Here we go. Again.
Last year, the EPA set a rather bizarre quota for oil companies. The quota was related to the amount of cellulosic biofuel – essentially fuel made from grasses – that oil refiners were expected to blend, increasing use of this renewable fuel. Now, I don’t like these kinds of quotas at the best of times. The market is much better placed to make decisions about what sort of fuel we use than any government agency, and there are all sorts of unintended consequences of biofuel standards. But let’s set that aside for the moment.
The thing that made this quota particularly problematic is that almost none of this cellulosic biofuel was even produced last year. In total, about 21,000 gallons were produced, but the EPA required oil companies to blend 8.7 million gallons of the stuff into traditional fuels. You don’t have to be a math whiz to understand that there’s a problem here.
So the oil companies sued the EPA, saying it was ridiculous for them to be fined for not using something that didn’t exist. The courts agreed. And yet, just yesterday, the EPA released the quota for cellulosic biofuel for 2013 – and it’s now up to 14 million gallons. WHAT?!
The EPA insists that the production is coming, but that seems like mostly assertion to me. There’s no real evidence that the supply will be there. Does the government really think that by just declaring that something must be used, they can cause it to be fabricated out of thin air? The arrogance is amazing.
