The Renewable Fuel Standard (RFS) mandates that increasing amount of biofuels are blended into motor fuels. By mandating certain fuels, instead of letting the people choose the best fuels, the RFS leads to higher fuel prices.
The RFS was first passed in 2005 and then amended in 2007. At the time, U.S. oil production was falling and U.S. oil consumption was increasing. Some people believed the U.S. had limited potential to increase oil production and imports would only increase. But these assumptions were fatally flawed.
Since 2008, oil production in the U.S. increased by over 80 percent and net imports decreased by over 50 percent. The biggest driver of this decrease in exports is not the mandated use of biofuels, but increased domestic oil production.
Despite the fact that the basic justification for the RFS was wrong, the law still mandates increasing use of biofuel. Also, the law assumed “advanced” and “cellulosic” ethanol would be cost-effective if Congress mandated their use. Congress was wrong and “advanced” and “cellulosic” fuels have proved to be expensive and in many cases non-existent in commercial quantities. The RFS, however, mandates the use of these “phantom” fuels.
The RFS is a deeply flawed law and shows why Congress should let Americans decide which fuels work best instead of Congress assuming it knows best.