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Ganesan, Arvin[Ganesan.Arvin@epa.gov]
ExxonMobil
Tue 7/23/2013 1:00:34 PM
Five Things To Know About RFS Targets For This Week's E&C Hearings

July 23, 2013

Dear Colleague,
Today, the House Energy & Commerce committee will hold the first of
two hearings about the impending ethanol "blend wall" crash caused by
the biofuels mandates of the
a
provision of the Energy Independence and Security Act of 2007.
Unless it's changed, this policy could force American refiners to cut
production, resulting in lower gasoline supplies for consumers.
Ahead of this week's hearings, below are five important facts to
consider about RFS targets:
When Congress set the RFS targets in 2007, they were based on
government projections of future gasoline demand that have
proved to be completely wrong. Gasoline demand is decreasing
in the United States, not dramatically increasing as predicted in
2007.
The "blend wall" is what industry calls the point at which the
volume of renewable fuels mandated by the RFS exceeds the
volume that can be practically blended into gasoline and diesel
fuel. Essentially, it's a matter of not having enough gallons of
gasoline in which to put all of the gallons of ethanol required by
law. Refiners will soon be unable to meet fuel demand and
comply with the law.
In the past there was no problem if a refiner came up short; the
market for RINs was adequate since, as the = - ' - = ' - = = = " - = : c _
~~~~~~"'' "Over the past several years, refiners have
actually blended more ethanol than required, and thus banked
'credits'."
A sure sign that we are barreling headlong into the blend wall, is
what is happening to the price of Renewable Identification
Numbers (RINs)- credits refiners earn for blending ethanol into

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motor fuels.
that RIN prices
soared last week to $1.32 per RIN, the fifth record in the
previous six trading sessions. By contrast, R/Ns traded for two
cents apiece last year.
A
suggests that, as a result, supply will drop
and result in severe gasoline and diesel supply disruptions,
which will ripple through the U.S. economy and cause significant
harm to consumers.
The irony is that this is an entirely manufactured crisis, and
Washington created this problem. The logical solution to the
impending crisis would be for the Obama administration to relax the
2013 and pending 2014 requirements and cap the required ethanol
blend at 10 percent. Using higher levels of ethanol (15 percent instead
of 10 percent) has the potential to damage engines. So setting the cap at
10 percent would protect cars' engines as well as consumers'
pocketbooks.
For more information, I encourage you to visit our Perspectives blogs
and read more
and
==~~"-==~=="----~===--==~~~'-==" If you have any
questions, please feel free to contact me directly either at 202-862-0235
or~==~=-'-'~==~=~'-'-=~=====

Sincerely,
Theresa M. Fariello
Vice President, Washington Office
ExxonMobil Corporation

ExxonMobil I 2000 K St., NW Suite 710 I Washington, DC 20006

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