Gasoline prices fell temporarily during a cooling of tensions between the United States and Iran, but energy analysts argue that a decades-old federal mandate continues to push up fuel costs and the overall cost of living. Critics say Congress could repeal the Renewable Fuel Standard, but the program has survived thanks to the strength of the ethanol lobby and its Midwest allies.
The cost is mostly invisible to most Americans. RFS charges never appear on a gas station receipt, and politicians hardly discuss them when debating gas prices. But critics argue drivers pay for the mandate every time they fill up — and that those costs add up to hundreds of dollars each year for the typical household.
Exactly how much it costs depends on the source. The Environmental Protection Agency estimated the program would cost consumers around $20 billion a year in 2026 and 2027.
(AP Photo/Washington Examiner Illustration)
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Independent analyses put the number higher. Research from the Energy Policy Research Foundation estimates the RFS raises fuel prices by 45 cents per gallon. If U.S. gasoline consumption reaches 140 billion gallons this year, the additional cost would total roughly $66 billion. When broken down further, the costs come out to an estimated $734 each year in hidden costs to a U.S. family of four. A separate study by Turner & Mason pegged the program’s costs at $70 billion a year.
Understanding those costs requires an understanding of how the RFS program works.
Created during the George W. Bush administration in 2005, RFS requires refiners and fuel importers to ensure increasing amounts of renewable fuels are blended into the nation’s transportation fuel supply. It was expanded two years later with broad support from congressional Democrats and Republicans.
However, the RFS standard is complicated.
While the EPA sets annual Renewable Volume Obligations, refiners and importers that fail to meet blending requirements can purchase Renewable Identification Numbers, or RINs, to comply with the program.
Critics have compared the program to Calvinball, the game in the comic strip Calvin and Hobbes, where the rules change constantly.
“The RFS undoubtedly adds to the price at the pump, and things have only gotten worse now that the mandate for 2026 and 2027 was increased,” Ben Lieberman, a senior fellow at the Competitive Enterprise Institute, told Washington Examiner. “Keep in mind that, without the RFS, refiners and fuel retailers would be free to blend in as much or as little ethanol as makes economic sense.”
The federal government controls more than just how much ethanol has to be blended into gasoline. It also determines how many fuel credits can be used on imported versus domestic biofuels.
After the EPA announced plans last year to cut imported biofuel credits drastically, the American oil and gas industry warned the proposal would damage the market.
“It is unworkable and would have significant harmful effects on the overall RFS program and could place upward pressure on fuel costs,” wrote the American Petroleum Institute, which represents the oil and gas industry, in a letter to the EPA.
Critics have also argued the RFS program isn’t delivering on its promises, something also noted by the federal government’s official watchdog.
In a report to the U.S. Senate in 2019, Government Accountability Office analysts said that the RFS program had a limited effect on greenhouse gas emissions. Multiple experts interviewed by the GAO said it was difficult to determine how much effect the RFS had on greenhouse gas emissions. This was due to a variety of factors, including the lifecycle of biofuel emissions.
The EPA has repeatedly uncovered fraud involving RIN credits. Since the program began, the agency says it has identified nearly 339 million invalid RINs and roughly $87 million in fraudulent sales. The GAO has also criticized the lack of transparency in the RIN trading market, saying limited oversight increases the risk of fraud and price volatility.
This is despite gas consumption falling in the U.S., according to the U.S. Energy Information Administration. Statistics show fuel demand decreased 4% last year compared to pre-pandemic levels. But the EIA projected consumption could drop 1.5% in 2026, not from higher crude oil prices but from increased fuel economy.
American oil and gas producers have pushed Congress to act on the issue to ensure the RFS program supports investment in a reliable, certain fuel supply.
RFS opponents continue to be stymied by an extremely powerful, not to mention vocal, opponent: the ethanol lobby and its congressional allies. Since 2016, the biofuels industry has spent $272 million on lobbying and campaign contributions, according to a 2021 report from Taxpayers for Common Sense.
Most ethanol is produced in the Midwest, meaning producers receive reliable support from Sens. Chuck Grassley (R-IA), Richard Durbin (D-IL), and Amy Klobuchar (D-MN).
“It’s not just one or two senators,” said Kenny Stein, the vice president of policy at the Institute for Energy Research. “It’s probably 30 senators, and that’s a blocking minority.”
Thirty senators is a good chunk, but it’s worth noting that it’s still indicative of 70 who would be happy to see it disappear. But Stein believes the ethanol lobby benefits from the fact that the RFS program never expires, and the anti-RFS coalition isn’t very organized. “When prices are high like this, people are like, ‘Oh, I don’t like this,’ but when prices go back down people forget,” he said.
This is despite the evidence that it raises fuel costs, particularly for rural Americans.
Data from the EIA found that 13 of the 15 highest per-capita RFS cost states are Republican-held or GOP-leaning. A family of four in Alabama pays an estimated $1,092 per year in hidden RFS costs.
It’s also a major issue in states with key U.S. Senate races, as the GOP hopes to hold on to its majority after the midterm elections. In Maine, the hidden costs add an estimated $898 each year for a family of four, while a Georgia family pays an extra $805. In oil and refinery-rich Texas, it’s $828 per year, with a total state cost of $6.56 billion.
Even with the added costs, there doesn’t appear to be any interest in Congress to change the RFS program. Stein said that it’s proof that a well-organized, deeply interested lobby can prevent reform from happening.
“If they were trying to pass the RFS today, they probably couldn’t pass it afresh, but preventing it from being repealed is very doable,” he said.
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There’s also the potential that any anti-ethanol perception could come back to bite a prospective presidential candidate. A GOP strategist told the Washington Examiner that anyone who wants to win Iowa needs to be seen as pro-ethanol.
“Once you cross the Appalachians, most Republicans only see this as a corn belt giveaway,” the strategist quipped.
Taylor Millard (@TaylorMillard) is a freelance journalist who lives in Virginia.
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[ H/T Washington Examiner ]
