EPA in Wonderland
Team Obama fines oil companies for not using a fantasy fuel.


Deroy Murdock

Way back in 2010, some 70 million gallons of fantasy fuel were supposed to spring from Cello Energy in Alabama. Unfortunately, in 2009, a jury determined that Cello had falsified its production capacity. Cello went silent in October 2010 when it filed for bankruptcy.

The National Academy of Sciences announced last year that “currently, no commercially viable bio-refineries exist for converting cellulosic biomass to fuel.” NAS further predicted that in 2022, EPA’s mandated cellulosic supplies would not materialize “unless innovative technologies are developed that unexpectedly improve the cellulosic biofuels production process.” In other words, if you don’t build it, they will not come.

A Wall Street Journal editorial perfectly encapsulated this fine mess.

Congress subsidized a product that didn’t exist, mandated its purchase though it still didn’t exist, is punishing oil companies for not buying the product that doesn’t exist, and is now doubling down on the subsidies in the hope that someday it might exist.

The oil refiners absorbed all of this and chose, at first, to play nice. AFPM and the American Petroleum Institute petitioned EPA in February 2011 and, again, on January 20, 2012 — that time joined by the Western States Petroleum Association. As the administration gave labor unions and entire states waivers from Obamacare, the refiners asked for waivers from the RFS mandate.

Fully 15 months after the first petition and four months after the second, EPA administrator Lisa Jackson finally rejected the refiners’ appeals, reaffirming that they must obey this regulation — never mind that they more easily could defy gravity. “We thank you for your interest in these issues,” Jackson’s May 22 letter cheerily added.

So, on June 11, AFPM and WSPA sued EPA in the D.C. Circuit Court. The plaintiffs hope that a federal judge will blend some sanity into a scenario that resembles the work of Salvador Dali.

Rather than focus on expanding operations and creating jobs, lawful American companies now must spend money to sue the federal government for relief from unobservable rules. This fact demonstrates how boneheaded and bullheaded Washington has become. Even worse, businesspeople beyond the oil industry watch this charade and wonder when the regulatory tumbrels will roll by for them.

“This doesn’t help,” says economist Tom Landstreet, founder and CEO of Standard Research Corporation, a Nashville-based investment-analysis firm. “On the margin, this spooks business people.” The former colleague of supply-side legend Arthur Laffer adds that “this is part of a pervasive cluelessness about the economy and markets. It’s just one of a thousand cuts.”

Company owners these days ask themselves, “How does one become a favored industry or business under this administration, versus being one that is vilified and demonized,” according to AFPM’s Drevna. If a particular enterprise is “not part of that inner circle,” he says, “they might go to Singapore or somewhere with a more business-friendly atmosphere.”

Drevna applauds recent comments by Governor Bobby Jindal (R., La.). “I suspect that many in the Obama Administration don’t really believe in private enterprise,” Jindal wrote in a June 14 post at “At best, they see business as something to be endured so that it can provide tax money for government programs. . . . The problem is that the private sector is so foreign to our President that he would need a passport to go there and a translator to understand what is happening.”

Washington’s unyielding, heavy-handed, and nonsensical behavior nonetheless may obscure a sliver of silver lining. The Bush-Obama administration indeed has invented a hybrid fuel: Cellulosic ethanol is one half industrial policy and one half comedy routine.

New York commentator Deroy Murdock is a nationally syndicated columnist with the Scripps Howard News Service and a media fellow with the Hoover Institution on War, Revolution, and Peace at Stanford University.


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