in some parts
of the country meeting a high-octane standard with more
ethanol, and perhaps stations in other parts of the country
with relatively less?
Mr. Columbus. Yes, sir. I think what you are going to see--
first of all, I want to remind everybody, demand pulls supply.
``If you build it, they will come'' only worked for Kevin
Costner, and that was a movie. So we are going to sell what the
people want.
In some parts of the country, they want lower ethanol
mixes. I don't know why. I mean, if you go to Mr. Cramer's part
of the world today, you can go get E0 for 60 cents a gallon
more than you can buy regular grade 10 percent ethanol. I don't
know why people want to do that.
But if the demand is there for lower amounts of ethanol, it
will get served that way. But on a cost basis, I think you will
find that higher ethanol blends will be very attractive.
Mr. Johnson. OK. Well, thank you.
Mr. Thompson, what kinds of facility changes would
refineries need to undertake to start producing high-octane
fuels or blend stocks for high-octane fuels? How much would
they cost?
Mr. Thompson. Well, it depends upon whether the program is
phased in. So, in our world, in order to do this properly, the
RFS would continue and then phase out, sunset. But on the early
years of the transition, it would cost our facilities very
little because we can now produce 95 RON at the moment, and we
believe we could make enough to coincide with the introduction
of the new vehicles.
Over time, it would probably cost multiple tens of billions
of dollars of investment to generate new sources of octane, the
ability for us to generate that, and also the new BOBs that
would have to go along for higher levels of octane.
So this would not be cheap for us. And to a point that was
made earlier, we are here not in a void, or a vacuum, we are
here offering up a compromise solution to bad status quo, which
is how do we help the autos comply with CAFE and how do we make
the RFS better? We are willing to make that investment, because
at the end of the day, it is cheaper for consumers.
Mr. Johnson. Gotcha. OK.
Mr. Jeschke, how much fuel ethanol use do you expect this
year and the years ahead under the current RFS? And how much
more could a high-octane standard provide?
Mr. Jeschke. We are going to use somewhere 14-plus billion
gallons this year, but we would hope to grow that because of
increased blending, as Ms. Skor has pointed out many times
here. But it all depends on what this group, what this body
comes up with for the rules and regs following. I guess I am
skeptical, as Ms. Skor is also, that the petroleum refiners
will use more ethanol voluntarily.
Now, as a farmer, as a proponent of ethanol, as a person
that has used it in my vehicle since the 1970s--and by the way,
I have a Briggs & Stratton engine that we bought in 1975 on a
rototiller that has had E10 in it ever since we bought it, and
I guarantee it will start on the second pull every spring. So
these small engines can run on ethanol, the old ones, even,
that weren't approved for it.
But we need to grow that market for us to be able to expand
our corn operation. I am getting the same price when I started
farming. Corn was in the mid-$3. Gasoline was 40 cents then in
the mid-1970s. Today, gasoline is $2.50 a gallon, and I am
still getting in the mid-$3 for my corn.
So dynamics, I am very, very vested in ethanol and trying
to promote expanded use. So that is why I very, very much want
to see increased blending, not the status quo.
Mr. Johnson. OK.
Very quickly, Mr. Thompson, you wanted to make a point?
Mr. Thompson. Yes, I would like to just add, because it has
been referenced a few times that we are not using all the
ethanol. We are using every drop we can use. There is a blend
wall here. We are using as much ethanol as our existing auto
fleet can handle. There is no place else for it to go.
And with all due respect to Ms. Skor, she is a wonderful
advocate for her client, it is not accurate that 9 out of 10
cars can handle E15.
The gentleman from California, we can't even sell E15 in
his State, OK, by law. Most cars today are not warranted to run
on anything higher than E10. It is a fact.
Mr. Johnson. Mr. Chairman, I yield back.
Mr. Shimkus. The gentleman yields back his time.
We are going to go to Bill Flores for 5 minutes, then we
will recess, because I think votes were just called.
And I want to thank Congressman Flores. He has been an ally
and a friend working on this together, so I want to give him a
lot credit for that.
Mr. Flores. Thank you. We come at this from different
angles, but I think we are coming to a fairly common conclusion
here.
For the folks that are not in this hearing room, I think it
is probably good that we sort of tell everybody how the numbers
we are talking about today fit the numbers they say on the
pump.
So today, if you see an 87 octane on the pump, that is an
AKI octane, which is equivalent to 91 RON, right? So the 91
octane you see on the pump today, is actually a 95 RON. So just
for everybody outside the room, I think it helps to reset that
we are not talking about reinventing the entire auto refinery
ethanol complex here.
Ms. Skor, is there a value to raising the RVP waiver? And
what is that value? As quickly as you can.
Ms. Skor. So eliminating the RVP?
Mr. Flores. Yes, ma'am. That is what I meant.
Ms. Skor. Eliminating RVP, absolutely, you would allow a
legal fuel to be sold year-round, when most of the country it
is not able to be sold in the summer months when most families
are taking their summer vacation travel.
Mr. Flores. Mr. Columbus, do you agree with that?
Mr. Columbus. I do, sir.
Mr. Flores. OK. Mr. Columbus, what are the challenges--
well, we have got six States that don't allow anything above
E10, which is about 19 percent of our gasoline demand in this
country today: California, Delaware, Montana, New York, Oregon,
and Wisconsin. So this question doesn't apply to those States.
For some reason, they don't like higher blends of ethanol.
But, Mr. Columbus, what are the challenges of having an
ethanol blend above E15?
Mr. Columbus. It is the same challenge that E15 faces in
terms of market introduction. The overall impediment, the
biggest impediment, Mr. Flores, is in fact the infrastructure
and how we regulate underground storage systems.
Mr. Flores. OK.
Mr. Columbus. The Office of Underground Storage Tanks
says----
Mr. Flores. So if we go above E15, then we have got a whole
new cost element for the consumer, right?
Mr. Columbus. Retailers that are going to E15 now are doing
that first and foremost in new facilities and rehabbed
facilities. For the most part, the existing infrastructure is
not warranted or certified to take----
Mr. Flores. OK. I have got a limited amount of time. But if
we are asking--I mean, we have had some panelists ask for
midblends, E20, E30, higher blends like that. There is a huge
consumer cost to that, if we do that, though. Is that correct?
Mr. Columbus. I believe if we do it the way we have talked
about, no, because this will----
Mr. Flores. No, no, I am talking about if we mandated--
let's say we mandated a higher RON, 95 or above, and then we
also mandated that it has got to be an E20 or an E30, then that
is where you get into the higher consumer costs.
Mr. Columbus. Right. If you do a performance specification
as opposed to a formulaic specification, the consumer will be
best served.
Mr. Flores. Right. OK.
Mr. Nicholson, if we go to, let's assume, a 95 RON, that
gives us the ability to do a nationwide standard from
California to Maine, which also matches the RON of Europe.
What are the benefits of that, as quickly as you can share?
Mr. Nicholson. For 95 RON, 3 percent improvement in fuel
efficiency and reduction in greenhouse gases.
Mr. Flores. Right. And so you can optimize your engine so
that, whether you are selling from either coast, even if you
are selling your cars in Europe, it is all one standard, which
means better economies of scale for production, and you have a
lower impact to the consumer per unit, right?
Mr. Nicholson. As I pointed out in my testimony, Europe has
had 95 RON for several years, and consumers are getting those
benefits. And I think Americans should get the same benefits.
Mr. Flores. OK.
Mr. Thompson, we talked about several States have standards
that prohibit us from going above E10. So, if Congress decides
to mandate a formulaic standard in addition to a RON standard,
then we are going to have challenges in meeting the standards
of some States.
You know, one of the things that has been proposed, one of
the comments that was sort of thrown out earlier is that
refiners have been anti-ethanol, in so many words. If we raise
the octane standard, why would refiners want to use anything
other than the cheapest form of octane enhancement, which today
is ethanol? Why would that happen?
Mr. Thompson. They wouldn't. And I would like to point out
that, within my membership, we have some of the largest ethanol
producers in the country.
Mr. Flores. Right.
Mr. Thompson. And I will just mention that when we look
back--and I say this as someone who worked 3 years at EPA and
very familiar with these programs--if you look back where we
have gotten in trouble as a country, it is always when there
has been a mandate or a formulaic approach.
Mr. Flores. Right.
Mr. Thompson. It just is, versus allowing and creating a
performance-based approach to let the market decide the best
way forward.
Mr. Flores. So, again, to repeat where I started this
conversation when Mr. Barton yielded me some time, by going to
a performance standard, everybody wins: the environment, our
consumers, our auto manufacturers, our ethanol constituents,
including the advanced and conventional folks, our marketers,
retailers, refiners. Everybody wins. So I am not sure why we
would want to do anything other than a performance-based
standard.
And I do accept the recommendations of Ms. Skor that we do
need to address the RVP waiver. So in terms of the legislative
solutions, that is something we will definitely keep in mind.
Thank you, Mr. Chairman. I yield back.
Mr. Shimkus. The gentleman yields back his time.
We are going to recess this hearing. We will return after
votes. And I know there will be a couple of us who will return
for that. So the hearing is recessed.
[Recess.]
Mr. Shimkus. Thank you all for coming back. We only had one
vote, so we will get started.
I would like to now recognize the gentleman from Michigan,
5 minutes.
Mr. Walberg. Thank you, Mr. Chairman.
What is the RFS standard for AV fuel?
Mr. Shimkus. Say that again?
Mr. Walberg. What is the RFS standard for plane fuel? I am
going to get on a plane here shortly.
Mr. Shimkus. High octane, baby.
Mr. Walberg. High octane.
Well, I appreciate this, Mr. Chairman, I appreciate the
hearing. And we all wish it might not have been on a fly-out
day.
I, for one, I am a motor guy. Living in Michigan, you have
got to be a motor guy. Having an almost classic Camaro, I am
glad to see GM here. But having antique and classic motorcycles
as well, including my Harley, this is an issue of much
importance to me.
I have rebuilt engines plenty of times, but it has been
primarily because of what I have done to them as opposed to an
outside source that can have an impact. And I can't build my
classic car engines and motorcycle engines again very easily,
changing them from the ground up in order to deal with RFS
standards, et cetera.
So this is important. And I don't want them to be expensive
doorstops that I can just look at. The Camaro is downstairs in
the parking lot in this building, and I enjoy driving it. And
so this is important.
Let me ask you, Mr. Columbus, what can be done to ensure
consumers are not misfueling their motorcycles, their boats? I
have just recently had to buy a new outboard engine because of
the destruction on my good old engine that served me very well.
I buy premium zero for my outboard motors. I don't buy that for
all the rest. I can't afford it for all the rest of my
vehicles.
But how do we deal with that misfueling?
Mr. Columbus. The misfueling is going to take a combination
of dispenser equipment and I think auto equipment. We are
working with the cars and with the refiners to try to figure
out what would be a practical and low-cost regime to protect
people from themselves, if you will.
Mr. Walberg. Well, not only. I mean, if you have a pump
with a single hose at it and you have whatever was used last
left in it, and I come up with my Harley, and I am going to put
2, 3 gallons in, a good percentage of that may be E15 or
whatever.
Mr. Columbus. Unless it is marked E15, it won't be E15. It
may very well be E10. And what I would suggest to you is you
either go to a place that sells E0--and that is easy for me to
say to you--or you take a gallon can with you and fill it about
half full with that E10.
Mr. Walberg. Yes, I carry that on my motorcycle, right.
When I take a thousand-mile trip, I am going to carry a gallon
thing with me. I am saying, these are things we have to
consider.
And I do wish, Mr. Chairman, we would have had
representatives from the marine industry, the motorcycle
industry here as well to talk about this, because they are not
satisfied that it is going to be for the industry, that it is
going to work.
Mr. Columbus. But one of the other things you might
consider doing is talking to EPA about making its product
transfer documents regime a little simpler for people, because
there is in fact an ethanol-derived fuel, isobutylene, that is
a drop-in fuel, it is completely compatible. But trying to get
it to the market based on the fact that EPA says you have to
have product transfer documents that say you can blend it with
that blend stock is really tough.
Mr. Walberg. Yes, well, let's be careful about this.
Let me go to Mr. Nicholson. Thank you for being here.
What is the investment required for automakers to make the
change to vehicles designed for high-octane fuels, and how much
time will you need to do it?
Mr. Nicholson. Thank you for that question.
As I said earlier, switching over all the engines to high
compression ratios is literally going to be billions of
dollars, investments spread across all the U.S. CAR and other
auto manufacturers.
Lead time-wise, we really need 4 years minimum, and that is
actually going fast when you think about making all those
changes. So, if we were to get legislation this year, we think
we could be ready for 2022 calendar year or 2023 model year.
That is why we have got a sense of urgency of really trying to
go fast as we can here to get this legislation.
Mr. Walberg. What do you expect the increase in fuel
mileage will be? And what is going to be the cost to consumer?
Mr. Nicholson. The increase in fuel economy from the 95 RON
proposal we think is 3 percent. Some consumers may not notice
that as much, but it is really substantial when you think about
the CAFE impact. And we think there is about a 3-to-1 ratio, so
you get three times more benefit than what the cost would be at
the pump. We think this is an excellent value for consumers.
Mr. Walberg. This is the lowest-priced way that you think
you can meet CAFE?
Mr. Nicholson. Exactly. For now, this is the most efficient
way. Of all the things that we are doing and considering, this
is the most cost-effective one that we have.
Mr. Shimkus. The gentleman's time has expired. I would
remind the gentleman that we did have small engines here at our
last fuels hearing.
So with that, I would like to turn to the gentleman from
California, Mr. Ruiz.
Mr. Ruiz. Thank you, Mr. Chairman. I know how it is when
you sit on the committee and wait for the very last person, so
I am going to yield my time to Mr. Loebsack from Iowa.
Mr. Shimkus. You are very kind.
The gentleman from Iowa is recognized.
Mr. Loebsack. Thank you, Mr. Ruiz.
And thank you, Mr. Chairman, for holding this hearing, and
thank you for letting me be waived onto this subcommittee as
well. I am going to have to think of something to help Mr. Ruiz
with, because that was very kind of him.
Listen, I think we all know that the future of America's
transportation fuels is an important topic going forward, and I
have really enjoyed the debate today, such as it has been.
We have had some positive moments, including yesterday when
the President publicly supported allowing year-round sales of
E15. We want to make sure that he follows through with that
going forward. That is an issue that I have championed with
Congressman Smith from Nebraska. We have had legislation that
we introduced on that front.
But there have been some seriously concerning moments when
it comes to these kinds of issues. We have seen recently some
reports about the waivers that the EPA has granted to small
refiners, so-called small refiners, to release them from their
obligations under the RFS program.
And one of the problems is that these waivers have occurred
sort of under the cover of darkness, too. It hasn't been an
entirely transparent process. And I brought that up with Energy
Secretary Perry yesterday, as a matter of fact, in this very
same room. And essentially, they have amounted to giveaways by
the EPA, I would argue, to some of the Nation's largest, most
profitable refiners.
As you all can imagine, the biofuels community and farmers
in Iowa have expressed significant concerns about these reports
to me directly, as a matter of fact. And these concerns have
been echoed by many, including the Secretary of Agriculture
himself, Sonny Perdue, who stated earlier this week that these
waivers reduced the statutory volume gallon for gallon,
essentially.
So it has become quite clear to me that this action does
constitute a demand reduction--destruction, in effect, and a
reduction, if you will. And I can only imagine how harmful this
will be to Iowa farmers, to Illinois farmers. Also, to the
folks who support the industry, all the workers in the biofuels
industry that we often don't think enough about, I would argue.
So, Ms. Skor, I am really happy to see all of you here
today, but I want to ask you, in particular, a couple
questions, if that is all right.
Do you believe that the EPA is misusing these hardship
waivers?
Ms. Skor. Absolutely. We would agree with our Secretary of
Agriculture, as he said that.
There are a few very troubling things about what is taking
place right now. One is that this is under the cover of night,
so we don't know how many refiners are getting waivers and we
don't know the justification.
From the reports that we have seen, just for 2017, Mr.
Pruitt has quadrupled the relatively historical number of
waivers granted. And the impact of the behavior that we are
seeing coming out of EPA is you are taking over a billion
gallons of demand out of the marketplace. Every waiver granted
is a gallon of biofuel that is not blended.
Mr. Loebsack. Right. And as I said, we did have Secretary
Perry right here yesterday, and I did ask him about that.
Because by law the EPA is supposed to consult with the DOE
before they do this. And he said that did happen, but he wasn't
particularly specific about that consultation.
So I have submitted a number of questions to him in terms
of how often this has happened since 2013 so he can get back to
us. And we want to know specifically when it has happened.
So you mentioned about a billion gallons, you think, of
biofuels?
Ms. Skor. Over a billion gallons. And that is moving us
backwards to 2013 blending levels. So with these steps, we have
moved back 5 years and turned back the clock on the progress of
the RFS.
Mr. Loebsack. And that is very disconcerting, obviously.
Mr. Jeschke, it appears to me that the biofuels industry
and agricultural groups have not yet identified what the right
path forward on octane is. Would you agree with that, that we
haven't gotten an agreement?
Ms. Skor. Yes, I would.
Mr. Loebsack. How about you, Mr. Jeschke?
Mr. Jeschke. Yes.
Mr. Loebsack. And just make sure that everybody here keeps
us up to date on what is going on. I know the committee is
going to be kept up to date. But we want to make sure that we
are in touch with all the stakeholders, really. I have only
asked questions of two folks. But I am concerned that this be
something that all the stakeholders do take into account and
have some input on going forward.
I would agree with the Chair of our committee that, while I
was not here in 2005, clearly things have changed here in
America. But we still have a lot of the same concerns around
the RFS and why we have the RFS in the first place. And part of
it is I don't want to be sending relatives that I have over to
the Middle East to fight in a conflict where oil is at stake.
We do have a national security issue here. But, as one
person from Illinois just a minute ago told me confidentially
in a conversation, this is about food and agricultural security
as well. We have to keep that in mind going forward.
So thanks, everybody. I appreciate it.
And thank you again, Mr. Ruiz, for allowing me to go ahead.
Mr. Shimkus. The gentleman yields back his time.
The Chair now recognizes the gentleman from Texas--we have
a few of those on this committee--Mr. Olson, for 5 minutes.
Mr. Olson. Thank you, Mr. Chairman.
And before I talk about the RFS, I want you all to note a
very important thing to happen about 2 hours ago in this
committee. Our chairman proved he is a want-to-be Texan. He
keeps saying ``y'all'' and ``in Texas, bigger is better.''
Recognition, he is my mentor. He gave me a Shimmy, a bobblehead
John Shimkus. I am going to put a cowboy hat.
Welcome to Texas, Mr. Chairman.
I want to be serious about, as you all know, I have some
deep concerns about going forward with the RFS as it stands
today. It was designed for a very different American energy
environment. We were an importer of oil and gas. Now we are an
exporter. I think today it stands as a very flawed mandate.
One problem I have with the RFS is the severe costs it has
placed on smaller independent refiners, like CVR, which is
headquartered in my district, Sugarland, Texas. For those
reasons, I worry about the potential cost of an upgrade to
newer, higher octane fuels.
First question to you, Mr. Thompson: Could you please talk
about what sorts of projects you have or changes we have to
make to move to a higher octane fuel, and what that might cost?
Would that be doable for small refiners like my guys in
Sugarland, Texas?
Mr. Thompson. Well, a couple things. We are very proud of
CVR as well, CHS, and all of our small merchant refiners, and
they are supportive of me being here today and talking about
higher octane, for sure.
So initially moving to a higher octane standard, provided
it is on a proper glidepath, there would be little investment
required because we have the capability now to deliver the
volumes that a new fleet of automobiles would require.
Over time, it would require investment. A preliminary
analysis would be literally tens of billions of dollars to
develop new ways and new capacity for octane sources.
I can't get into the specifics because every refinery is
different, as you know, and there are lots of different ways to
increase octane, so each refinery would have to look at its
operations.
But this would be a major investment. And the only reason
we are willing to do it is because we would prefer to make this
investment than the investments that we are required every year
to comply with the RFS, which is doing very little to help
consumers.
Mr. Olson. One final question. This came up with Secretary
Perry yesterday, sitting just where Mr. Nicholson sat.
He spent a lot of time in Iowa in 2016 running for the
White House. That seems to be an important place to have spent
a lot of time here. He had a lot of dealings with ethanol,
obviously, in a corn State.
He said his perception was the people who produce corn in
America care a little bit about where the ethanol goes, what
gas tanks, but they don't care too much American or overseas.
They just want a supply source so they can put their ethanol in
a gas tank.
He brought up the idea of exporting our ethanol to Mexico.
Any thoughts about, Mr. Jeschke? I mean, the idea just popped
in my head yesterday, but that might be a viable alternative to
what we have right now.
Mr. Jeschke. Well, the U.S. Grains Council, of which I am a
part--I sit on one of their committees--is looking at Mexico
and is very involved with corn grower checkoff money in trying
to educate and help the Mexicans figure out how they might
replace MTBE--which I know is a favorite of some of you, and
that is used in Mexico now extensively--but looking to possibly
replace that with ethanol.
So we are looking at all export markets as an opportunity
to try and grow our demand. So that is currently going on. It
isn't something that would be brand new.
Mr. Olson. Ms. Skor, your thoughts on exporting ethanol to
Mexico?
Ms. Skor. We are thrilled that Mexico has opened its
markets and is looking at ethanol and E10. And so we have been
in regular conversations with stakeholders in government and
industry there.
I would say that exporting homegrown renewable fuel to
Mexico is wonderful, in addition to making sure that we are
taking advantage of this homegrown renewable fuel in our
backyard.
Mr. Olson. Thank you. My time is over. It is time to mosey
on down the road, like we say in Texas. I yield back.
Mr. Shimkus. I did think the gentleman did say a small
refinery in Texas. Didn't you call it a small refinery?
Mr. Olson. It is in Kansas, actually. The headquarters is
in Sugarland, but the refinery is up in Kansas, a rather small
one.
Mr. Shimkus. The headquarters of a small refinery is in
Texas.
Mr. Olson. Yes.
Mr. Shimkus. OK. I just want to clarify just for the
record.
Mr. Olson. Come to Texas. You will learn about more about
it.
Mr. Shimkus. Now, I would like to recognize the gentleman
from Georgia for 5 minutes, Mr. Carter.
Mr. Carter. Thank you, Mr. Chairman. I don't know how to
follow that exchange, but nevertheless I will do my best.
Thank you all for being here. Let me tell you, I represent
the entire coast of Georgia. I have over 100 miles of
coastline. My concern in this hearing today is mainly about
marine engines, because we are having a lot of problems with
the new blends having degradation on our engines, and it is
something I am very concerned about.
It is my understanding that the butanol has properties that
more closely resemble that of gasoline, or align with gasoline,
than ethanol does and that it has less of an impact, less of a
negative impact on the engines.
In fact, the National Marine Manufacturers Association and
the American Boat and Yacht Council underwent a 5-year study
with the Department of Energy studying this, and from what they
have come up with--comparing it to ethanol--and that study said
that biobutanol and similar biofuels have a higher energy
content and similar emission properties and reduction
properties while lowering the degrading properties on the
engines.
Have you heard of this? Has anyone heard of this?
Mr. Columbus. Yes, sir.
Mr. Carter. Mr. Columbus. Yes, that is fine.
Mr. Columbus. I have. The producers of isobutanol are eager
to try to work something out with EPA so that they can, in
fact, put their additive with blend stock set for E10. They
have got to go through a whole process. Anything you can do to
help EPA----
Mr. Carter. So you are telling me the problem is something
that we need to be addressing here in Congress--or in EPA?
Mr. Columbus. There is a regulatory impediment to their
taking a product to market in an efficient way. And yes, it is
EPA, and my bet is that the folks at EPA would be thrilled to
hear from you about this.
Mr. Carter. OK. Well, thank you for that information. I
didn't realize that. And that is very important.
Can it work? I mean, do you think that this would be
better?
Mr. Columbus. Look, it is a different thing than fuel
ethanol.
Can it work? Sure. It is a relatively small production item
today.
Mr. Carter. All right. Can I stop you right there and ask
you: It is a relatively small production item today, how are we
going to get to it market, then? Because it is not going to do
any good if we can't get the product to the people.
Mr. Columbus. You will get it to market the same way
ethanol historically has gotten to market. It will go by train
or barge and it will go----
Mr. Carter. But I am talking about demand, if there is not
enough demand for it.
Mr. Columbus. Well, I think what you have just said is, if
it is marketed properly in the marine community, there will be
plenty of demand for it. How it will get to that market will be
the same way that ethanol moves or that any other component
moves.
Mr. Carter. Right. I understand the transportation. But I
am just looking at it in terms of the economics. I mean, if
there is not enough of a market there, a demand for it, then I
am afraid it is not going to get to people.
Mr. Columbus. Well, the manufacturers of it assure me that
they think there is plenty enough demand to support their
efforts.
Mr. Carter. OK.
Mr. Columbus. They are just trying to get rid of the
regulatory impediment.
Mr. Carter. OK. Well, fair enough. And we certainly will
try to see about it.
Let me ask you, while I have got you, Mr. Columbus, about
how it is marketed. And let me ask you something. You know what
E88 and E15 mean to my wife? Absolutely nothing. And yet we
have this problem with marketing.
And that is a big concern of mine, because we have got a
number of consumers who are using these fuels inappropriately
and putting them in marine engines, and it is causing them
significant problems.
Mr. Columbus. Mr. Carter, with due respect to those people
that you know who do that, I cannot help them if they will not
read letters that are this big on the pump that say don't do
that.
Mr. Carter. I get it, and I understand that. But at the
same time, can we do a better job of the marketing process of
it?
Mr. Columbus. Well, I think all of us have done what we can
when we ruled out these ultra-low sulfur fuels. When we roll
out a new fuel, EPA undertakes an effort with the refining
community, with the marketing community to educate consumers.
I cannot help people who will not read these things. And I
know that sounds hard. But what you are finding out is the
number one thing that people buy gasoline on isn't what it says
on the pump, it is the big, stupid price sign. It is, what does
it cost?
Mr. Carter. Absolutely. I would agree with you.
Mr. Columbus. And if they are prepared to put their second-
most expensive investment at risk for 3 cents a gallon or 4
cents a gallon, it is a choice.
In the 1970s, I watched people carve out fill pipe
restrictors to put leaded gasoline into a car meant to take
unleaded and then were angry and sued retailers because they
said, ``That leaded gasoline that you let me buy at your outlet
poisoned my catalytic converter, and when I went to register my
car, it cost me a thousand dollars.'' I can't help those
people.
Mr. Carter. Mr. Columbus, I am with you. I understand your
point. I think it is a valid point. But with all due respect, I
think that we and the industry can do a better job in helping
by simply using better marketing and----
Mr. Shimkus. The gentleman's time is----
Mr. Carter. Excuse me, I am sorry. I didn't realize that.
So I hope you understand my point.
Mr. Columbus. I empathize with your problem, Mr. Carter.
Mr. Carter. Thank you.
Thank you. And I yield back.
Mr. Shimkus. The gentleman yields back. I want to thank my
colleague.
We have got an agreement by my friends on the minority side
to be able to go to one more round, if that is OK with you all.
Obviously, there are only a few of us left, so I don't think it
will take very long. So I will recognize myself for 5 minutes,
too, for a second round of questioning.
Thank you all. Understand, this where we need your help.
There are a lot of things that we need to hash out. So
understanding that a 95 RON fuel can be produced in different
ways by different refineries, can you estimate how many
billions of gallons--not now, help us, provide this
information--estimate how many billions of gallons of ethanol
would be used to produce a RON fuel at EO, E10, E15, et cetera?
We had conversations about this over the last couple days.
We need to know that. And I would even suggest you could do
it collectively, peer-reviewed. We need those numbers.
The other thing that popped in my mind is, if the vehicle
fleet transforms or starts moving 7 percent every year, so a
whole passenger vehicle--except for my very old car that I
drive, there will be a few outsiders there--13 years, right? So
I don't know if it is possible. What happens in this 13-year
transition to a high-octane standard, and where are the
billions of gallons of what we would hope would be homegrown
ethanol produced in America, right?
We really just need numbers. Again, you could do it
collectively, peer-reviewed. If you want to do it separately,
then we will fight about whose numbers. Formulas are formulas.
We will need defined variables. But we just need that help, and
I would ask that you would do that.
Another question is, Whatever the high-octane standard is
set at, would you imagine a market for even higher octane fuels
above that level? And we can just go through, and then I have a
follow-up to that.
Mr. Columbus. Yes, sir, absolutely. If you take a look the
way fuels have developed over the last 78 years, you will see
that there is always a creep.
With respect to Mr. Nicholson, somebody at GM is going to
look at you and say, ``That Corvette of yours, if you want it
to purr like a kitten, you would run it on 98 RON or 100 RON.''
It is just how things happen.
So, yes, we anticipate that 95 RON will ultimately become a
floor.
Mr. Shimkus. Ms. Skor.
Ms. Skor. I would hope, yes, that there would be a
continued appetite for even greater octane in the country.
Mr. Shimkus. Mr. Nicholson.
Mr. Nicholson. Yes. First of all, Mr. Shimkus, I would like
to offer that U.S. CAR could be the broker to kind of do this
analysis that you talked about. So we would certainly be
willing to work with everyone on this panel to just do that
analysis peer-reviewed so that we could get back to this
committee with those numbers.
Mr. Shimkus. Thank you for that offer.
Mr. Nicholson. So I will just say that to anybody on the
panel that would like to be part of that.
To your question, for sure there will be premium fuels on
top as there are today. As mentioned, Corvettes will always
want to use the best possible, as well as luxury cars. So I see
that market developing.
In fact, I would even go further to say there could be even
more demand in the future, given the very difficult CAFE
regulations that are in front of us. You know, OEMs actually
have an incentive to specify premium required, because we then
get to take advantage of that octane with the regulators in
certifying that.
What prevents us from doing that today is the cost-
prohibitive 50 cents per gallon that you see at the pumps, and
most customers, except for performance vehicles, just won't put
up with that.
Mr. Shimkus. Great.
Mr. Jeschke.
Mr. Jeschke. Yes. I would hope that we would look to those
higher blends, higher octane with higher blends, because I
think concern for the environment will not get less. I think it
will continue to become greater and greater. So I believe the
higher octane fuels, as Mr. Nicholson said, will help them to
achieve those goals.
Mr. Shimkus. Mr. Thompson.
Mr. Thompson. Well, we are certainly prepared to offer up
95 RON as a floor, not a ceiling, and let the market decide
where it should go.
And I will just note that E15 and E85 have been around a
long time, and consumer preference has decided where those
products go. We do not control access to market.
So the consumers are going to decide whether they go
higher. We would be open to it, provided that the floor is 95.
Mr. Shimkus. Great. Let me finish with this last one: What
regulatory actions would be needed to make that extra-high-
octane fuel available?
Mr. Columbus. You have to have a modification of the one-
pound RVP waiver. And I think you have to let the
infrastructure evolve or you have to change the regulations--
again, the Office of Underground Storage Tanks at EPA--the
latter of which I do not believe any of you are going to be
prepared to do.
So the reason we are as supportive of this roll-in as we
are is we believe the infrastructure will build out, and it
will build out earlier because they will see down the road
there is a guaranteed return.
Mr. Shimkus. So my time has expired. I will look at my
colleagues. Can I finish this question? Is that all right?
So, Ms. Skor.
Ms. Skor. So I just want to kind of clarify, what is most
important and critical from the consumer perspective,
especially when you are looking at fuel diversity and choice at
the pump, is access. When consumers have access to E15, which
is unleaded 88, and a 5-to-10-cent gallon savings, what we are
seeing is they embrace it. They wholeheartedly embrace it. And
if you look at the sales of E15, they are increasing when
consumers have access.
But the most important point there is access. A big
impediment to that consumer access is Reid vapor pressure. So
you grant that and you allow full-year sales. And I think that
is one of a few impediments that we need to allow consumers to
be able to access higher-blend and better-for-the-environment
fuels.
Mr. Shimkus. Mr. Nicholson.
Mr. Nicholson. First of all, I would say that perhaps a
national standard for a premium kind of fuel might be a
facilitator for a market demand for such a thing. Should be,
from my point of view, a performance-based standard. But 95 RON
can be the regular fuel, and there could be a national standard
for a higher one. That might be a good idea.
We will need some kind of cooperation with regard to EPA.
It has been briefly mentioned here. And I just wanted to point
out that our vehicles today are certified to the 9.0 PSI RVP
certification fuel. So it needs to be ensured that this
requirement is met regardless of fuel composition to ensure the
proper operation of the evaporative emission system. So we are
going to have to work out some details, but I think it can be
done.
Mr. Shimkus. Mr. Jeschke.
Mr. Jeschke. Yes. I guess, Mr. Chairman, I would just point
to the points that I mentioned in my opening statements.
Mr. Shimkus. Very good. Thank you.
Mr. Thompson.
Mr. Thompson. Quickly, I can't help myself. Access.
Refiners, we own less than 4 percent of the retail stations. We
don't control access. Mr. Columbus can attest to that. So this
notion that big, bad oil is preventing access simply is not
true.
As far as--if I understand your question about how do we
get to 95 RON--it is for the RFS to sunset, and in return for
that we will be committed to a 95 RON standard.
Mr. Shimkus. Yes. I think it was like, if 95 is a floor,
then what would be the regulatory actions we need?
Mr. Thompson. OK. I am sorry. Then the issue is EPA has
mechanisms now. E15 got to the market without a big overhaul of
the Clean Air Act. EPA has mechanisms now for certification
fuels to get authorized. I would say go through the process.
Mr. Shimkus. Thank you. And I will return the balance of my
time. And I again thank my colleague, Mr. Tonko, for allowing
us to go a second round and recognize him for 5 minutes.
Mr. Tonko. Thank you, Mr. Chair.
Mr. Nicholson, as I understand it, any and all cars on the
road today can use premium fuel?
Mr. Nicholson. You say can they use premium?
Mr. Tonko. Yes.
Mr. Nicholson. Well, yes, they can.
Mr. Tonko. So when GM creates this new vehicle, this new
engine, they are recommending use of premium. You are
suggesting it runs it better. But what is to deny the consumer
from fueling up with regular without damaging the engine? So
basically if it is the choice of premium or regular, cheaper or
more expensive, how do we guarantee that any benefits of that
premium use will actually be realized?
Mr. Nicholson. Well, thank you very much, and I just want
to come back to Mr. McKinley's point. You know, consumers could
do that today. I don't really know anybody that does that,
because putting premium in a regular-fueled vehicle doesn't get
you any benefit.
What we are proposing is not premium fuel. It is a new 95
RON high-octane fuel for new greenhouse gases.
We still definitely have to deal with the misfueling issue.
For example, if someone generally were to use the new 95 RON
fuel in a 2018 model regular vehicle, there would really be no
problem. You would have higher octane, but it would be very
little benefit because the vehicle wasn't designed for that. So
what we are proposing is the engines are designed and they use
the new fuel.
The misfueling problem we worry about is they use today's
regular fuel in their new vehicle designed for 95 RON. That is
a problem, and that is a remaining issue. So we have got
misfueling risks that we need to work on.
Mr. Tonko. So do you then require premium, not recommend
it?
Mr. Nicholson. We require the new 95 RON fuel. That is what
we would do, and we need all OEMs to go together to do that.
The analogy maybe is just the way we switched from leaded fuel
to unleaded fuel.
Mr. Tonko. So you are redesigning an engine that will
require, not recommend, premium?
Mr. Nicholson. Yes. Exactly. It will be required. And we
are going need all the OEMs to go together to make this work.
Mr. Tonko. OK. I yield back, Mr. Chair.
Mr. Shimkus. The gentleman yields back his time.
The Chair then now recognizes the gentleman from Texas, Mr.
Flores, for 5 minutes.
Mr. Flores. Thank you, Mr. Chairman.
Ms. Skor, you recommended that we have a one-pound RVP
waiver year-round for all blends of gasoline E10 and above--or,
well, any E level. Is that correct?
Ms. Skor. Correct.
Mr. Flores. OK.
Mr. Columbus, would there be any problems from your
constituents' perspective?
Mr. Columbus. It is not a problem for us. I mean, what we
propose is a waiver for any fuel that has an RVP that is equal
to or less than E10, and you can go up to E25 or so.
There is an infrastructure problem. It is no fun to talk
about underground storage tanks. Nobody likes that. And nobody
sees them. And well over 60-something percent of the retail
outlets in the United States have changed hands since the turn
of the millennium. Most of those tanks, the owner doesn't know
exactly what he has got.
So the impediment to taking the fuel on through is that it
is a violation of the Resource Conservation Recovery Act to
store E15 or E20 in an underground storage tank that the owner
and operator cannot demonstrate was warranted to be compatible
with that blend.
Mr. Flores. Let me try to come back to the original
question, though. Is there a downside to having the RVP waiver,
the one-pound waiver, year-round for your constituents?
Mr. Columbus. No, sir.
Mr. Flores. OK.
Mr. Columbus. No, sir.
Mr. Flores. Sorry, I didn't mean to cut you off, but I know
the chairman will eventually.
Mr. Nicholson, is there any problem for U.S. CAR?
Mr. Nicholson. As I mentioned previously, our vehicles are
certified to the 9 PSA RVP certification fuel. So it just needs
to be ensured that this requirement is met regardless of the
waiver or not to ensure the proper functioning of evaporative
emissions systems.
Mr. Flores. OK.
Mr. Jeschke, would your constituents have any issue with
it? I think you asked for it in your testimony, if I recall.
Mr. Jeschke. That is correct.
Mr. Flores. OK.
Mr. Thompson, is there any problem with your constituency?
Mr. Thompson. With?
Mr. Flores. With a one-pound waiver year-round for all
grades, all blends.
Mr. Thompson. We are willing to entertain the idea as a
part of a comprehensive RFS solution.
Mr. Flores. That is where I am going with this, is if we
talk about----
Mr. Thompson. We would not be too keen to the idea, as has
been reported yesterday, in exchange for nothing because--that
is not something we are interested in.
Mr. Flores. OK.
Mr. Thompson. We are willing to put it all on the table
like we are doing. We have been very candid.
Mr. Flores. Right, and that is what I am talking about. I
mean, I am trying to address the needs of the broadest
constituency possible, I mean, from the environment to the
consumer to all of your constituencies at the table.
So you kind of introduced the next part of this question,
and that is, if we don't do anything, we have got a status quo.
And I think several of you have complained about the way the
EPA has adjudicated the RFS. And so do all of you feel like a
statutory solution is the better outcome here than where we are
today?
Mr. Thompson, I will start with you.
Mr. Thompson. Absolutely.
Mr. Flores. OK.
Mr. Jeschke.
Mr. Jeschke. I couldn't answer that, I guess, without
consultation.
Mr. Flores. OK.
Mr. Nicholson.
Mr. Nicholson. We believe a legislated solution will be
really helpful to the overall process to make sure that all the
parties are coordinated together, which is really important.
Mr. Flores. OK.
Ms. Skor.
Ms. Skor. I believe that a conversation about high-octane
fuels can--and I am glad we are having that--I also believe
that conversation can have outside of any conversation to do
with the Renewable Fuel Standard. This body can move us toward
a path of a national fuel standard and doesn't need to do that
in the context of the Renewable Fuel Standard.
Mr. Flores. Would you repeat your answer now? Say that
again.
Ms. Skor. Sorry.
Mr. Flores. I want to make sure I can drill into this one.
Ms. Skor. I applaud the conversation today about moving
toward a high-octane standard.
Mr. Flores. OK.
Ms. Skor. But this body can move toward that goal without
touching the Renewable Fuel Standard.
Mr. Flores. I see what you are saying. OK. All right.
Let me say this: Is what we are looking at in terms of a
statutory solution preferable to where we are today, where you
have got the EPA that is doing things that you already said
today you don't like?
Ms. Skor. I actually would not say that a statutory action
is preferable to the situation. I think the challenges with EPA
are on the administrative side, and we need to make sure that
the EPA is implementing as envisioned by Congress.
Mr. Flores. OK. And those aren't unique to this
administration, right? I mean, this was going on in the years
prior to this administration.
Ms. Skor. Yes, we have got--there are some different
challenges most recently, yes.
Mr. Flores. OK. All right.
Mr. Columbus.
Mr. Columbus. My answer is yes. My concern about what is
going on with the status quo is, because of the things that
have been going on, there is a significant amount of
uncertainty in the market. And commodities markets really like
certainty. When there is uncertainty, you see values go up,
down, sideways. People who are involved in the system get
caught in a box.
So we think you should move forward, and we like the high-
octane solution as a good place to start.
Mr. Flores. Can I indulge the chairman and the ranking
member to give me 1 more minute?
Mr. Shimkus. Without objection.
Mr. Flores. OK. Thank you.
So my final question is this. Mr. Nicholson, this will be
for you. And I am glad to hear that there is a fighting Texas
Aggie in terms of worldwide propulsion for GM. I can't wait for
you all to build a 700-horsepower Tahoe for me that gets 35
miles to the gallon.
That said, we are talking about something that is really
broader than the U.S. possibly here. And when we talk about
worldwide environmental impact, you said that there is already
a 95 RON standard in Europe.
Mr. Nicholson. Yes.
Mr. Flores. If we have one single nationwide standard in
the United States for 95 RON, what other countries would likely
follow on? Which would make U.S. CAR and U.S. refining and U.S.
ethanol, put us all kind of on the same--and consumers--kind of
all on the same page.
Mr. Nicholson. Yes, thank you. As you pointed out, Europe
has already proven that 95 RON is a great solution that
delivers efficiency. As I said earlier, I think Americans
deserve at least as good a fuel as the Europeans have. And I
think, by historical patterns, let's say, there is high
likelihood that Canadian and Mexican would, let's say, follow.
Mr. Flores. OK. So we could set a new emissions profile for
the entire North American continent.
Mr. Nicholson. I think one national standard would provide
leadership and show leadership that would likely be followed.
Mr. Flores. OK.
Thank you for your indulgence. I yield back. It was a great
hearing today.
Mr. Shimkus. Thank you. The gentleman yields back his time.
Seeing no further Members wishing to ask questions for this
panel, I would like to thank all of you for being here again
today.
Before we conclude, I would ask unanimous consent to submit
the following document for the record: a letter from my friends
at the Renewable Fuels Association. Without objection, so
ordered.
[The information appears at the conclusion of the hearing.]
Mr. Shimkus. And pursuant to committee rules, I remind
Members that they have 10 business days to submit additional
questions for the record.
I ask that witnesses submit their response within 10 days,
except for that probably lengthy review of billions of gallons.
That will take longer than 10 days, I would assume.
Without objection, the subcommittee is adjourned.
[Whereupon, at 11:35 a.m., the subcommittee was adjourned.]
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