This posting comes to us from the Institute for Energy Research where Robert Bradley (one of our Energy Counsel Members) is President. Due to editing for brevity, please visit the Institute for Energy Research for the complete article.
In an attempt to alleviate concerns regarding energy independence, climate change, and high gasoline prices, Congress is expected to consider legislation this fall that would mandate the use of renewable fuels in the transportation and electric generating sectors. The Energy Information Administration (EIA), an independent and statistical agency in the U.S. Department of Energy, released a study in September, requested by Senator Inhofe, that analyzes both a renewable fuels standard (RFS) in the transportation sector and a renewable portfolio standard (RPS) in the electric generating sector. According to the EIA, these mandates would raise energy prices and reduce American economic output by $296 billion over two decades.
Gasoline and other petroleum products would cost more as oil refiners, blenders, and ethanol producers comply with the mandates, by producing almost 25 billion gallons of corn-based ethanol, 31 billion gallons of cellulosic ethanol, and importing 9 billion gallons of ethanol from foreign markets in 2030, 5 years after the mandates must be reached. Gasoline prices are forecast to have a 61 percent increase (in 2005 dollars).
IER Distinguished Fellow Mary Hutzler provided this summary