tv Fuel Economy Gas Emission Standards For Vehicles CSPAN April 20, 2018 8:04am-10:23am EDT
one of the exciting things about the high octane fuel standard, our version of it, it allows us to ethanol policies, would you agree that it can lead to an advantageous use of ethanol? >> i think the 95-run policy discussion right now would not lead to a more advantageous use for consumers. >> you know, us on this committee -- there are a few of us left from '05, '06, '07, the energy situation we faced then is much different than it is today.
that was an era of scarcity. we were watching what was going on in brazil with ethanol. it was a different world. i supported the rfs then. i worked on it. i think there was a difference between corn ethanol and the advance of cellulosic and you mention that had in your comments. i was in the radio business for 21 years, i would have loved to have a mandate for somebody else to buy my inventory. i'm just saying. i grew up on a farm, i get it and respect corn growers. as a chairman of this committee, i have this advantage of looking at this broadly, and trying to figure out what's the best policy for american farmers, what's the best policy for consumers. how do we move this policy forward knowing that 2022 is out there? i know some people may want to roll the dice and see what happens. i don't think that's the responsibility of congress. i think our job is to set the policy as we did in '05 and '07 to try to resolve a problem then.
i think it's time to modernize that policy. i just want people at the table to understand we're serious about this one way or the other, and we want to get it right for the american consumers so it's sustainable, predictable and we continue to make progress. to reduce harmful emissions. we continue to help our farmers, but we also put the consumer first, the consumer first. and so, i just -- i struggle with this. this is a hard one for all of us. we know the realities of the senate, we know the reality of getting votes around here. i understand all the market forces, political market forces at work, i'm not naive to that. i think we have a bigger responsibility to the country here to do this right. and so i don't know if i've got any more questions on it. i appreciate you all being here. i know you're all looking at this seriously. i just want to implore that we continue these discussions, i think there is a path forward
that will work for our growers, wherever ethanol's being produced, grown and they can work for the consumers and give the stability. i want to thank the autos for coming to the table, because we want to make sure we're not jamming something that will not work for engines. and i would defer to you about that, that issue. if we do this right, you'll create demand for this higher octane, right? it will be predictable? >> yeah, we're very happy about this. this is the most cost effective way to increase fuel economy and reduce greenhouse gases. we're happy to have the hearing and move this forward quickly as possible. >> mr. thompson from your perspective are there other issues in other states that can be adversely affected if we get the number wrong? >> absolutely. so again, we can talk conceptually about e-20, e-30,
but if we put it in the context of what we're trying to do, is address cafe at the near term. 95-run's the only product that can be sold nationwide. california and five other states do not allow the sale of i-15 or higher octane blend. how can we put the autos in the position of rolling out a new product put not able to get fuel to them. 95-run is the only time that is scaleable in the time frame of cafe compliance. >> i know i've exceeded my time. thank you for your leadership on this. and to everyone on the panel. we appreciate you working with us, and i yield back. >> the gentleman yields back his time.
>> regular grade gasoline is something north of 70%, sir. mid grade 80, 90 octane. >> well, most of our vehicles on the road today are made for running very efficiently at regular gas. and if we do it , and maybe the manufacturers will do it so we end up going to 95%, you're going to increase the cost at the pump for people running their vehicles. >> all right. number one, perhaps initially it is not clear to me, sir, that in the long-term, that's going to
work. the reason e-15 has entered markets where it's lawful, it is offered at a price which is less than regular grade gasoline. >> not in my area in houston. very often. we don't have a whole lot -- >> not at all. >> everything is bigger in texas. >> that's right. that's one of my concerns and i'm glad the manufacturers are here, because they make the vehicles, and our fleets turn over fairly regularly. so people may not notice it. but by doing this, you will require the people pay more at the pump, which is not a popular issue. >> again, sir -- >> and you're a marketer. you're not the one -- >> no, again, sir. i believe experience shows us that if there is an absolute demand for a product, the price of it tends to go down. this is a 7% shift in vehicles every year. as that product comes in, i don't doubt that at first it will be priced higher than
regular grade gasoline, simply because it will still be a specialty product. as you evolve, as you transform the market, that will come down. and, again, if you give me the one pound waiver on higher blends and give me time to redo the infrastructure, tolerate them, i suggest you'll find that price becomes very competitive and looks a lot like what regular gasoline or less than regular gasoline would cost today. >> well, my concern is right now that, you know, if we change the fleet over the period of years, people are going to pay more at the pump. and right now i'm hearing people, even in houston, complaining that the price is going up because we're going to a summer blend.
we did a really good energy bill. in fact, a lot of my environmentalists forget that bill also authorized the wind power, the solar power. and what we've done on our electricity generation. the rfs i considered was a failure, because here we are, 13 years later. the market -- and i have one relatively small biofuel refinery in my district. we used to have three, but they couldn't go with the market over the last number of years. so when we talk about biofuels, what percentage is corn-based? corn-based as compared to what some of us thought back in 2005 we would be recycling things instead of making the price of our corn whiskey go up? >> right now the vast majority is blended with corn ethanol, so conventional ethanol. we do have advanced cellulosic ethanol on the market.
and i would say, you know, if you look at the progress that has been made in the ten years, one of the things that slowed our ability to innovate and get more cellulosic in the market is the implementation of the rfs and the uncertainty of what was taking place at epa. that uncertainty sends the wrong market signal to innovators and investors. >> i only have a few more seconds. i agree because the rfs -- because in my area in texas, we were reformulating our gas in the '90s, early '90s and it was environmental benefit. but we used mtbe, product of natural gas. but the '05 energy bill had a waiver for mtb. the senate didn't accept it. we're still producing mtb in texas for the export market, but we can't use it to reform late
our gas. and now we have lots of natural gas that we could be using that for. mr. chairman, i know you and i have had this battle -- >> welcome to my world. >> but i would like to reform the rfs -- >> gentleman's time is expired. the chair now recognizes the other gentleman from texas in a bipartisan manner, gentleman congressman barton for five minutes. >> thank you, mr. chairman. i'm here under protest. i don't do get-away hearings, and darn sure don't do hearings that start at 9:00 in the morning. >> that's right. fortunately or unfortunately, we have a witness that represents one of the companies that's one of the biggest employers in my district, general motors has an assembly plant in arlington, texas, that's one of the most successful plants in their company. and so i'm honored to be at this hearing because of that. i listened to chairman
walden, and i will say the country is well served that he is the chairman right now. if i were still chairman, i'd be in a wrestling match with chairman shimkas because i would be repealing the renewable fuel standard and i'd take a go at repealing the corporate fuel economy standard. i was chairman in 2005 and we had the rfs, the original rfs because the speaker of the house was denny hastert from illinois. he said we're not going to have a debate about this, joe. you're chairman and i'm speaker. that was pretty determinative. i said, yes, sir, mr. speaker. but it was a more lenient rfs, i think a more reasonable rfs. so there's no question that it is important to our corn growers, our agricultural test
or but at the same time no one can say ethanol is a struggling, startup industry any more. you don't need the protections, the mandate, the quotas that we have today. so, this octane alternative, high-octane alternative, i think is a very reasonable proposal. i really do. so, i guess my question to mr. nicholson would be, is there any doubt that the manufacturers can manufacture engines to use that type of fuel? >> there's no doubt. we're at the table. u.s. -- i'm representing u.s. car and we're all prepared to redesign our engines to deliver this roughly 3% fuel economy improvement from the 95 run. we think it's a consumer-facing
way that consumers will get benefit from, and we'll get reduced greenhouse gases. so we're here and ready to support. >> okay. and i guess -- is it score? is that how you say it? you seem to be the proponent of the ethanol industry. >> yes, i am. >> is there any doubt in your mind, move to allowing the high-obtain fuel that your industry still wouldn't thrive? >> honestly, we wish that we could because of all the reasons and benefits of ethanol as high-octane and home grown renewable fuel. the challenge and the reason that we believe we continue to need the guardrails provided by something like the renewable fuel standard is it's not an open market place. we don't have access to the consumer.
until there is a market place -- >> what do you mean by that, what do you mean you don't have access to the consumer? >> if you look at the fuel market place, so much of it, of the access -- >> you have guaranteed access. >> yes. with the renewable fuel standard we do have the ability to compete. what we'd want to see in conversations moving forward is what is the path for continued access to the consumer. i'm going to give back a minute. i do appreciate you holding the hearing. i'll yield to mr. flores -- >> that's okay. i've got a ton of questions. this is a great panel. one of the things i'm hearing, everybody agrees we need to have a higher octane standard, right? okay. the second thing -- the questions i'm hearing are how much, how high should that go. how do we get there. and then the third thing i'm hearing is how long should we spend to go from where we are
today to go to that new standard so that not only can the ethanol industry and the retailers -- and the auto manufacturers and the refiners get ready for that, but also get our consumers educated and ready for this new world of higher ron. i only have a few seconds left and use that as my intro for the next round. it does sound like a win/win/win for the consumers, ethanol markets, and conventional retailers and refiners and auto manufacturers. sounds to me like everybody wins, so i think we need to look at that versus status quo which is clearly a loser. i yield back. >> gentleman's time expired. we have to vote soon. i'm going to come back so we can have a finish of our questions and go to the second round for those who want to delve into this. chair recognizes gentleman from california mcinerney for five minutes. >> i appreciate the chair
jumping over to me and i appreciate the panelists here this morning. mr. nicholson, i'm very concerned about the trump administration's proposal to roll back greenhouse gas and fuel economy standards for model years 2022 to 2025 automobiles and light trucks. the state of california is committed to reducing tail pipe emissions and getting vehicle on the market that use less fuel and emit less carbon per vehicle mile traveled. given that backtrack i'd like to know where gm stands on scott pruitt's recent statement in california's ability to set greenhouse gas emission standards for automobiles under the clean air act. so, does gm agree with administer pruitt's office california to waiver? >> i don't -- can you ask the last part of the question again?
>> sure. does gm agree with administrator pruitt's opposition to the california waiver? >> that's not a question about the midterm review or -- >> that's right, it's a question about your agreement with -- >> i'm not really prepared to give general motors' point of view on that question. i mean, global propulsion systems and product development and we're here to talk about octane and engines and i'm not really informed about the weave waiver or whether that's okay or not okay. >> well, this is an important question, especially to california, but to the nation in general. if the auto makers understand, in my opinion, that the high fuel efficiency standards are in their interest, in the international auto market, then they should be in opposition to this potential. >> we do have a prepared statement on the midterm review and i'd be happy to share that with the committee.
>> ms. sclor, mr. thompson has proposed replacing renewable fuel standard with 95 octane performance standards. however, if the octane is not sourced from ethanol, wouldn't this just lead to an increase oil use? >> potentially. 9 5r, ron, is a premium fuel on the market today, there is opportunity for refiners to make that fuel with ethanol, and they are not doing it even with the economic incentive of ethanol as the lowest octane. so 95 ron, it -- at best, it's status quo and perhaps you would be using less ethanol than today. >> thank you. it wasn't that long ago that we were hearing about e-15 causing damage in engines we had briggs and stratton in here, some of
the auto manufacturers were concerned about that. is that still a concern about e-15 damaging engines and causing long-term damage? >> is that a question for me? >> you can answer if you want. >> i will defer to auto. i will say kind of -- i'll provide part of an answer. e-15 is approved for nine out of ten vehicles on the road today. and so -- in fact, i applaud gm for being the first company to warranty e-15 when it became a legal fuel. so, it is not approved for small engines. all of the retailers who sell e-15 also sell e-10. some sell e-0. we did a survey with consumers who own motorcycles and small engines last year and asked them, are you satisfied with the fuel choices on the market. do you believe you are using the right fuel for your engine? and the resounding response across the board was yes.
>> i can confirm that answer. so, for u.s. car, e-15 is fine. we've been that way since 2012. but there's lots of people filling up at the pump with all kinds of small engines that have different answers. but for u.s. car e-15 is fine. >> how far do you think we can go with ethanol in our cars, in most cars out there today? >> e-15 is where we're at today. it would require redesign of fuel systems. you have to actually look at every single part that touches the fuel in the car to go higher, so we're not prepared to really talk about anything higher today. it may be technically possible. but for today e-15 is what's okay. >> okay, thank you. i yield back. >> gentleman's time is now expired. chair recognizes mckinley for five minutes. >> thank you, mr. chair man. i'm curious from your testimony. i was just googling the federal trade commission, their website and their consumer division
within the federal ftc.gov says that higher octane gasoline offers no benefits. it won't make your car perform better, go faster or get better mileage or run cleaner. i'm trying to reconcile that with all the testimony we've been hearing and all this debate so who's right? federal trade commission? if it's not going to run cleaner, better, not going to improve the quality of our cars, are we doing this to redesign our engines? that's what we're going to have to do. our engines aren't designed to run on higher. i'm trying to reconcile what we're doing here. >> yeah, i can reconcile that. it's a true statement that if your entire vehicle, including the engine and the way it's calibrated, is designed for 87 aki pump fuel regular fuel
today. that putting premium in it will provide no additional benefit. what we're talking about is something very different. a coordinated fuels and engines together as a system approach in the future, and if we redesign the engines to take full advantage of the higher octane, calibrate them accordingly and introduce them in the market, then we can get the 3% benefit we're talking about. >> and the cost of retooling and re -- what can we expect that would add to the cost of the car, let alone the cost of the fuel? when we have to change our engines entirely, our whole fleet -- >> i'm curious about this. >> it's very costly. in fact, if we implement this system, oems such as general motors and ford would be investing billions of dollars to redesign engines, remanufacture
them at higher compression ratios to accommodate this fuel. the fact that we're willing to do that, and we believe this is cost effective relative to other greenhouse gas and cafe -- >> if i could, please, but you're going to pass that kooft on. that's what happens. >> we don't believe -- we're facing regulations for greenhouse gas and cathay. >> the billions of dollars are going to be passed on to the consumer, right? >> this is the most cost-effective thing that we can do. other things we'll have to do will cost even more. >> we'll have to have another conversation about this. let me -- the last question -- i want to digest that answer. the other question has to do with before i came to congress, apparently there was a row used to experiment with flex fuels. and we experimented -- congress must have passed that. what have we learned from the
flex fuel experiment in trying to improve the rfs? >> fuels and engines are a system and that's the most important message. it takes all the stakeholders working together to ensure success. to me that's really the lessons learned. we all need to go together and we have -- we need a framework and policies that really support that -- >> has the flex fuel system experiment -- did it fail? >> i think everybody can judge that for themselves. >> how would you judge it? >> i wasn't here at the time when it was passed -- >> did it work? was it a good investment? >> i don't really have an opinion on that. >> anyone else want to comment on the flex fuel experiment? >> it didn't work. >> it did not work. thank you. at least you're -- >> well, no. some of my members created the most expensive parking lots,
inconvenient spaces in history. first, most people didn't know that they had a flex fuel vehicle, surprising as that may be. number two, taking e-85 to market proved to be a disaster. people didn't understand it. they worried that they weren't getting the same value, even if you had to price it substantially below regular gasoline and you had to charge 50 to 70 cents per gallon less to have people buy it. so, no, it didn't work. >> anyone want to comment about that? >> -- what we talked about today. >> i would offer one of the important learnings from that experience that we have acted on, there is actually government public/private partnership on building out the infrastructure, is that one of the things you needed to make sure is that consumers had access to the fuel so that they could optimize the flex fuel engine. so one of the things that the biofuels industry has made a concerted effort to do since then is work with the retailers to build out the infrastructure for higher blends so that when
we have higher blends come available, consumers can access them in the market place. >> chairman, i yield back my time. >> gentleman's time is expired. chair recognizes gentleman from ohio for five minutes. >> thank you, mr. chairman, i appreciate it. important topic, especially in a large agricultural region and energy region that i represent in eastern and southeastern ohio. mr. columbus, do you envision any problems for stations continuing to carry today's fuels for existing vehicles while also introducing a high-octane -- a new high-octane fuel? is the transition a smooth one? >> today we have almost every retail outlet in the united states sells a premium grade of gasoline, has one offer for that. that is a 95 ron product.
as we go forward and we want to introduce and make the price of those gasolines go down, we will need to add, i believe, more ethanol, and that will drive price of that product down. today it is a specialty product and is priced highly. >> okay. do you envision gas stations in some parts of the country meeting a high-octane standard with more ethanol and perhaps stations in other parts of the country with relatively less? >> yes, sir. i think what you're going to see -- first, i want to remind everybody demand pool supply, build it and they will come only worked for kevin costener, it was a movie. we're going to sell what people want. in some parts of the country they want lower ethanol mixes. i don't know why. if you go to mr. cramer's part of the world today, you can go
get e-0 for 60 cents a gallon more than you can buy regular grade 10% ethanol. i don't know why people want to do that, but if the demand is there for lower amounts of ethanol, it will get served that way. but on a cost basis, i think you'll find it higher ethanol blends will be very attractive. >> okay. well, thank you. mr. thompson, what kinds of facility changes would refineries need to undertake to start producing high-octane fuels or blend stocks for high octane fuels? how much would they cost? >> well, it depends upon whether the program is phased in. so, in our world, in order to do this properly, the rfs would continue, would then phase out sunset. in the early years of the transition, it would cost our facilities very little because we can now produce 95 ron at the moment and we believe we can make enough to coincide with the introduction of the new vehicles.
over time, it would probably cost, you know, multiple tens of billions of dollars of investment to generate new sources of octane, the ability for us to generate that. and also the new bobs that would have to go along for higher levels of octane. so, this would not be cheap for us. and to a point that was made earlier, we're here not in a void or vacuum. we're here offering up a compromised solution to bad status quo. how do we make the autos comply with cathay and make rfs better. we're willing to make that investment because at the end of the day it's cheaper for consumers. >> gotcha, okay. mr. jesh key, how much fuel ethanol use do you expect this year, and the years ahead under the current rfs and how much more could a high-octane standard provide? >> we're going to use somewhere 14 plus billion gallons this
year, but we would hope to grow that because of increased blending as ms. skors pointsed out many times here. it all depends what this group, what this body comes up with for the rules and regs following. i guess i'm skeptical as ms. skors also petroleum refiners will use ethanol voluntarily. is a farmer a proponent of ethanol? as a person that used it in my vehicle since the '70s -- by the way, i have a briggs and stratton that's had e-10 in it ever since i bought it. i guarantee it will start the second pull every spring. these small engines can run on ethanol, even the old ones that weren't approved for it. but, you know, we need to grow that market for us to be able to expand our corn operation. i'm getting the same price when i started farming corn, was in the mid $3.
gasoline was 40 scents then in the mid 70s. today gasoline is 2.50 a gallon and i'm getting mid $3 for my corn. dynamics, i'm very, very vested in ethanol and trying to promote expanded use. that's why i very much want to see increased blending, not the status quo. >> very quickly, mr. thompson. you'd like to add -- >> there's been reference we're not using all the ethanol. we're using all we can use. there is a blend wall here. we are using as much ethanol of our existing auto we can handle. there is no place else for it to go. with all due respect to ms. scores, she's a wonderful advocate for her clients. not all cards can handle e-15. the gentleman from california can't sell e-15 in his state by law. most cars today are not warranted to run on anything higher than e-10. it's a fact. >> the gentleman yields back time. we're going to go to bill flores for five minutes, then recess
because i think votes were just called. i want to thank congressman flores. he's been an ally and a friend working on this together so i want to give him a lot of credit for that. >> thank you. we come at this from different angles but i think we're coming to a fairly common conclusion. for folks that are not in this hearing room, it is probably good we tell everybody how the numbers we're talking about today fit the numbers they see at the pump. today if you see an 87 octane at the pump, that's an aki octane, which went to 91 ron, right? and then so the 91 octane you see on the pump today is actually a 95 ron. just for everybody outside the room, i can it helps to reset we're not talking about reinventing the entire auto refinery ethanol complex here. miss skor, is there a value to raising the rvp waiver and what is that value, as quickly as you
can? >> so, eliminating -- >> yes. >> eliminating rvp, yes, you would allow a legal fuel to be sold year-round when most of the country it's not able to be sold in the summer months when families are taking their summer vacation travel. >> mr. columbus, do you agree with that? >> i do, sir. mr. columbus, what are the challenges -- well, we've got six states that don't allow anything above e-10 which is 19% of our gasoline demand in this country today. california, delaware, montana, new york, oregon, wisconsin. so this question doesn't apply to those states for some reason they don't like higher blends of ethanol. mr. columbus, what is the challenge of having an ethanol blend above e-15? >> it's the same challenge that e-15 faces in terms of market introduction. the overall impediment is the
infrastructure and how we regulate underground storage systems. >> okay. so if we go above e-15, we have whole new cost element for the consumer, right? >> retailers are going to e-15 now are doing that first and foremost in new facilities and rehab facilities. for the most part the existing infrastructure is not warranted or certified to take -- >> okay, i've got limited time. we're asking -- we had some panelists asking for mid blends, e-20, e-30, higher blends like that. there is a huge consumer cost to that if we do that, though, is that correct? >> i believe if we do it the way we've talked about, no. >> no, no. i'm talking about if we mandated -- let's say we mandated a higher ron, 95 or above, and also mandated it's got to be an e-20 or e-30, that's where you get into the higher consumer cost. >> if you do a performance specification as opposed to formulaic specification, the consumer will be best served.
>> okay. mr. nicholson, if we go to let's assume 95 ron, that gives us the ability to do a nationwide standard from california to maine which also matches the ron of europe. what are the benefits of that as quickly as you can share? >> for 95 ron, 3% improvement in fuel efficiency and reduction in greenhouse gases. >> so, you can optimize your engine so that whether you're selling for either coast, if you're selling your cars in europe it's all one standard which means better economies of scale for production and you have a lower impact to the consumer per unit, right? >> as i pointed out in my testimony, europe has had 95 run several years. consumers are getting those benefits. i think americans should get the same benefits. >> mr. thompson, we talked about several states have standards that prohibit us from going
above e-10 so congress decides to mandate a formulaic standard. we're going to have the challenge of meeting the standards in some states. one of things proposed, one of the comments thrown out earlier is refiners have been anti ethanol in so many words. if we raise the octane standard, why would anyone want to use the cheapest form of octane enhancement which is ethanol? why would that happen? >> they wouldn't. and i would like to point out that within my membership we have some of the largest ethanol producers in the country. >> right. >> and i will just mention when we look back -- and i said this to someone who worked three years at epa and is very familiar with these programs. if you look back where we've gotten in trouble as a country, it's always been when there has been a mandate or formulaic approach. >> right. >> it just is.
versus allowing and creating a performance-based approach to let the market decide the best way forward. >> so, again, to repeat where i started this conversation, when mr. barton yielded me some time, by going to a performance standard, everybody wins. the environment, our consumers, our auto manufacturers, our ethanol constituents, including the advanced and conventional folks. our marketers, retailers, refiners. everybody wins. so i'm not sure why we would want to do anything other than a performance-based standard. and i do accept the recommendations of ms. score that we do need to address rvp waiver. so in terms of legislative solutions, that's something we'll definitely keep in mind. thank you, mr. chairman, i yield back. >> we're going to recess this hearing and return after votes, and i know we'll a couple of us returning for that. so the hearing is recessed.
>> thank you all for coming back. we only had one vote so we'll get started. i'd like to now recognize the gentleman from michigan. five minutes. >> thank you, mr. chairman. what's the rfs standard for add fuel? >> say that again. >> what is the rfs standard for plane fuel? i'm going to get on a plane shortly. >> high octane, baby. >> high octane. i appreciate this, mr. chairman. i appreciate the hearing. we all wish it might not have been on a fly-out day. i, for one, i am a motor guy. living in michigan you've got to be a motor guy. but having an almost classic
camaro, glad to see gm here. but having an antique and classic motorcycles as well, including my harley, this is an issue of much importance to me. i've rebuilt engines plenty of times, but it's been primarily because of what i've done to them as opposed to an outside source that can have an impact. and i can't build my classic car engines and motorcycle engines again very easily, changing them from the ground up in order to deal with rfs standards, et cetera. so, this is important and i don't want them to be expensive doorstops that i can just look at. the camaro is downstairs in the parking lot in this building, and i enjoy driving it. and so this is important. let me ask you, mr. columbus, what can be done to ensure consumers are not misfueling their motorcycles, their boats?
i just recently had to buy a new outboard engine because of the destruction on my good old engine that served me very well. i buy premium zero for my outboard motors. i don't buy that for all the rest. i can't afford it for the rest of my vehicles. how do we deal with that? misfueling. >> the misfueling is going to take a combination of dispenser equipment and i think auto equipment. we are working with the cars and with the refiners to try to figure out what would be a practical and low-cost regime to protect people from themselves, if you will. >> well, not only -- i mean, if you have a pump with a single hose at it and you have whatever was used last left in it and i
come up with my harley, and i'm going to put two, three gallons in, a good percentage of that may be e-15 or whatever. >> unless it's marked e-15 it won't be e-15. it may very well be e-10. what i would suggest to you is you either go to the place that sells e-zero and that's easy for me to say to you. or, or you take a gallon can with you and fill it about half full with that e-10. >> yeah, i carry that on my motorcycle. >> right. look -- >> when i take a 1,000-mile trip, i'm going to carry a gallon can with me. i'm saying these are things we have to consider. i do wish, mr. chairman, we would have had representatives from the marine industry, the motorcycle industry here as well to talk about this because they're not satisfied that it's going to be for the industry that it's going to work. >> one of the things you might consider doing is talking to the epa about making its product
transfer documents regime a little simpler for people because there is an ethanol-derived fuel isobeutylene. it's a drop-in fuel. completely compatible. but trying to get it to the market, based on the fact that epa says you have to have product transfer documents that say you can blend it with that blend stock is really tough. >> let's be careful about this. let me go to mr. nicholson. thank you for being here. what is the investment required for auto makers to make the change to vehicles designed for high octane fuels and how much time will you need to do it? >> thank you for that question. as i said earlier, switching over all the engines to high compression ratios is going to be literally billions of dollars of investment spread across the u.s. car and other manufacturers. lead time wise, we need four years minimum and that's actually going fast when you think about making all those
changes. so if we were to get legislation this year, we think we could be ready for '22 calendar year or '23 model year. that's why we have a sense of urgency trying to go as fast as we can to get the legislation. >> what do you expect the fuel mileage is going to be and what will be the cost to the consumer? >> the increase in fuel economy from the 95 ron proposal we think is 3%, which is, you know, some consumers may not notice that, as much. but it's really substantial when you think about the cathay impact. and we think there's about a 3 to 1 ratio so you get three times more benefit than what the cost would be at the pump. we think this is an excellent value for consumers. >> this is the lowest priced way you think you can meet cathay? >> exactly. for now, this is the most efficient way of all the things that we're doing and considering, this is the most cos cost-effective one we have. >> gentleman's time expired. i remind gentleman we have -- with that i'd like to turn to gentleman from california,
mr. reese. >> thank you, mr. chairman. i know how it is when you sit on the committee and wait for the last person. i'm going to yield my time to mr. loebsack from iowa. >> you are very kind. recognize the gentleman from iowa. >> thank you, mr. ruiz, and thank you, mr. chairman. thank you for letting me be waived out of this. i have to think of something to relieve mr. ruiz with. because that was very kind of him. listen. i think we all know the future much america's transportation fuels is an important topic going forward, and i've really enjoyed the debate today, such as it's been. we've had some positive moments including yesterday when the president publicly supported allowing year-round sales of e-15. we want to make sure that he follows through with that. going forward, that's an issue i championed congressman smith from nebraska. we've had legislation he introduced on that front, but i do have some -- there have been some seriously concerning
moments when it comes to these kinds of issues. we've seen recently some reports about the waivers the epa has granted to small refiners, so-called small refiners, to release them from their obligations under the rfs program. one of the problems is that these waivers have occurred sort of under the cover of darkness, too. it hasn't been an entirely transparent process, and i brought that up with energy secretary perry, as a matter of fact, in the very same room. essentially they've amounted to giveaways by the epa to some of the nation's most largest, most profitable refiners. as you all can imagine and farmers in iowa have expressed significant concerns about these reports to me directly, as a matter of fact. and these concerns have been echoed by many including the secretary of agriculture himself, sonny perdue who stated the waivers reduce the statutory volume gallon for gallon
essentially. so, it's become quite clear to me that this action does constitution a demand reduction and a destruction in effect, and a reduction, if you will. i can only imagine how harmful this will be to iowa farmers, illinois farmers to the industry all the workers in the biofuels industry that we don't think enough about, i would argue. so ms. score, i'm really happy to see all of you here today. i want to ask a couple particular questions if that's all right. do you believe that the epa is misusing these hardship waivers? >> absolutely. we would agree with our secretary of agriculture as he said that. there are a few very troubling things about what is taking place right now. one is this is under the cover of night so we don't know how many refiners are getting waivers and we don't know the justification. from the reports that we've seen just for 2017, mr. pruitt has quadrupled the historical relative numbers of waivers
granted. and the impact of the behavior we're seeing coming out of epa is you're taking over 1 billion gallons of demand out of the marketplace. every waiver granted is a gallon of biofuel that is not blended. >> right. and as i said, we did have secretary perry here yesterday, and i did ask him about that, because by law the they are supposed to consult with the eoe about that. he wasn't specific about that consultation so i submitted a number of questions to him in terms of how often this has happened since 13 so he can get back to us and we want to know specifically when it happened. so you mentioned about 1 billion gallons, you think, of biofuels? >> over 1 billion gallons. and that is moving us backward to about 2013 blending levels. so with these steps, we have moved back five years, and turned back the clock on the progress of the rfs. >> that's very disconcerting obviously. is it jowski? >> correct.
>> it appears to me the biofuels industry and agricultural groups have not yet identified what the right path forward on octane is. would you agree with that? >> yes, i would. >> how about you? >> yes. >> and just make sure everybody here keeps us up to date on what's going on. i know the committee is going to be kept up to date, but we want to make sure we're in touch with all the stakeholders really. i've only asked questions of two folks, but i am concerned that this be something all the stakeholders do take into account and have some input on going forward. i would agree with the chair of our committee that while i was not here in '05, clearly things have changed here in america. we still have a lot of the -- same concerns around the rfs and why we have the rfs in the first place. and part of it is i don't want
to send relatives to fight in the middle east in conflicts where oil is at stake. we do have a national security issue here. one person from illinois told me a minute ago confidentially in a conversation, this is about food and agricultural security, as well. we have to keep that in mind going forward. thank you, mr. ruiz for allowing me to go ahead. >> gentleman yields back his time. we have a few of those on the committee. mr. olson for five minutes. >> thank you, mr. chairman. and before i talk about the rfs, i want y'all to note that a very important thing happened about two hours ago in this committee. our chairman proved he is a want-to-be texan. he keeps saying y'all and texas bigger is better. so under that recognition. he is my mentor.
he gave me a shimmy. a bobblehead shimkus. i am going to put a cowboy hat -- >> can i have your time? >> welcome to texas, mr. chairman. i want to be serious. as y'all know, i have some deep concerns about going forward with the rfs as it stands today. it was designed for a very different american energy environment. we were an importer of oil and gas. now we are an exporter. i think it stands as a very flawed mandate. one problem i have with the rfs is severe cost it's placed on smaller, independent refiners like cvs which is headquartered district, sugarland, texas. for that reason, i worry about the potential cost of upgrade for newer high-octane fuels.
mr. thompson, could you talk about what sorts of projects or changes we have to make to move to a higher octane fuel, and what that might cost? would that be doable for small refiners like our guys in sugarland, texas? >> well, a couple things. we're very proud of cvs as well, chs, small refiners. they are supportive of me being here today and talking about higher octane for sure. initially moving to a higher octane standard, there would be little investment required because we have the capability to deliver the volumes that a new fleet of automobiles would require. over time it would require investment. a preliminary analysis would be literally tens of billions of dollars to develop new ways and new capacity for octane sources. i can't get into the specifics
because every refinery is different as you know and there are different ways to increase octane. each refinery would have to look at its operations. this would be a major investment and the only reason we're willing to do it would be to make this requirement every year to comply with the rfs which is doing very little to help consumers. >> i stand corrected, not cvs, cbr. one final question. this came up with mr. perry yesterday. he said he spent a lot of time in iowa in 2016. the white house said it is an important place to spend a lot of time there. he had a lot of dealings with ethanol, obviously a corn state. he said his perception was the people care a little bit about where the ethanol goes, what gas tanks, but they don't care too much american, oversees, they put their ethanol in the gas tank.
he brought the idea of exporting our ethanol. any thoughts about that? mr. ditzky? it popped in my head yesterday. it may be a viable answer to what we have now. >> someone who sits on the committee is looking at mexico and very involved with corn grower check off -- figure out how they might replace mtbe which i know is a favorite of some of you. and that is used in mexico now extensively. but looking to possibly replace that with ethanol. we are looking at all export markets to try and grow our demand so that is currently going on. isn't something that would be brand new. >> ms. skor, your thoughts on
importing to mexico? >> we are thrilled mexico has opened its markets and we are been in regular conversation with government and industry there. i would say that exporting home grown renewable fuel to mexico is wonderful in addition to making sure that we are taking advantage of this home grown renewable fuel in our back -- backyard. >> thank you. my time is over. it's time to mosey on down the road. i yield back. >> i think the gentleman did say a small refinery in texas. didn't you call it a small refinery? >> it's in kansas actually. the refinery is in canvas. >> the headquarters of a small refinery is in texas. refinery. wanted to clarify for the record. now like to recognize the gentleman from georgia, mr. carter. >> thank you, mr. chairman. i don't know how to follow that exchange, nevertheless i will do my best. thank y'all for being here. let me tell you, i represent the entire coast of georgia.
i have over 100 miles of coast line. my concern in this hearing today is mainly about marine engines because we're having a lot of problems with the new bends, degradation on our engines. it's a concern i have. the properties more closely resemble that of gasoline than ethanol does. it has more of or less of an impact, less of a negative impact on engines. in fact, the national marine manufactures association and the boat and yacht council underwent a five year study with the department of energy studying this. what they have come up with, comparing it to ethanol and that study said that the similar biofuels have a higher energy content and similar emission properties and reduction properties while lowering the degrading properties on the engines.
have you heard of this? have anyone heard of this? >> yes, sir. >> mr. columbus, yeah, that's fine. >> i have. producers of isobutenol are eager to work something out with epa so they can put their additive set for -- they have to go through a whole process. anything you can do -- >> the problem is something we need to be addressing here in congress? >> there is a regulatory impediment to taking their product to market in an efficient way and my bet is they would be thrilled to hear about this. >> i didn't realize that. can it work?
do you think this would be better? >> look, it is a different thing than fuel ethanol. can it work? sure. it is a relatively small production item to date -- >> all right, can i stop you there and ask you. relatively small production today. how are we going to get it to market, then? it's not going to do any good if we can't get the product to the people. >> you will get it to the market to the people the same way ethanol that's gotten to market. it will go by train or barge. and it will -- >> but i'm talking about demand. if there is not enough demand for it. >> i think what you just said is if it's marketed properly in the marine community, there will be plenty of demand for it. how it will get to that market will be the same way ethanol moves or any other component -- >> i understand the transportation. i'm just looking at it in terms of the economics.
you know, if there is not enough of a demand, i'm afraid it's not going to get to the people. >> they think there is enough demand to get to the people. they are trying to figure out the regulatory impediment. >> let me ask you, mr. columbus, about how it's marketed. when i say that, let me ask you something. you know what e-88 and e-15 mean to my wife? absolutely nothing. >> yeah. >> and yet we have this problem with marketing and that's a big concern of mine because we've got a number of consumers who are using these fuels inappropriately and putting them in marine engines and it's causing them significant problems. >> with due respect, i cannot help them if they will not read letters that are this big on the
pump that say don't do that. >> i get it, i understand it. at the same time can we do a better job in processing it? >> i think all of us have down what we can when we rolled out -- when we roll out a new fuel, epa undertakes an effort with the refining community, with the marketing community to educate consumers. i cannot help people who will not read these things. i know that sounds hard, but what you're finding out is the number one thing people buy gasoline on isn't what it says on the pump. it's is the big stupid price sign. it's what is -- >> absolutely, i would agree with you. >> if they are prepared to put
their second most expensive asset at risk for 3 cents a gallon, it's a choice. in the '70s, i watched people carve out fill pipe restricters to put leaded gasoline in a car meant to take unleaded, because they said the leaded gasoline you let me buy at your outlet poisoned my catalytic converter. when i registered my car, cost me a thousand dollars. i can't help those people. >> mr. columbus i'm with you. i think it's a valid point. with all due respect, we and the industry can do a better job in helping by simply using better marketing and -- >> the gentleman's time is -- >> excuse me, i'm sorry, i didn't realize that. i hope you understand my point. >> i understand the problem, mr. carter. yield back. >> gentleman yields back. we have agreement by my friends on the minority side to be able to go to one more round if that's okay with you all. obviously there's only a few of us left.
so i don't think it will take that long. i'll recognize myself in the final round of questioning. this is where we need your help. there are a lot of things we need to hash out. so, understanding run fuel can be produced different ways by different refineries, can you estimate how many billions of gallons, not now, help us provide this information, estimate how many gallons of ethanols would be used to produce e-0, e-10, e-15. we had conversations the last couple days. we need to know that. you can do it collectively, pier reviewed. we need those numbers. the other thing that popped in my mind is if the vehicle fleet
transforms or starts moving 7% a year, whole passenger vehicle -- except for my very old car that i drive, there are few outsiders there. 13 years, right? so, i don't know if it's possible, what happens in this 13 year transition to a high octane standard and where are the billions of gallons of what we hoped would be ethanol home grown produced in america, right? we just need numbers. you can do it collectively, peer reviewed. you want to do it separately we'll fight about the numbers. formulas are formulas. we need to find variables. we just need that help and i would ask that you would do that. another question is -- here's a question, not just a -- whatever the high octane standard is set at, would you imagine a higher market for higher octane fuels above that level?
just go through and i have a follow-up to that. >> yes, sir, absolutely. if you take a look at the way fuels developed over the last 70, 80 years, you'll see there is always, somebody at gm is going to say if you want it to pire like a kitten. we anticipate 95 run will ultimately become the floor. >> ms. skor? >> there would be a greater opportunity for octane in the country. >> mr. nicholson. >> first, i'd like to offer that u.s. car could be the broker, to do the analysis that you would talk about. we would work with everyone on
the panel to do the peer review so we can get back to the committee, to anybody on the panel that would leak to be part of that. for sure there will be premium fuels on top as there are today. as mentioned, corvette would like to use the development, as well as luxury cars. i would say there could be even more demand in the future given the very difficult cafe regulations that are in front of us. oems actually have an incentive to specify with the regulators from doing that. what prevents us from doing that today is the cost prohibitive and most customers except for performance vehicles just won't put up with that. >> great. mr. jesse? >> i hope we look to the higher
blends, higher octanes because i think concern for the environment will not get less. i think it will continue to get greater and greater. the higher octane fuels will help them achieve those goals. >> we are willing to offer it as a floor and not a ceiling. let the market decide where it should go. i'll note e-15 and e-85 have been around a long time, consumer preference has decided where those products go. the consumers are going to decide where they go. >> great, let me finish with this last one. what regulatory actions would be needed to make the extra high-octane fuel available? >> you have to have a modification of the one-pound rvp waiver. i think you have to let the
infrastructure evolve and storage tanks in the epa or the latter which i don't believe any of you are going to be prepared to do. i think we support will build out and it will build out earlier because they will see down the road there is a return. i look at my colleagues. can i finish this question? ms. skor? >> i want to clarify what's most important from the consumer perspective when you're looking at the pump, it's access. when they have access to e-15 and 5 to 10 cent gallon savings, what we see is they embrace it. if you look at the sales of e-15 when consumers have is access. but the most important point
there is access. vapor pressure, you grant that and allow full-year sales. that is one of a few impediments that we need to allow consumers to be able to access higher blend and better for the environment fuels. >> mr. nicholson? >> i would say perhaps, a national standard for a premium kind of fuel might be a facilitator for a market demand for such a thing. should be from my point of view performance base standard. but the 95 run could be the regular fuel and a standard for a higher one. that's a good idea. we need some cooperation from the e.pa. our vehicles are certified to the 9.0 psi rvp certification fuel. it needs to be ensured this requirement is met regardless of fuel composition. the proper evaporative, we have to work out the details, but i think it could be done.
>> i'd point to the points i made in my opening statement. >> very good. mr. thompson. >> quickly, i can't help myself. access, refiners, we own less than 4% of the retail stations. we don't control access. mr. columbus can attest to that. the notion that big bad oil is presenting access is simply not true. if i understand your question about how do we get there, we will be committed to a 95 ron standard. >> i think it was -- 95 is the floor, what would be the regulatory actions we need. the issue is epa has mechanisms now. epa got to the market without a big overhaul of the clean air act. epa has mechanisms now for certification fuels to get authorized. i would say go through the process. >> thank you.
and i'll return the balance of my time and again thank my colleague for allowing us to go a second round. yield back to the chair. >> as i understand it, any and all cars on the road today can use premium fuel? >> you said can they use premium? >> well, yes, they could. >> when gm creates this new vehicle, this new engine, they are recommending use of premium. but what's to -- you're suggesting it runs better. what is to deny the consumer from fueling up with regular without damaging the engine? so, basically if it's a choice of premium or regular, cheaper
or more expensive, how do we guarantee that any benefits of that premium use will actually be realized? >> thank you. i want to go back to mr. mckinley's point. consumers could do that. i don't know anybody that does that. putting premium in a regular fuel vehicle doesn't get you any benefit. what we are proposing is not premium fuel. it's a high-octane fuel for new greenhouse gases. we still have to deal with the misfueling issue. if someone were to generally use the new 95 run fuel in a 2018 model regular vehicle, there would really be no problem. they would have higher octane, but it would be very little benefit because the vehicle wasn't designs for that. what we are proposing is engines are designed and they use the new fuel.
now, if someone -- the misfueling, they use regular fuel for a 95 run. that's a remaining issue. we have risks we need to work on. >> so, do you then require premium, not recommend it? >> well, we require the new 95 ron fuel. we need all oems to go together to do that. the analogy is maybe the way we switched from unleaded fuel to leaded fuel. >> you're recommending. >> exactly, it's going to be required. we need all the os to go together. >> thank you. the gentleman yields back his time. the chair recognizes the gentleman. >> thank you. you are recommending we have a year round blend of e-10 and above -- well, any blend, is that correct?
>> that's correct. >> mr. columbus, would there be any problems with that from your constituents' perspective? >> what we propose is a waiver of any fuel that has a -- you can go up to e-25 or e-20 or so. there is an infrastructure problem. it's no fun to talk about underground storage tanks. nobody likes that. and nobody sees them. at well over 60% have changed hands. most of the tanks, the owner doesn't know exactly what he's got. so, the impediment to take in the fuel on through is if it's a violation of the resource
conservation recovery act to store e-15 or e-20 in an underground storage tank an owner/operator has warranted not to be compatible with the blend. >> let me come back to the original question. is there a downside to having the the rvp one-pound waiver for your constituents? >> no, sir, no, sir. i didn't mean to cut you off. i know the chairman will eventually. mr. nicholson, is there any problem for your constituents, for u.s. car? as i indicated our vehicles are certified for the noncertification fuel. this requirement needs to be met regardless of the waiver or not to ensure the system. would your -- you asked for it in your testimony if i recall. >> that's correct. >> is there any problem with your constituency?
all blends? >> we're willing to entertain the idea as part of a comprehensive rfs solution. >> that's where i'm going with this. >> we would not be too keen to the idea, as has been reported yesterday, in exchange for nothing because, you know, that's not something we're interested in. we're willing to put it all out on the table. we've been very candid. >> that's what i'm talking about. i'm trying address the needs of the broadest constituency possible, i mean from the microsoft to the consumer to all the sweatcies at the table. the next question is, if we don't do anything we have a status queue and i think several of you complained about the way the epa has adjudicated the rfs.
so do all of you feel like a statutory solution is the better outcome here than where we are today? mr. thompson, i'll start with you. >> absolutely. >> i couldn't answer that. i guess without consultation. >> mr. nichols? >> we believe the legislative solution would be really helpful to the overall process to make sure that all the parties are coordinated, which is really important. >> miss skor? >> i believe a conversation about high octane fuels can and i'm glad that we're having that. i also believe that conversation can have outside of any conversation to do with renewable fuel standard. this body can move us towards a path towards a national fuel standard. would you repeat your answer? say that again. i want to make sure i can drill into this one. >> i applaud the conversation today about moving towards a
high octane standard, but this body can move towards that goal without touching the renewable fuel standard. >> okay. all right. but let me say this. is what we're looking at in terms of a statutory solution preferable than what we have today where you have the epa that you already said today you don't like? >> i would not say that a statutory action is preferable to the situation. i think the challenges with epa are on the administrative side and we need to make sure epa is implementing as ordered by congress. >> this is not unique. this is going on years prior to this administration. >> we have different challenges most recently, yes. >> mr. columbus. >> my answer is yes. my concern about what's going on, the status quo. because of the things that have been going on there's a significant amount of uncertainty in the market.
and commodities markets really like certainty. when there's uncertainty you see ovals go up, down, sideways. people involved in the system get caught in a box. we think you should move forward and we like the high octane solution as a good place to start. >> can i indulge the chair to give me one more minute >> without objection. >> okay. thank you. so my final question is this. mr. nicholson, this is for you. i'm glad there's a fight in terms of worldwide propulsion for gm. can't wait for you to build me a tahoe that gets 37 miles per gallon. we're talking about something that's broader than the u.s., possibly here. when we talk about worldwide impact. you say there's a 95 ron standard in europe. if we have one single nationwide standard in the united states for 95 ron what other countries would likely follow on which
would make u.s. car and u.s. refining and u.s. ethanol, all the consumers on the same page. >> europe has proven 95 ron is a great solution. delivers efficiency. i think as i said earlier i think americans deserve at least as good a fuel as the europeans have. i think by historical patterns, let's say there's high likelihood canadian and mexican would follow. >> so we could set a new emissions profile for the entire north american continent. >> one national standard would provide leadership and show leadership that would likely be followed. >> thank you for your indulgence. i yield back. great hearing today. >> the gentleman yields back his time. seeing no further members wishing to ask questions, i would like to thank all of you for being here again today. before we conclude i would ask unanimous consent to submit the
following document for the record. a letter from my friends at the renewable fuel association. no objection. so ordered. i remind members they have ten business days to submit additional questions for the record. i ask witnesses submit their response within ten days except for that probably lengthy review of doing gallons that will take longer than ten days i assume. without objection the subcommittee is adjourned. isobutenol anol
>> marijuana policy is the subject of discussion today with former rhode island congressman patrick kennedy, public health officials and others. the event hosted by smart approaches to marijuana begins live noon eastern on c-span 2. on c-span this afternoon live coverage of former first lady barbara bush lying in repose for a public viewing at st. martin's episcopal church in houston. she passed away earlier this
week at the age of 92. coverage begins at 1:00 p.m. eastern again on c-span. the funeral service is saturday and can you watch as mourners talk about the life and legacy of former first lady barbara bush and that will be live saturday at noon eastern on c-span. this weekend c-span's city tour takes you to asheville, north carolina. we'll explore the literary scene and history we visit the boyhood home of thomas wolfe. >> there's over 200 characters that we can connect that thomas wolfe knew as a boy. told some secrets which you shouldn't do in a small southern town.
>> go inside the grove park inn where f. scott fitzgerald stayed during the summers of 1935 and '36. he came here most importantly to recover that muse. he wanted to write again but needed something to write about. when he game to the grove inn he wanted to find stories in the people that were staying here. >> on sunday at 2:00 p.m. eastern on american history tv we tour the largest home in america, the biltmore estate. >> a home with more than 33 bedrooms for guests and family. 65 fireplaces. an incredible massive staircase. just architectural beauty surrounding the home. >> we'll visit the late pastor billy graham's asheville religious retreat the coffee. watch c-span's cities tour
saturday at 11:15 eastern on c-span's book tv and sunday 2:00 p.m. on american history tv on c-span 3 working with our affiliates as we explore america. a senate commerce science and transportation subcommittee held a hearing with state and local officials to assess surface transportation infrastructure funding. they discussed the administration's infrastructure proposal and how it compared to rural needs and freight requirements. this hearing is about an hour and 15 minutes. good afternoon. i am pleased to convene the senate subcommittee on surface transportation and merchant marine infrastructure safety and security. our hearing today titled
rebuilding infrastructure in america, state and local transportation needs will give us the opportunity to better understand the state of our surface transportation infrastructure. many of us hear from our constituents about the poor state of infrastructure in the united states. their concerns have been confirmed by numerous study, including the often cited infrastructure report card from the american society of civil engineers, which gave us u.s. infrastructure a d plus in 2017. research by the american transportation research institute shows that congestion