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tv   Fuel Economy Gas Emission Standards For Vehicles  CSPAN  June 1, 2018 5:44pm-8:02pm EDT

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about how right to try will allow terminally ill patients access to drug treatments that are not fully approved by the fda. then popular mechanics on how the carrier plant in indianapolis is faring following trmp's efforts to keep the factor's jobs in the u.s. be sure to watch c-span's washington journal, live at 7:00 eastern, saturday morning. join the discussion. >> now, a hearing on options to make high-octane fuels and high-efficiency vehicles more available. members of the house energy and commerce subcommittee on the environment heard from representatives of the oil, auto and agriculture industries. this is t2 hours, 15 minutes. >> i ask all our guests today to please take their seats, and fek
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w -- if we can get the doors being closed, thank you. the subcommittee now will come to order and the chair will recognize himself for five minutes for an opening statement. the subcommittee has jurisdiction over the epa program effecting fuels and vehicles. most significantly, the renewable fuel standard, as well as the corporate average fuel economy/greenhouse gas standards. at our march 7th hearing on the future of fuels and vehicles, we had a chance to learn more about the trends impacting person transportation in the years ahead. one takeaway was is that although electric vehicles will continue to make inroads, the internal combustion engine will still dominate the market for another three decades or more, as will petroleum and agriculturally-based liquid fuels to power these engines. for this reason, the cafe greenhouse gas programs will continue to have a significant impact for years to come. one potential flaw with the rfs and the cafe greenhouse gas is
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that the two programs have never been fully coordinated with one another. the rfs doesn't necessarily give us the liquid fuel formulations that maximize energy efficiency and the cafe and greenhouse gas doesn't necessarily result in the kinds of engines that make the best use of the biofuel blends. fortunately there's new research underway to do better coordinating these programs. at the march hearing, we learned about doe's initiative looking to maximize efficiency by using high-octane fuels and engines specifically designed to run on these fuels. this could benefit everyone. today we seek to get the high-octane policy discussion underway in earnest and i welcome our witnesses. high-octane fuels can improve fuel economy and engines, optimized for them. for automakers, it is also
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relatively low-cost tool to reduce miles per gallon. and it also may be a pathway to use at least as much if not more ethanol than under the rfs. but make to mistake, this is a major undertaking. and i say that respectfully. for one thing, we must deal with the proverbial chicken and egg conundrum. we can't expect refiners and gas stations to invest in new fuel unless they know that cars will be manufactured that will run on it. and automakers don't want to commit to new engines until they know that the fuel will be widely available. significant investigation dollars and a great many jobs may be at stake. and there are a lot of details yet to be decided, including exactly what the high-octane standards should be. how many years refiners and automakers needs noin order to make the transition and what gas makers must do in order to provide this new fuel for new
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vehicles, while still carrying the old fuels for existing vehicles. we also must figure out what other legal and regulatory provisions may need to be revised or repealed in order for high-octane transition to work. and most importantly of all, we need to make sure that we do what we do is of a net benefit to consumers. one point i do want to emphasize, this hearing is not a discussion on epa's midterm evaluation or the calf faye greenhouse gas standards for model years 2022 through 2025. regardless of the outcome of that process, we know for certain that fuel economy standards are going to continue increasing from where they are today, and that automakers will need every cost-effective option for complying. high-octane is one such option and is worthy of serious consideration. and today i hope we can get a constructive dialogue underway. thank you and i have a minute left. anyone seek time on the majority side?
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if not, i would like to recognize the ranking member of the subcommittee for five minutes. >> thank you, mr. chairman. and thank you, chair witnesses, for joining us this morning. i would like to thaink all of te subcommittee's hearings are high octa octane, but none more than today's -- it's 9:00 -- which will focus on the challenges and opportunities of high-octane fuels and vehicle efficiency. last month, we heard broadly about the future of our nation's transportation fuels. we learned more about doe's co-optimization program which is setting how to make fuels and engines in tandem that will make our vehicles more efficient. today's panel represents a cross-panel of the transportation sector. refiners, vehicle manufacturers, fuel producers, and retailers. this hearing comes as the administration and some members of the congress have considered changes to our existing fuels and fuel economy policies. earlier this month, the epa administrator, scott pruitt, determined that emissions standards for model year 2022 to 2025 light-duty vehicles should
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be revised. epersonall personally, i do not believe this decision is justified by the technical record. similarly, discussions on how to reform the renewable fuel standard continue. in both cases, we must be mindful of the fact continues. greenhouse gas pollution has become the nation's largest source of emissions and needs to be reduced. currently refiners blend additives into gasoline in order to increase octane level. a number of today's witnesses will express support of a 95 dock tan number which will be similar to fuels sold today that generally cost about 50 cents more than regular unleaded. before we sign up for upending the policy shift. we need to better understand the consequences of it type of change. it would impact all transportation stakeholders, including those represented on the panel and also most
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importantly consumers. during any fuel transition period, i believe it is natural that consumers will graph tad towards the cheapest fuel option. it's critical to consider how consumers will deal with any potential cost increase or confusion around misfueling. the other issue is to consider is how an octane standard would interact with rfs. a wide variety of views on the rfs. i believe in some ways it has been successful in achieving its stated goals, and in others it's fallen short, particularly in the development of advanced biofuels production. in this case the question i find most important is will moving to a high octane fuels standard do a better job of incentivizing advanced biofuels. i think probably not. one success of the rfs has been reduction in carbon pollution. the rfs supports fuels that are less carbon-intensive than
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gasoline. but unless there are certain requirements it is my understanding that a 95 ron fuel would not necessarily be guaranteed to use ethanol or other low-carbon biofuels. and could potentially increase the carbon intensity of our nation's fuel supply. we should consider how best to insure a transition to higher octane fuels, does not permit a back slide on the gains that have been made to improve air quality and reduce carbon emissions. similarly, how would this standard interact with cafe standards? there's potential for higher octane fuels, coupled with turbo-charged engines to help achieve fuel economy standards. i don't think this can or should be done without the certainty that these standards will continue and continue to be strengthened into the future. i don't agree that our nation's existing fuels and fuel economy programs are as problematic as some here. but i'm sure these programs can be improved and i'm open to hearing ideas that seek to further the goals of these programs without eroding the
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progress that has already been made. once again i want to thank our witnesses for joining us this morning and i look forward to hearing your testimony. mr. chair, again thanks for the hearing and i yield back. >> the chair recognizes the chairman walden for five minutes. >> i want to welcome our witnesses for being here and all of those who have been so engaged in this issue. the energy and commerce committee takes our obligation seriously to get the fuels and vehicles policy right. it's about time. the vehicle and the gas it runs on is a major expense for households, as well as millions of small businesses, farms and ranches and the many companies that produce and sell fuels and vehicles employ millions of americans as we know and range in size from major automakers and refiners to small companies like red rock biofuels, which is looking to help reduce the risk of wildfire in our forests by converting woody biomass into biofuel and jobs for the rural areas in my district in
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lakeview, oregon. getting the policy right isn't always easy. especially with complex and sometimes contentious issues like renewable fuel standards and vehicle fuel economy standards. today we explore how to improve fuel economy by transitioning to higher octane blends and vehicles whose engines are designed to maximize efficiency from those fuels. we can incorporate more ethanol into fuels supply while also increasing miles per gallon. first look it seems like an elegant way to make both the rfs and cafe standards work better together. of course whenever something sounds too good to be true it very well may be. so we need to kick the proverbial tires of this policy idea before moving ahead. and that's the purpose of today's hearing. we need to be especially mindful of the consumer impacts, we want a policy outcome that brings down the cost of driving, so questions about the impact on the price per gallon at the pump and on sticker price of new
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vehicles will need to be addressed as well. as will questions whether this is the most cost-effective means to improve fuel economy and reduce emissions. while looking at these concerns, we also need to consider the upside potential of high-octane fuels and vehicles. i look forward to the discussion today. and i would thank the chairman of the subcommittee and others who are putting their shoulder to the wheel here, this is a priority for me, it's a priority for this committee. it is a priority for the country. and we intend to move forward one way or another. so we appreciate that you all take that seriously as we do. and we look forward to having everybody at the table and working this out this year. with that, i would yield back to the chairman of the subcommittee. >> gentleman yields back the time. the chair recognizes the ranking member of the folk committee. >> thank you, mr. chairman. some will say that establishing a high octane fuel standard can serve as an alternative to the current renewable fuel standard or rfs program. but others have very different
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viewpoints, today we'll hear both sides and review whether moving to a high octane standard can satisfy enough stakeholders to move forward with rfs reform legislation, i remain skeptical. as with any policy, the devil is in the details, here's a few of my questions. first at what octane level would we set the standard? second, is it a performance standard only, or would we retain some discretion to designate clean and renewable fuels as a source for that octane? and third, where would advanced and cellulastic biofuels fit into this program. fourth what engine modifications are necessary? how quickly can they be integrated into new vehicle models and how would consumers be affected and how would it affect workers in the refining, automotive and agricultural sectors. these questions make a big difference in how stakeholders will be impacted. unfortunately today's pam does
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not come close to addressing everyone involved. reduce dependence on fossil fills, promote rural development and deliver environmental benefits, while it achieved many goals, especially in air quality, the record on environmental benefits of the rfs is mixed. high octane fuel standards may or may not deliver environmental benefits in terms of air quality, greenhouse gas emissions and resource use this is critical, particularly in light of last week's announcement by epa administer scott pruitt that the trump administration was going to roll back fuel efficiency standards. continued growth of greenhouse gas emissions in the transportation sector must stop and fuel economy must improve dramatically. a policy change that extends the dominance of fossil fuel use of transportation that slows improvement in vehicle fuel economic standards or keeps us on the path of increased carbon emissions in the transportation sector is unacceptable in my opinion and the current rfs program is not perfect.
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in the past few days we learned that this administration's implementation from the rfs is far from perfect. i have serious concerns and questions about administrator pruitt's extensive use of secret waivers to allow numerous refiners of all shapes and sizes to get out from their obligations under the law. i support the judicious use of waivers as appropriate under law to relieve the burden on small refiners facing hardship, however the secret waivers by administrator pruitt go beyond the scope of the law to include refineries that neither small nor in financial address. that's not the way to address problems with rfs implementation. we must evaluate this proposal against the successes and shortcomings. the rfs has encouraged a great deal of investment by companies and individuals throughout the entire transportation agricultural and biotechnology sectors. without careful consideration and analysis, we risk severe disruption and hardship for businesses, farmers, workers, consumers, and the environment. and trading one set of problems
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for another is simply not progress. i know this is going to be a valuable hearing and i thank you, mr. chairman, and our ranking member, for doing this today. thank you. >> i thank the gentleman. we now conclude with members' opening statements. the chair would like to remind members, all opening statements would be made part of the open record. we want to thank all of our witnesses for being here today and taking the time to testify before the subcommittee. today's witnesses will have the opportunity to give opening statements followed by a round of questions by members. we'll just begin, first i would like to recognize mr. timothy columbus, general council society of gasoline marketers of america and the national association of convenience stores. sir, you have five minutes. you're now recognized. >> i think we have to turn the mike on. it's probably one of the issues. >> it's why emily is my friend.
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she helps me with these moments. my name is tim columbus. i'm a law firm, i appear today on behalf of our clients, the national association of convenience stores and society of gasoline marketers of america. these represent over 80% of fuel sales in the united states. as a result of, as mr. tonko knows, my favorite term, the big stupid price signs, that market is the most transparent and price competitive commodities market on the face of the earth. simply stated, retailers want to sell products in a legal way to people who want to buy them. they don't buy them because we sell them. we sell them because they want them. because they do not manufacture the products they sell, they favor, as do all buyers, deep diverse markets behind them from which they can obtain supplies. in that context, the rfs has in fact diversified the markets from which our members purchase product.
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as i told the members at their first roundtable on this issue, retailers seek peace in valley. we believe the concept that's being proposed today offers perhaps a path to achieve that objective. implementing a program which all new cars would be required to run on higher-octane fuels, a performance standard, would have the following salutory effects in our opinion. number one, consumers would benefit from, a, higher mileage, and b, that the cost of fuels would be driven down based on the economic advantage of their component parts. today, the cheapest octane on earth is in fact ethanol. i believe this opens a substantial opportunity for ethanol and that that can in
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fact lower the cost of motor fuels overall. number two, environment would benefit from decreased auto emissions. high compression engines are more efficient. we get better mileage and we spew less stuff into the air. it's a technical term, stuff. fuel marketers would benefit from a continued and evolving diversity in supply which will drive down their costs and therefore the costs of their customers. i believe fuel manufacturers would benefit from their increased ability to supply products which are marketed based on their economic efficiencies in relevant markets rather than based on a formulaic approach. retail marketers in particular, the specific benefits of this approach i think are the following. the change in the product mix would occur over time. that results in at least at the outset minimal if any need to modify existing infrastructure. r.o.n. 95 is in the market today
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and available in virtually every retail market in the united states. by insuring an ever increasing market for those fuels, marketers would be in a position to make a decision to invest knowing there's a demand for the product that requires the investment and they would be able to achieve an economic return. by opening the market to few newels and properly allocating responsibility for compliance amongst manufacturers, marketers, and consumers, retailers will have the option of introducing new fuels to the market to meet consumers' demand for those fuels. in conclusion, we believe the concept being discussed today offers all of the stakeholders the benefit of going folder based on a performance rather than formulaic standard. it has been my experience that when manufacturers face a performance standard, it is the instance in which the great american competitive genius has produced the best economic
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results for the consumers and all of us who serve them. we congratulate the subcommittee for holding this hearing. we urge you to move forward in an effort to alleviate the ongoing plague of industry squabbles and enhance the efforts of fuel consumers in obtaining the most cost-effective fuels for their vehicles. thank you, i'm happy to answer any questions that these comments or my statement may have raised for you. >> gentleman yields back. the chair now recognizes emily, chief executive officer of growth energy. welcome. you're recognized for five minutes. >> good morning. chairman shimkus, ranking member tonko and members of the subcommittee. thank you for the opportunity to discuss the contributions of ethanol to high-octane fuels and future vehicle fuel economy standards. my name is emily skor and i'm
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the ceo of growth energy, america's leading biofuels trade association proudly representing 83 companies, and tens of thousands of supporters across the country including in illinois. we work to bring consumers better choices at the pump, grow america's economy, and improve the environment for future generations. ethanol is a home-grown biofuel that is now blended into 97% of standard gasoline. meeting more than 10% of our motor fuel needs. ethanol blended fuels have the highest octane of any available liquid alternative, and allow for better performing engines that deliver greater fuel efficiency. american biofuels are ready to move america forward with a stable policy and access to drivers, we can deliver low-carbon, low-cost, high performing sustainable vehicle solutions. congress recognized the need for a more diverse and stable fuel supply, and enacted the renewable fuel standard to drive innovation and investment in
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renewal biofuels and open access to the marketplace. this energy policy is successfully driving advances in ethanol with plants operating at commercial scale converting corn kernel fiber, wood waste, and other biomass feed stocks into high-value energy. to continue our progress and fulfill congressional goals, u.s. consumers must have greater access to alternative fuel choices at the pump. growth energy has been working with fuel retailers to build the marketplace for fuel with higher blends of ethanol such as e-15 and e-85. as well as install the infrastructure that can be used for high-octane mid-level ethanol blends such as e-30. today, low cost, higher blends are available at thousands of gas stations around the country. consumers have already driven 4 billion miles on e-15 and are ready to use this fuel
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nationwide year round. as fuel economy standards become increasingly stringent in the u.s. and worldwide, auto manufacturers are working toward more efficient engines that require high-octane fuels to operate effectively and lower greenhouse gases. ethanol is a ready solution. with a natural 113 octane, it has a lower carbon content that the gasoline components it replaces and provides increased engine efficiency to reduce greenhouse gas and criteria pollutant emissions. we have submitted the first proposal for a 100 r.o.n. e-30 fuel nearly seven years ago. robust research by national labs, automakers and other scientific institutions has explored the myriad benefits of high-octane fuels and specifically a mid-level blend in the e-20 to e-30 range. when paired with various high compression engines these fuels increase vehicle engine
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efficiency, lower tailpipe emissions and increase use of renewable fuel. there have been recent discussions about moving to solely a 95 r.o.n. fuel standard. while we applaud any move to higher octane fuels, a 95 r.o.n. could easily be met with today's premium gasoline and there would be little to no incentive for oil refiners to move to higher biofuel blends. the past decade has shown oil companies will actively ignore economic incentives just to prevent market entry of higher ethanol blends. we cannot assume that such a modest increase in octane will drive growth and demand for american-made biofuels without the access to market provided by the rfs. only by coupling a stable rfs to maintain market access with a significant boost in octane from a mid-level ethanol blend can consumers realize significant
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cost savings, increased engine efficiency and substantial environmental benefits. biofuels must be part of any long-term plan for engine efficiency and greenhouse gas reduction. however, any discussion of our future fuel mix cannot turn back the clock on the rfs. we cannot support a modest move in octane at the expense of one of the most successful domestic energy policies and the only legislated carbon reduction program. thank you for the opportunity to testify. and i'm happy to answer any questions. >> thank you, the chair now recognizes mr. dan nicholson, general motors on behalf of the united states council for automotive research. you're recognized for five minutes. >> chairman walden, chairman shimkus, ranking members pallone and tonko and members of the committee. i'm dan nicholson, vice president of propulsion systems for general motors company. i'm here today representing general motors, a member of -- i appreciate the committee's
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invitation to appear before you to discuss the importance of increased octane in gasoline. as you know, the automotive industry is changing at an unprecedented pace. this requires all stakeholders to be better coordinated and develop implementation strategies together. as the committee explores options such as changes to u.s. fuel standards that may include higher octane gasoline, it's necessary that the industries involved in this opportunity work more closely together in order to insure that consumers benefit and our industries remain strong. we believe increasing the minimum octane level in u.s. gasoline for new vehicles will be a win for all industries and, most importantly, consumers. today, you will hear from many stakeholders involved in changing the liquid fuel market. this change requires the
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commitment of all parties. i would now like to take a few minutes to discuss the role of the automotive industry. currently, many facets of the traditional automotive business are being disruptive. innovative technologies are driving tremendous advancements in everything from safety and vehicle connectivity to fuel efficiency and electrification. additionally, societal trends like urbanization and sustainability are changing the way customers think about and interact with mobility. as gm's chairman and ceo mary barra likes to say, the auto industry will change more in the next five years than it has in the last 50 years. we believe this gives us opportunity to make cars
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cleaner, safer, smarter, more efficient, and more fun to drive than ever before. as part of this significant shift, the automotive industry has taken unprecedented steps to improve engine efficiency through downsized turbo charged engines, improved multi-speed transmissions and a host of ecofriendly improvements, all with the goal of meeting customer requirements while delivering improved efficiency. the global automotive market is growing, and multiple technologies and solutions will be needed to match demand. octane is one of those solutions. we have an opportunity to play a large role in offering consumers the most affordable option for fuel economy improvement and greenhouse gas reduction. we believe a higher efficiency gasoline solution with a higher research octane number or r.o.n.
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is very important to achieving this. u.s. car research shows that 95 r.o.n. makes sense from the viewpoints of both refiners and fuel retailers. as you may know, this is the same level of r.o.n. that europe has used as their minimum level for many years. without this new fuel, we will continue to endure the impacts of fuel variation and forego related fuel economy improvement opportunities. ultimately, policy leadership is key to bringing about fundamental change in the market. your leadership is critical here. we need to work together to improve the fuel in the u.s. market to take advantage of engine designs that are more efficient and provide significant large-scale fuel economy improvements and corresponding reductions in greenhouse gas emissions.
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and we must do so in a way that makes sense for consumers. which means developing a favorable consumer model for fuel and coordinated retail introduction. thank you again for the opportunity to be here today. and to discuss the advantages high-octane fuels used in high-efficiency vehicles. >> thank you very much. now i'd like to recognize mr. paul jeschke testifying on behalf of the illinois corn growers association. we want to welcome you. you're recognized for five minutes. >> thank you, chairman shimkus, ranking member tonko. thank you for inviting me -- >> check the mike. >> it's on. >> okay. >> it could be pulled closer to you. >> thank you for inviting me
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here to speak about what high-octane fuel can do for america's farmers. as a corn farmer from the village in illinois, i never imagined i would be sitting here in this chamber in our nation's capital talked about corn-based higher octane fuels. a growing body of evidence shows high-octane midlevel blends offers the most environmental friendly and cost-effective route to vehicle efficiency and lower greenhouse gas emissions. high-octane gasoline derived solely from hydrocarbons is dirtier and more costly. today's premium fuels can cost 40 cents to 80 cents more than regular unleaded gasoline. consumers should have a higher octane. >> a midlevel ethanol blend consists of 25% to 30% ethanol, splash that in today's regular gasoline blend stock and you would end up with an octane rate higher than today's premium. this fuel would enable more efficient vehicles and lower greenhouse gas emissions.
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high-octane midlevel ethanol blends means lower costs for both refiners and consumers. these fuels could be made by splash blending ethanol into existing regular gasoline blend stock with no change at the refinery. these blends would reduce upstream greenhouse gas emissions because ethanol is less carbon intensive and it would improve air quality as ethanol displaced air pollutants. given our trend line gains in corn yields, i believe we can meet the future demands for corn based ethanol on the land we're farming now. farmers are growing more corn and more octane per acre now than ever before. the growth of corn ethanol production has done more to bring profitability to corn farmers than any of the many government support programs which i have experienced. and ethanol's development was financed to a large extent with farmer investment. this profitability allowed many young people to return to the farm, including my nephew in my
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case. but domestic ethanol use has stagnated and our profitability is again collapsing. since 2014, illinois farm profit has been dismal. this projected a bleak future for all of us, but especially these younger farmers. what can be done? the answer seems clear to me. as our vehicles of the future need higher octane, cleaner burning fuel, we should look to higher blends of ethanol. our nation's fueling infrastructure can accommodate middle level fuel blends, and it could be readily available nationwide, similar to that of diesel fuel. unfortunately, the epa regulations are stifling both fuel and engine innovations, preventing consumers from enjoying the performance benefits and fuel savings of midlevel ethanol blends. until these barriers are addressed, it's simply not true that a minimum octane standard would provide the biofuel
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industry with the opportunity to expand its market share. for it to compete in the market on the base of its value, epa's anti-competitive regulations must be corrected. some of these regulatory concerns are the same rvp standards for all fuels containing at least 10% ethanol, which may have happened yesterday. a new high-octane midlevel ethanol certification fuel such as a 98 to 100 e-25. a fuel economy equation that does not penalize ethanol blends. a technology neutral fuel economy and ghg regulatory scheme that treats all of alternative fuels light to the extent their reduce petroleum consumption and greenhouse gas emissions. an accurate life cycle analysis of the greenhouse gas benefits of corn ethanol like those at the usda and the department of energy have already developed. epa could address these issues through regulation without the
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need for new legislation. in addition, automakers should warrant new vehicles for ethanol concentrations up to 25%, similar to bmw has already done for some of their vehicles. removing these barriers would clear the road for high octane, high efficiency vehicles. more details on these points and other observations and suggestions are covered in the written testimony that i have submitted. i'm proud of what we do in my family's farm. i'm proud that our corn crop can have a part to play in the high-octane future heading our way if we're allowed to do so. america's corn farmers are ready to do our part to deliver. thank you, mr. chairman. >> thank you very much for joining us today. and i'd like to turn to mr. chet thompson, president and ceo of the american fuel and petrochemical manufacturers. your full statement is in the record. >> thank you, chairman shimkus, chairman walden, ranking member tonko, members of the subcommittee, thank you for the
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opportunity to bat clean-up this morning. and provide afpm's views on this important subject of higher octane fuel. as you mentioned, my name is chet thompson, the president and ceo of the american fuel and petrochemicals manufacturers. we're uniquely qualified to weigh in on the topic as we supply virtually all of the gasoline used in the country today. so i'll use my limited time to focus on a few aspects of my written testimony. first, afpm is absolutely intrigued by the possibilities and opportunities that could be afforded by a higher octane fuel. such fuels, as you mentioned, mr. chairman, could be a solution to the rfs that works for all stakeholders. and again, also as you mentioned, today's hearing comes as a critical time for the u.s. fuel and automotive sectors. the auto industry faces enormous challenges to comply with the c.a.f.e. and meeting consumer preferences. the refining industry is dealing with an inefficient and
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unworkable fuel standard that's only going to get worse over time. fuel marketers in the biofuel industry don't have it easy, either, to be sure. they're faced with constant uncertainty, never-ending debates about the rfs, making for a very challenging business environment. again, these uncertainties will grow worse with every moment we move closer to 2022, when epa takes over this program. we believe there's a potential solution for all of this, higher octane fuel. if done correctly, and by that, i'm going to get into what done correctly means in a minute. higher octane fuel has the potential to make life better for everyone at this table and this room. over the last few years, we have been evaluating the benefits of various octane levels. our analysis, detailed analysis shows a 95 r.o.n. performance standard could be an efficient and affordable option to reduce emissions and meet the needs of the auto sector.
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a 95 r.o.n. standard would help auto companies, as mr. nicholson said, comply with c.a.f.e. by meaningfully improving the efficiency of the internal compossession engine. by our estimates, 95 r.o.n. would reduce greenhouse emissions in this country by the equivalent of putting 720,000 e.v.s on the road each year. so let me put that number in perspective. in 2016, 200,000 e.v.s were sold globally, so we're talking about tripling that year after year through 95 r.o.n. if you look at figure three on page 9 of my testimony, you can see that 95 r.o.n. is the lowest-cost fuel option for making these gains. 95 r.o.n. is the lowest cost option for consumers. so finally, it also has the benefit, 95 r.o.n., of being available and scalable nationwide on the timeline needed by the auto industry. no other octane level can make this claim.
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not a single one. so we believe a 95 r.o.n. would be good for the ethanol industry as well. i'm sure they appreciate me saying that. we would expect it to provide them with every bit as much ethanol demand as they get under the rfs and likely more. this is true for a simple reason, because ethanol at the moment is a low-cost source of octane, so it follows that they would thrive under a high-octane performance standard, one done under the free market and not through government mandate. fuel marketers would benefit as well, as mr. columbus said. a fuel neutral 95 r.o.n. performance standard would provide marketers with optionality. and flexibility. importantly, this would translate to the benefit of consumers by creating a transparent and competitive
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market for all liquid fuels. finally, my members would certainly benefit as well. sunsetting the rfs and transitioning to a 95 r.o.n. performance standard would end mandates, reduce compliance burdens and provide achievable regulatory targets. so such a standard would provide or require enormous investments from my industry. 10s of billions of dollars would be needed so we don't take this hearing lightly. we are, however, willing to entertain it for one simple reason. frankly as a compromise solution to the rfs that we again could work for all stakeholders. but for it to make sense to us, frankly, under any circumstances, a 95 r.o.n. standard would have to include three elements. first, it would have to be accompanied by a sunset of the rfs. the refining industry simply can't comply with the burdens of the rfs at the same time making investments bringing 95 r.o.n. to the market. second, it would have to be implemented over a reasonable period of time, and third, it
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must include measures to prevent misfueling. as to the latter, we are certainly in a process now to evaluate all of the obstacles that would be brought about by bringing a new fuel to market. we're working on that. these issues are real, but the good news is through our analysis now, we don't think any of these obstacles are insurmountable. we believe it has the higher octane potential to harmonize our fuel and vehicle policies and for that reason it deserves further analysis. we thank you for the opportunity to be here. >> thank you very much. appreciate everybody's testimony. to my colleagues on the subcommittee, welcome to my world. i believe that we are closer than people think. and i want to encourage my colleagues to really help now dig into this issue, specifically, so we can address and work through some of these concerns. having said that, i'd like to
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recognize myself five minutes for my first round of questions. okay, for all of y'all, that's what we say in southern illinois, all y'all. this hearing is more about the high-octane concept overall and less about debating the specifics such as where that number should be set. so without advocating for a specific number, can you each of you sketch out what you need in order for high-octane fuels to work for you and your member companies. tim. mike, i think, also. >> i'm old. i don't learn that quickly. we believe there are a couple things we would have to have. number one, we would have to have a regulatory regime that guaranteed retailers who complied with warnings, signage standards, that if a motorist introduced the wrong fuel into
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his new vehicle, the environmental protection agency would not be holding the retailer accountable for that. when we went from leaded to unleaded gasoline, retailers were prosecuted by epa if consumers put leaded gasoline in a vehicle meant for unleaded. that's got to change for us. number two, we would think it would be crucial that the one-pound waiver, revapor pressure requirements for an e-10 be extended to any blend of fuels that has an rvp equal to or less than e-10. and finally, i was going to speak to this as well. i would hope you could do something to accelerate the approval process for new gasolines. i think it took three years to do e-15. if we're going to go to higher blends, and i anticipate that over time we would go to higher
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blends than just e-10, e-15, i think the market will end up demanding more than 95 r.o.n. 95 r.o.n. is a floor for us, not a cap. >> ms. skor. >> thank you. i would have to echouch of what mr. columbus said in that yes, first and foremost, the ability to sell a legal fuel such as e-15 year round, and any blends above 10% year round, is going to be absolutely paramount because you look at that today, and that's really the largest impediment to much further market adoption of e-15. can would second the approval process of new fuels has been very slow and cumbersome, so that too is something you would want to see expedited. and again, in continuance of this quest for a free market and access to the consumer in the marketplace. and importantly, any discussion of high octane, and i appreciate how much ethanol is recognized as the cheapest octane source on
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the planet. having said that, if you look at the last decade of market behavior and dynamics, refiners walk away from that economic source of octane due to competition, so we would like to see, and we would need to see, that there's a designation, that that high-octane source is renewable fuels, as the source of octane. >> mr. nicholson? >> we need one national standard for the fuel that is important to us. and then weed. like to be part of making sure the specifications are correct and it's interrelated with emissions criteria. one national standard is what we're seeking. >> well, as a supplier, the raw materials for ethanol, corn farmers are ready to do their part. we have piles of corn all over the country in the ground yet. that's how much of a surplus of that commodity we have. those are being picked up now, but again, they're all raw material that we're providing,
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can easily be geared up. we're growing naturally yields of about 1% a year, so i think we can do our part. >> mr. thompson. >> we need the rfs to sunset. we cannot do both high-octane fuel and the rfs. >> great. thanks. for growth and the corn growers, would you support any level of stringency that gives you at least as much ethanol that you use currently use today? >> so i think if the conversation is simply high-octane standards, that's a wonderful thing that we should be moving toward as a country. if the conversation is a high-octane standard coupled with some change to the rfs, that's a different conversation. if you look at the market potential that is the congressional intent of the rfs, 90% of our market access is yet to come, so importantly, one of the things we have provided with a market access of the renewable fuel standard is that innovation and that drive toward use of -- >> my time is about to expire. i want to get mr. jeschke a
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chance to answer it. you didn't answer the question on stringency. >> we're wanting to grow the market. i talked about the piles of corn we have. we're wanting to grow our share of the fuel market. ethanol production. we think it's good for farmers and good for the environment. >> thank you very much. the chair recognizes mr. tonko for five minutes. >> thank you. mr. thompson f the rfs is replaced with the high-octane standard, as you suggest, it's my understanding there are other petrochemical derived chemicals that could be blended into gasoline to achieve the octane rating of premium fuel. is that correct? >> yes, that's correct. there are gasoline is a blend, and there's lots of blends that have octane in it, but our analysis shows if we went to a 95 r.o.n. standard, ethanol would continue to be the dominant source of octane. >> okay. some refineries might choose to
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meet the octane standard with an additive other than ethanol. wouldn't that be an option in the absence of the rfs program's mandate or some other requirement to blend renewable fuel with gasoline? >> certainly that would be an option. it would be done consistent with air quality and local permitting, which absolutely, our modeling shows there would be no environmental detriment due to other sources of octane being used. >> thank you. i would point out that when congress mandated a performance standard to increase oxygen content, they used mtb to increase the standard and we ended up with a drinking water pollution problem. before we open the door, i would like to know what risks might be involved in making that decision. the rfs program was intended to reduce petroleum use and increase the use of renewable fuels. if we replace the rfs with a high-octane standard set at 95 r.o.n. levels, what is the
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impact on the overall demand for renewable fuel? >> well, there would be no impact on the overall demand. as has been stated by the panelists, it's currently sold on the marketplace, often with a 10% ethanol blend. so if we move to a national standard of 91, there would be little to no intensive to further use biofuels in our national transportation mix. >> so what might this mean for the development of advanced biofuels and for the transition to greater use of cellulosic biofuels. >> this would eviscerate all of the innovation and investment taken place so far if you look at advanced biofuels. just a few years ago, when the rfs blending targets were put on hold, we as a nation lost billions of investments in next generation technology because of the lack of certainty that these fuels that i will say contribute 90-plus percent greenhouse gas reduction, the uncertainty there
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would be no market for them in the u.s. >> as we have discusses, the department of energy in collaboration with vehicle manufacturers have been exploring the optimal level of gas levels. the octane levels they're working with are 95 or 96 octane or 100 r.o.n., and that the source of octane is presumed to be renewable fuels at blends that are e-25 to perhaps e-30. is that correct? >> yes, that's correct. and that program is similar to a large body of work that's examining the sweet spot, if you will, and then e-20 to an e-30 blend, where you're really optimizing the cost savings for consumers coupled with the 90% greenhouse gas reduction you're getting or the greater
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greenhouse gas reduction and reduced tailpipe emissions. >> thank you. you and i have discussed that when it comes to fuels there's one in the consumers care about above all else, and that's the price. >> yes, sir. >> i imagine during the transition to a 95 r.o.n. fuel standard, there would be some new vehicles that would require something similar to today's premium fuel, and many existing vehicles which continue to opt for the cheapest option. how do you envision consumer acceptance of a requirement to buy more expensive fuel? >> well, i don't -- first of all, let's talk about premium gasoline prices today as opposed to regular rate gasoline. it's a specialty product. it's like going someplace and trying to get ethanol-free gasoline. people pay a premium for it because there's very narrow demand for it today. having said that, i envision that a 95 r.o.n., if it's coupled with a waiver of the one-pound waiver for higher blends of ethanol, you're going to see prices come down on that product. why? because ethanol is in fact the
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cheapest product. something i want you to always remember, mr. thompson's members are important to us, but they're not the only source of blend stocks on the face of the earth. if in fact there are cheaper forms of blend stock, my clients will do so. many of them today have introduced e-15. why? because it's cheaper in the retail market because of the ethanol component. so that ability to use increased amounts, there is however a cap on that. and that is you have to have an infrastructure that will handle it, sir. and today, epa's rules say if it's not certified to hold a higher blend than e-10, not warranted, and a retailer cannot affirmatively demonstrate that that equipment is compatible, and it goes back to mtbe stuff. he's violated the resource conservation recovery act.
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so prices will come down because components prices will come down. >> the chair now recognizes the chairman of the full committee, mr. walden. >> thank you very much, mr. chairman. i very much appreciate your willingness to chair this subcommittee and take on this issue. i know how much fun it must be for you being conflicted with these things. to everybody on the panel, in one capacity or another, you're involved in the fuel standard or you wouldn't be with us today. can i get you all to agree that a high-octane fuel standard if done right could be improvement over the status quo? that's a pretty easy yes or no. start at that end. >> yes. >> high-octane standard provided you couple that with a market access and the drive toward growth that you get with a renewable fuel standard. >> i want to make sure we're
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answering the same question. can you agree that a high octane fuel standard if done correctly could be an improvement over the status quo? yes or no? >> possibly. >> okay. >> absolutely yes. >> thank you. >> i'll take a chance and say yes. >> okay. >> yes, sir. >> thank you. mr. columbus, the gas station is where the fuel policy succeeds or fails because that's the interface with the consumer, and you have done a good job of representing the consumers here. on balance, do you see a high-octane fuel standard potentially working to the benefit of the consumer? >> i do, sir. >> all right. ms. skor, one of the exciting things about the high-octane fuel standard, well, our version of it, is it allows us to take full advantage of ethanol's properties. would you agree such a policy could lead to a more advantageous use of ethanol? >> i think the 95 r.o.n. policy discussed right now does not --
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will not necessarily lead to a more advantageous use of biofuel for consumers. >> you know, i was on this committee. there's a few of us left who were here in '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, and i supported the rfs now. i have worked on it and got a little bit of that. i think there's a difference, by the way, between corn ethanol and the advanced cellulosic, and you mentioned that in your comments. i was in the radio business for 21 years. i would have loved to have had mandate that somebody has to buy my inventory. just saying, i grew up on a form. i get it. i respect corn growers. as the 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. and how do we move this policy forward in knowing that 2022 is
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out there. some people i know may just want to roll the dice and say we'll just ride it, 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-'07 to try to resolve a problem then. i think it's time to modernize that policy. and 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 consumer 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 hard one for all of us. we know the realities of the senate, we know the realities in getting votes around her. i understand all of the market forces, political market forces at work. i'm not naive to that. but i think we have a big responsibility to the country
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here. to do this right. and so i don't know if i have any more questions on it. i just appreciate you all being here. i know you're all looking at this seriously. i just want to implore that we continue these discussions, because i think there is a path forward that will work for our growers wherever ethanol is being produced, grown. and that can work for the consumers and give the stability, and 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, and so we're really happy to have the hearings and to move this forward as quickly as possible.
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>> mr. thompson, from your perspective, are there issues in other states that could 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 c.a.f.e. in the near term, 95 r.o.n. is the only product that can be sold nationwide. california and five other states do not allow the sale of e-15 or higher octane blends, so how could be put the autos in a position of rolling out a new product but not be able to get fuel to them? 95 r.o.n. is the only product that is scalable within the timeframe of c.a.f.e. compliance. >> i know i exceeded my time. thank you for your leadership on this, and again, to everybody on the panel, we know you're serious about it. i yield back. >> the chair now recognizes the gentleman from texas, mr. green, for 5 minutes. >> thank you, mr. chairman, for having this hearing, although i would at least ask for one more refiner on there to match up
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with the corn folks here. i want to follow up what the chair said that 2005, '06,'ver 7, and' 08, this subcommittee had a hearing in 2008 on peak oil. it's changed in 2018. mr. columbus, your members actually typically sell what we call regular gas and premium gas. what's the percentage right now that you're selling of a premium? >> under 20%. >> under 20%. >> somewhere around 15%. i'm not even sure premium. regular-grade gasoline is something north of 70%, sir. mid-grade, 9%, premium is about 10% to 12%. >> most of our vehicles on the road today are made for running very efficiently at regular gas. if we do it and maybe the manufacturers will do it, so if we go to 95%, you're going to
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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 is it is offered as a price which is less than regular-grade gasoline. >> not in my area in houston very often. we don't have a whole lot -- >> everything is bigger in texas. >> that's right. but 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 -- >> you're a marketer. you're not the one -- >> again, sir. i believe experience shows us that if there is an absolute
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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 price will come down, and again, if you give me the one-pound waiver on higher blends, and give me time to redo the infrastructure to 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. >> my concern is right now if we change the fleet over the period of years, people are going to pay more at the pump. right now, i'm hearing people, even in houston, complaining the price is going up because we're going to a summer blend in south texas.
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in texas. and that's more expensive to refine. so that's one thing that concerns me. i was on the committee in 2005, and i want to thank our former chairman, joe barton was here a minute ago, who is the chair of the committee. 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 have done on our electricity generation, but 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. and we used to have three, but they couldn't go with the market over the last number of years. but when we talk about biofuels, what percentage of it is corn-based? corn-based as compared to what some of us thought back in '05, we would be recycling things instead of making the price of
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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. 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 to the market was the implementation of the rfs and the uncertainty in terms of what was taking place at epa. that uncertainty sends the wrong market signal to innovators and investors. >> i agree because the rfs, because in my area in texas, we were reformulating our gas in the '90s, early '90s, and it was an environmental benefit, but we used mtbe, a product of natural gas. but the '05 energy bill, the
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house bill actually had a waiver there for those producers of mtbe, but the senate didn't accept it. we're still producing mtbe in texas for export market, but we can't use it to reformulate our gas. 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. >> and i would like to reform the rfs, but i'm not so sure -- >> the gentleman's time has expired. the chair now recognizes the other gentleman from texas, in a bipartisan manner, the gentleman, congressman barton for five minutes. >> thank you, mr. chairman. i'm here under protest. i don't do getaway hearings, and i darn sure don't do hearings
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that start at 9:00 in the morning. that's right. unfortunately. fortunately, we have a witness that represents one of the companies, it'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. if i br were still chairman i would be in a wrestling match with chairman shimkus because i would be repealing the renewable fuel standard and i would take a goal at repealing the carpet 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 and he said we're not going to have a debate about this, joe, you're chairman, but i'm speaker
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and that was pretty determinative. i mean you know, i said yes, sir, mr. speaker. but it was, it was a more lenient rfs, i think a more reasonable rfs. so i think a more reasonable rfs. so there is no question that it is important to our corn growers or agricultural sector, but at the same point in time, nobody can say ethanol is a struggling start up industry anymore. so you don't really need all of the protection, the mandates, the quotas that we have today. so, this high octane alternative i think is a very reasonable -- 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?
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>> there is no doubt. i'm representing u.s. car and we are all prepared to do our part to redesign the engines at great extent and great investment in order to deliver this, you know, roughly 3% fuel economy improvement from the 1995 run. it's very important and we think it is the consumer facing way that consumers will get benefit from and we will get reduced greenhouse gases. we are here and ready to support. >> okay. and i guess, mrs. skorskor, is how you say it? you seem to be the proponent of the ethanol industry. >> yes, i am. >> is there any doubt in your mind, or the group that you represent, that if we were to move to allowing a high-octane fuel, that your industry still would not thrive? >> you know, honestly, we wish
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that we could because of all of the reasons and benefits of ethanol. high octane and renewable fuel. the challenge and the reason that we believe we continue to need the guardrails provided by something like a renewable fuel standard is, it's not an open marketplace. we don't have access to the consumer. >> what do you mean by that? what do you mean you don't have access to the consumer? >> if you look at the fuel marketplace, so much of the access -- >> that's guaranteed access. >> yes. with the renewable fuel standards we have the ability to compete. and what we want to see in conversations moving forward is, what is the path forward for continued access to the consumer? >> i'm going to give back a minute, mr. chairman. i do appreciate you holding the hearing. i yield the floor. >> that's okay, mr. chairman, because i've got a ton of questions. this is a great panel.
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one of the things i'm hearing is that everybody agrees we need to have a high-octane standard, right? the second thing, the questions i'm hearing is, how much? how high should that go? how do we get there? in 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 auto manufacturers and refineries get ready for that, but also get our consumers educated and ready for this new world of higher r.o.n. i only have a few seconds left so i will wait and use that as my intro for the next round. it does sound like it's a win- win-win for our consumers, for the ethanol markets, for the conventional, marketers, retailers, and also our refineries and manufacturers. it sounds to me like everybody wins. i think we need to look at that
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versus status quo which is clearly a user. >> gentlemen, time has inspired. -- expired. i'm going to come back, mr. tomko is going to come back, for those who want to delve into this. the chair recognizes the gentleman from california, mr. mcnerney. for five minutes. >> appreciate the chairman jumping over to me and i appreciate the panelists here this morning. mr. nicholson i'm very concerned about the trump administration's post for fuel economy standards for model years for light trucks with my state of california is committed to reducing emissions in getting vehicles on the market that use less fuel and intent -- emit less carbon per vehicle.
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i would like to know where gm stands on the epa's and recent statements in california's ability for the greenhouse gas emissions and automobiles that. so, does the gm administration approve of mr. pruitt's waiver? >> i don't -- can you ask last part of the question? >> does gm agree with mr. pruitt's opposition to the california waiver? >> that's not a question about the midterm review? >> that's right. it's a question about your agreement. >> i'm not really prepared to give general motors' point of view on that question. the propulsion systems and product development and we are here to talk about, you know, octane, and engines. and i'm not really informed about the waiver, or whether that's okay or not okay. >> this is an important question to california and the nation in general.
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the automakers understand in my opinion that the high fuel efficiency standards are in their interest, in the international auto market. they should be in opposition to this potential opposition. >> we have a midterm statement on the review and i'd be happy to share that with the committee. >> all right. mr. thompson has proposed replacing the renewable fuel standard with 95 r.o.n. octane performance standards. however, if the octane is not sourced from ethanol, wouldn't this just increase oil use? >> potentially. 95 r.o.n. is a 95 octane fuel, the premium fuel on the market today. there is every opportunity in many instances for refineries to make that premium fuel with more ethanol. and yet, they are not doing it, even with the economic incentive of ethanol at the lowest octane.
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so, 95 r.o.n. is, at best, status quo, and perhaps you'd be using less ethanol than today. >> thank you. it was not that long ago that we were hearing about e-15 causing damage in engines. we had some of the auto manufacturers in here and they 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 it if you want. >> well, i will just say, i'll provide part of an answer. e-15 is approved for nine out of 10 vehicles on the road today. in fact, i applaud gm for being the first company to warranty e- 15 when it became a legal fuel. it is not approved for small engines. so, all of the retailers who
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sell e-15 also sell e-10, some even sell e-0. we did a survey with consumers, their own motorcycles, and small engines last year and asked them, are you satisfied with the fuel choices on the market? do you believe that you are using the right fuel for your engine? and the resounding response across the board was, yes. >> i can confirm that answer. for u.s. car, e-15 is fine and we've been that way since 2012. but, there is 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? >> well, e-15 is where we are at today. it would require redesign of fuel systems . you have to actually look at every single part that touches the car to go higher. we are not prepared, when we talk about anything higher today, it may be technically
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possible but for today, e-15 is what's okay. >> thank you. >> the chair now recognizes the vice chair of the subcommittee, mr. mckinley, for five minutes. >> thank you, mr. chairman. i'm curious from your testimony, i was just googling the federal trade commission, their website. and, their consumer division within the federal does higher octane gasoline offer absolutely 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 of the testimony we've been hearing, and all of this debate. so, who is right? federal trade commission? if it's not going to run cleaner , better, it's not going to improve the quality of our cars.
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are we doing this just to redesign our engines? i assume that's what we have to do because typically our engines are designed to run on that. i'm trying to reconcile what we are doing here. >> 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 a ki pump fuel regular fuel today, putting premium in it will provide no additional benefit. what we are talking about is something very different. a coordinated fuel and engine together as a system approach in the future, and if we redesign the engines to take full advantage of the higher octane, and we calibrate them accordingly and introduce them in the market, then we get this 3% benefit that we talk about. >> and, the cost of retooling, what can we expect, that that would add to the cost of the car? let alone the cost of the fuel?
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when we have to change our engines entirely? our whole fleet. i'm very curious about this. >> it's very costly. in fact, if we implement the system, oem such as general motors, and ford, and others would be investing potential billions of dollars to redesign engines, manufacture them at higher compression ratios, to accommodate this fuel. the fact that we are willing to do that, and that we believe this is cost-effective, relative to other greenhouse gases. >> you are going to pass that cost on, right? that's what happens? >> we are facing regulations for greenhouse gas in cafe. >> i understand that and billions of dollars will be passed on to the consumer, right? >> this is the most cost effective thing that we can do. other things we have to do will cost even more. >> we'll have to have more of a conversation about this.
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let me handle that last question. i want to digest that. that answer on it. the other question i have is, before i came to congress, apparently, there was a move to use other fuels. 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 of the stakeholders working together to ensure success. and to me, that is really the lesson learned. we all need to go together and we need a framework and policy that really supports that. >> it's like fuel system experiment has failed? >> i think everybody can judge that for themselves.
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>> how would you judge it? >> i wasn't here at the time when it was passed. >> right now today. has it works? has it been a good investment? >> i don't really have a good opinion on that. >> anyone else want to comment on the flex fuel experiment? >> it did not work. my members created the most expensive parking lots, inconvenient parking spaces in history. first, most people did not know that they had flex fuel vehicles. number two, taking e-85 to market proved to be a disaster. people did not understand it. they worried they were not getting the same value. even if they have prices below regular gasoline. you had to price $.15-$.70 per gallon or less to have people buy it. so no, it did not work. >> i would offer one of the important learnings from that experience that we have acted
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on, there is actually government, public, private partnership on building out the infrastructures, that one of the things you need to make sure is that consumers have access to the fuel, so that they could optimize the flex fuel engines. 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 become available, consumers can access them in the marketplace. >> gentlemen, time has expired. the chair now recognizes mr. johnson for five minutes. >> thank you. i appreciate it. important topic, especially in a large agricultural region and energy region that i represent in eastern-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-
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octane -- new high-octane fuel? >> i do not, sir. >> today, we have almost every retailer out in the united states sells a premium grade gas. at least one offer for that. that is a 95 r.o.n. products. as we go forward, and we want to introduce and make the price of that gasoline go down, we will need to add, i believe, more ethanol. and that will drive the price of that product down, from where is a special lease -- specialty product that is priced highly. >> do you expect some castings in the country meeting a high- octane standard with more ethanol and perhaps stations and other parts of the country with relatively less? >> yes, sir. first of all, i want to remind
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everybody, in full supply, they will, only for kevin costner. and that was a movie. so, we are going to sell what the people want. in some parts of the country, they want low ethanol mix. i don't know why. if you go to mr. kramer's part of the world, you can go more by regular grade, 10% ethanol. i don't know why people want to do that. you will get served that way on a cost basis. i think you will find it will detract. >> mr. thompson, what kind of facility changes would refiners need to undertake to start producing high octane fuels or blend socks for high octave -- octane fuels? how much would they cost?
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>> well, it depends upon whether the program is phased- in. so, in our world, in order to do this properly, we would continue and then phase out sunset. but, we can now produce 95 r.o.n. at the moment and we believe we could make enough to coincide with the introduction of the new vehicles. over time, it would cost multiple, tens of billions of dollars in investment to generate new sources of octane. the ability for us to generate that. and also, the new b.o.b.s would have to go along with this. this would not be cheap for us. we are not in a vacuum. we are here, offering up a compromise solution to that status quo, which is how do we help the autos help with high cafe and how to make the investment better? we are willing to make the investment because at the end
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of the day, it's better for consumers. >> how much fuel, ethanol, use, do you expect this year and in the years ahead under the current rfs? and, how much more could a high- octane standard provide? >> we are going to use somewhere 14 plus billion gallons this year. but we would hope to grow that, as mrs. skor has said many times, but it depends on what the rule comes up falling. i guess i'm skeptical, mrs. skor, the petroleum refineries would use more ethanol voluntarily. now, as a farmer, a proponent of ethanol and person who has used it in my vehicle since the '70s, and by the way, i have a briggs & stratton engine that
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said e-10 on it, and i guarantee it will start every time. so, these small engines can run on ethanol, the old ones, even though they weren't approved for it. but, we need to grow that market for us to be able to stand our current operations. and getting the same price when i started farming, corn was three dollars. today, gasoline is $2.50 per gallon and i'm still getting in the mid-3 dollars for my corn. so, i'm very invested in ethanol and trying to promote expanded use which is very much why i want to see increased spending, not the status quo. >> very quickly, mr. thompson -- >> i like to add that we are not using all of the ethanol. we are using every drop we can use. we are using as much ethanol as our existing auto fleet can handle. there is no place else for it to go. with all due respect to miss
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skor, she's a wonderful candidate. the gentleman from california, we can't even sell e-15 in his date, by law. most cars today are not warranty to run on anything higher than e-10, it's a fact. >> gentlemen, take your time. we are going to go to bill flores for five minutes, and then we will recess. because, i think that they were just called. and, i want to thank congressman flores who has been an ally and a friend working on this together. i want to give him a lot of credit for that. >> we are coming from a lot of different angles but i think we are coming to a fairly common conclusion here. for the folks that are not in this hearing room, i think it is probably good that we tell him but he how the numbers we are talking about today fit with the numbers that sit at the pump. today if you see an 87 octane at the pump, that is an a ki
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octane which is equivalent to 95 r.o.n. so the 91 octane you see on the pump today is actually a 95 r.o.n.. so, just for everybody outside the room. we are not talking about reinventing the entire auto refinery ethanol complex here. ms. skor, is there a value to raising the rvp waiver and what is that value? as quickly as you can. >> so, eliminating rvp, absolutely. you would allow a legal fuel to be sold year round, when in most of the country, it's not able to be sold in the summer once a month when most families are taking their summer vacations. >> esther clemens, do you agree with that? >> i do. >> what are the challenges? we have six states that don't allow anything above e-10 which is 19% of our gasoline demand in this country today. california, new york, delaware, oregon, wisconsin. this question does not apply to
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those states. for some reason, they don't like higher blends of ethanol. but, what are the challenges of having an ethanol blend above e- 15? >> it's the same challenge that e-15 faces in terms of market introduction. overall, the biggest impediment is in fact the infrastructure in how we regulate underground storage systems. the office of underground storage tanks says if we go above e-15, we've got a whole new cost element for the consumer, right? >> retailers going to e-15 now are doing that first and foremost in new facilities and rehab facilities. the most part, existing infrastructure is not warranted, or certified to take -- >> i got a limited amount of time. but, we've had some panelists ask for mid-blends. e-20, e-30, higher blends like that. there is a huge consumer cost
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if we do something like that. is that correct? >> i believe if we do it the way we've talked about, no. >> i'm talking about if we mandated. let's say we mandate at a higher r.o.n., 95 or above, and then we also mandated has to be e-20 or e-30, that's where we get into higher consumer costs. >> if you do a performance specification, the consumer will be best served. >> if we go to 95 r.o.n. let's assume this gives us the standard, which is the benefits of that, 495 r.o.n.? >> 3% improvement in fuel efficiency and reduction in greenhouse gases. >> and so you can optimize your engines, so if you are selling
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from either coast, even if you are selling 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. >> as i posted in my testimony, europe has had 95 r.o.n. for several years and consumers are getting those benefits and i think consumers should get those same benefits. >> mr. thompson, we talked about several states have standards that prohibit us from going above e-10. congress decides to mandate a formula standard in addition to r.o.n. standard that we are going to have challenges in meeting the standards in some states . one of the things that has been proposed, one of the comments thrown out earlier, is that refineries have been anti- ethanol, in so many words. if we raise the octane standard, why would refineries want to use anything other than the cheapest form of octane enhanced? which today is ethanol? >> they wouldn't. and i'd like to point out that within my membership, we've had
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some of the largest ethanol producers in our country. and i will just mention that when we look back, and i said this to somebody who worked 3 years at epa and is very family with these programs, if you look back where we've gotten in trouble as a country, it has always been where we had a mandate or formulaic approach. versus allowing a formulated approach to let the market decide the best way forward. >> so again, to repeat this conversation, mr. barton, you owe me some time. by going to performance standard, everybody wins. the environment, consumers, auto manufacturers, ethanol constituents, including advanced and conventional books. our markets, retailers, refineries. everybody wins. i'm not sure why we would want to do anything than a performance based standard. i do accept the recommendations, ms. skor, but we do need to address the rvp waiver.
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in terms of legislation, that is something i will keep in mind. >> we are going to recess this hearing and will return after a vote. and i know there will be a couple of us that will return for that. the hearing is recessed.
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if we have everybody here, could you try to find your seat? we have some members who want to try to catch a plane.
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>> thank you, offer coming back. we only had one vote so we will get started. i'd like to recognize now the gentleman from wishard -- michigan. five minutes. >> thank you. what is the rfs standard for plane fuel? i'm trying to get on the plane shortly. >> high octane, baby. >> well 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'm a motor guy living in michigan. you've got to be a motor guy. but, having an almost classic camaro, i'm 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.
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we've built engines plenty of times, but it has been primarily because of what i've done, 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. this is important. and i don't want them to be expensive doorstops that i can just look at. the khmer downstairs in the parking lot, in this building. and i enjoy driving it. this is important. let me ask you, mr. columbus, what can be done to ensure consumers are not missed fueling their motorcycles, their boats? i have just recently had to buy a new outboard engine, because of the destruction on my good old engine that served me very well.
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i buy premium 04 my outboard motors. i don't buy that for all the rest. i can't afford it for all of the rest of my vehicles. but, how do we deal with that? >> well, the missed fueling is going to take a combination of dispenser equipment, and, i think auto equipment. we are working with cars, and with 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. if you have a pump with a single hose at it, and you have what ever was used in it last left in it, and i come up with my harley, i'm going to put 2 to 3 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.
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and when i suggest to you is you either go to the place that sells e-0, and that's easy for me to say to you. or, you take a gallon can with you and fill it about half full with that e-10. >> i carry that in my motorcycle. >> right. >> when i take a 1000 mile trip going to carry a gallon can with me. i'm saying, these are things we have to consider. and i do wish mr. chairman that we would have had representatives from the marine industry, the motorcycle industry as well to talk about this. they are not satisfied that it's going to be for the industry that it's going to work. >> one of the other things you might consider doing is talking to the epa about making his prior transfer documents regime a little simpler for people, because there is in fact an ethanol derived isobutyl lien that is a drop in fuel that is completely compatible, trying to get it to the market, based
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on the fact that epa says you have to have product transfer documents that you can blend with that blends talk. it's really tough. >> well, let's be careful about this. and, let me go to mr. nicholson. thank you for being here. what is the investment required for automakers to make the change for 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 of the engines to high compression ratios is literally going to be billions of dollars investment spread across all of the u.s. car and other auto manufacturers. timewise, we really need 4 years minimum, and that's actually going fast. when you think about making all of those changes. if we were to get legislation this year, we think we could be ready for the 2022 calendar year or 2023 model year. that's why we've got a sense of urgency and really trying to go
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as fast as we can to get this legislation. >> what to expect the increase in fuel mileage will be and what will be the cost to the consumer? >> the increase in fuel economy from the 95 r.o.n. is roughly 3%. some consumers may not notice that as much, but it's really substantial when you think about the c.a.f.e. impact. and we think there is a 3-1 ratio. you get three times more benefit than what the cost would be at the pump. we think this is an excellent value for the consumer. >> this is the lowest-priced way that you think you can meet cafe? >> exactly. we think this is the most efficient way, the most cost- effective one that we have. >> gentlemen, time has expired. i will remind you gentlemen that we did have small engines here at our last fuel hearing. with that i like to turn to the gentleman from california. >> thank you, mr. chairman. i know how it is when you sit on the committee and wait for the very last person. i'm going to yield my time to the gentleman from iowa. >> the gentleman from iowa is recognized.
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>> thank you, and thank you for holding the hearing and letting me be waived out of this subcommittee as well. i'm going to have to think about something to help mr. ruiz with because i was very kind of him. listen, i think we all know that the future of transportation fuels is an important topic going forward and i really enjoyed the debate today such as it has been. we've had some positive moments, including yesterday when the president publicly supported allowing sales of e- 15. we want to make sure that he follows through with that. going forward, that's an issue i have championed with congressman smith from nebraska. we've had legislation we have introduced on that front. but, there have been some seriously concerning moments, when it comes to these kinds of issues. we've seen recently some reports about the waivers of the epa as granted the small refiners, so-called small refiners, to release them from their obligations under the rfs program.
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and, one of the problems is that these waivers have occurred sort of under the cover of darkness, too. it has not been an entirely transparent process. and i brought that up with energy secretary perry, as a matter of fact, in this very same room. essentially, they have amounted the giveaways by the epa to some of the nation's largest and most profitable refineries. as you all can imagine, biofuels community and farmers in iowa have expressed significant concerns about these reports to me directly, as a matter of fact. these concerns have been echoed by many including the secretary of agriculture himself, sonny perdue. the state has reduced the statutory volume gallon for gallon, essentially. so, it has become quite clear to me that this action does --
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i can only imagine how harmful this would be to iowa farmers, illinois farmers, also to the folks who support the industry, the workers in the biofuels industry that we often don't think about, i would argue. so, i'm really happy to see all of you here today but i want to ask you in particular a couple of 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 that 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 have seen, just for 2017, mr. pruitt has quadrupled the relatively historical number of waivers granted. and the impact of the behavior that we are seeing coming out of epa is you are taking over a billion gallons of demand out of the marketplace. every waiver granted is a gallon of biofuel that is not blended. >> right.
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and as i said, we did have secretary perry right here yesterday and i did ask him about that. because by law the epa is supposed to consult with the d.o.e. before they do this. and he said that did happen, but he wasn't particularly specific about that consultation. so i have 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's happened. so you mentioned about a billion gallons, you think, of biofuels? >> over a billion gallons. and that is moving us backwards to 2013 blending levels. so with these steps, we have moved back 5 years and turned back the clock on the progress of the rfs. >> right. and that is very disconcerting, obviously. mr. jeschke, it appears to me that the biofuels industry and agricultural groups have not yet identified what the right path forward on octane is. would you agree with that, that we haven't gotten an agreement? >> yes, i would. >> how about you, mr. jeschke?
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>> yes. >> right. and just make sure that everybody here keeps us up to date on what is going on. -- i know the committee is going to be kept up to date. but we want to make sure that we are in touch with all the stakeholders, really. i have only asked questions of two folks. but i am concerned that this be something that 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. but 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 be sending relatives that i have over to middle east to fight in conflicts where oil is at stake. we do have a national security issue here. but as one person from illinois just a minute ago told me confidentially in a conversation, this is about food and agricultural security as well. we have to keep that in mind going forward. so thanks, everybody. i appreciate it. and thank you again, mr. ruiz, for allowing me to go ahead.
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>> the chair now recognizes the gentleman from texas, we have a few of those on this committee, mr. olson, for five minutes. >> thank you, mr. chairman. and before i talk about the rfs, i want you all to note a very important thing that happened about two hours ago in this committee. our chairman proved he is a want to be texan. he keeps saying, yell, in texas, -- y'all, in texas, bigger is better. he is my mentor. he gave me a shimmer, a bobble head mr. shimkus. i'm just going to put on a cowboy hat. >> can i have your time? >> welcome to texas, mr. chairman. i want to be serious. as you all know, i have some
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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 today it stands as a very flawed mandate. one problem i have with the rfs is the severe cost displaces on smaller funders, like cvs, which is headquartered in my district, sugar land, texas. for those reasons, i worry about the potential cost of upgrades to newer high octane fuels. first question, mr. thompson. could you please talk about what sorts of projects you have to move to a higher octane fuel, and what that might cost? would that be doable for small refiners like our guys in sugar land, texas?
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>> well, a couple of things. we are very proud of cvs as well, chs, and all of our small merchant refiners, and they are supportive of me being here today and talking about higher octane, for sure. so initially moving to a higher octane standard, provided it's on a proper glidepath, there would be little investment required because we have the capability now 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's lots of different ways to increase octane, so each refinery would have to look at its operations. this would be a major investment. and the only reason we are willing to do it is because we would prefer to make this investment than the investments that we are required every year to comply with the rfs, which is doing very little to help
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consumers. >> i stand corrected. cvr. not cvs. one final question. this came up with secretary perry yesterday. secretary nicholson said, he spent a lot of time in iowa in 2016, right after the white house. that seems to be an important place to spend a lot of time there. he had a lot of dealings with ethanol, obviously in a corn state. he said his perception was people who produce corn in america care a little bit about where the ethanol goes, what gas tanks, but they don't care too much american, or overseas, they just want a supply source. they put their ethanol in the gas tank. he brought that idea of exporting our ethanol to mexico. thoughts about that? mr. jeschke?
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that just popped in my head yesterday but maybe a viable alternative to what we have now. >> the u.s. counsel which i'm a part that on one of the committees that they are looking at mexico and is very involved with corn grower, check off money, to try to educate and help the mexicans figure out how they might replace mtbe, which i know is a favorite of some of you. and that is used in mexico, and now extensively. but looking to possibly replace that with ethanol. so we are looking at all export markets as an opportunity to try and grow our demand. so that is currently going on. it isn't something that would be brand new. >> ms. skor, your thoughts on exporting ethanol to mexico. >> we are thrilled that mexico has opened its markets and is looking at ethanol and e-10. and so we have been in regular conversations with stakeholders in government and industry there. i would say that exporting homegrown renewable fuel to mexico is wonderful, in addition to making sure that we are taking advantage of this homegrown renewable fuel in our backyard.
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>> thank you. my time is over. it is time to mosey on down the road like we say in tech. >> i think the gentleman did say a small refinery in texas. and you say it a small refinery? >> in kansas, actually. the headquarters is in sugar land. >> the headquarters of a small refinery is in texas. just want to clarify, just for the record. >> come to texas and learn more about it. >> gentleman from georgia. five minutes, mr. carter. >> thank you, mr. chairman. i don't know how to follow that exchange but nonetheless, i will do my best. thank you for letting me be here. let me tell you, i represent the entire coast of georgia, over 100 miles of coastline. my concerns today is about marine engines. we are having a lot of problems with the new blends having degradation on our engines.
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this is something i'm concerned about. it's my understanding that the butanol has properties that more closely represent that of gasoline or align with gasoline than ethanol does. and that it has more of an -- or, less of a negative impact on the engines. in fact, the national marine manufacturers association and american boat and yacht council underwent a five-year study with the department of energy, studying this. and from what they have come up with, comparing it to ethanol, that study said that bio butanol and similar biofuels have a higher energy content and similar emission properties and reduction properties, while lowering the degrading properties only on the engines. have you heard of this? has anyone heard of this? >> yes, sir. >> mr. columbus? yeah, that's fine. >> i have. the producers of isobutanol are
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eager to try to work something out with epa so that they can, in fact, -- i'm sorry -- put their additive with blend stock into e-10. they have to go through the whole process. anything you can do to help epa. >> so you're telling me the problem is something that we need to be addressing in congress? or the epa? >> there is a regulatory impediment. they are taking a product to market in an efficient way and yes, it is epa. my bet is that the folks in epa would be thrilled to hear from you about that. >> thank you for that information. i did not realize that and that's very important. can it works? i mean, do you think that this would be better? >> look, it is a different thing than fuel ethanol. can it work? sure. it is a relatively small production item today.
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>> all right. can i stop you right there and ask you? a relatively small production item today. how are we going to get it to market then? because it's not going to do any good if we can't get the product to the people. >> you will get it to market the same way ethanol historically has gotten to market. it will go by train or barge. >> but i'm talking about demand. if there is not enough demand for it. >> well 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 that ethanol moves or that any other component moves. >> right. and i understand the transportation. but i'm just looking at it in terms of the economics. i mean, if there is not enough of a market, a demand for it, then i'm afraid it's not going to get the people. >> the manufacturers have assured me that they think there is plenty of demand to support their efforts. they are just trying to get rid
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of the regulatory impediment. >> okay, well fair enough. then we certainly will try to do that. let me ask you while i've got you, mr. columbus, about how it's marketed. and when i say that, let me ask you something. do you know what e-18 and -- e- 88 and e-15 mean to my wife? absolutely nothing. that's a problem. we've got a big number of consumers using these fuels inappropriately and putting them in marine engines and it is causing them significant problems. >> with due respect to the people that you know who do that, 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 and i understand that. but at the same time, can we do a better job of the marketing process of it? >> well, i mean, i think all of us have done what we can when we rolled out these ultralow
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sulfur fuels. when we rolled 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. and i know that sounds hard. but, what you are finding out is the number one thing that people buy gasoline on is and what it says on the pump. it is the big, stupid price sign. it is, what is it -- >> absolutely. i would agree with you. >> and, if they are prepared to put their second most expensive investment at risk for $0.03 a gallon, or $0.04 a gallon, it's a choice. in the 1970s, i watched people carve out fill pipe restrictors to but leaded gasoline into a car, meant to take unleaded, and they were angry and sued retailers because they said that leaded gasoline that you let me buy at your outlet
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poisoned my catalytic converter and when i went to register my car, it cost me $1000. >> mr. columbus, i'm with you. i understand your point. i think it's a valid point. but with all due respect, i think 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 did not realize that. i hope you understand my point. thank you, and i yield back. >> i want to thank my colleagues. we've got an 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 very long. i will recognize myself for five minutes for a second round of questioning. thank you, all. understand, this is where we need your help. there is a lot of things that
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we need to hash out. so, understand that a 95 r.o.n. fuel can be produced in different ways but in different refineries, can you estimate how many aliens of gallons, not now, help us, provide us some information -- estimate how many billions of ethanol would be used to produce a r.o.n. fuel at e-0, e-10, e-15, et cetera? we've had conversations about this the last couple of days. we need to know that. and i would even say you could do it collectively. peer-reviewed. we need those numbers. the other thing that popped in my mind is, if the vehicle fleet transforms, or starts moving 7% every year, so, a whole passenger vehicle, except for my very old car that i drive, there will be very few outsiders there. 13 years, right? so, i don't know if it's possible. what happened in this 13 year transition?
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to a high-octane standard? and, where are the billions of gallons of what we would hope would be homegrown ethanol produced in america. right? we really just need numbers. again, you could do it collectively, peer-reviewed. if you want to do it separately, we will fight about whose numbers. formulas are formulas. we will need to define variables. but, we just need the 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 market for even higher octane fuels above that level? and we can just go through and i have a follow-up to that. >> yes, sir, absolutely. if you take a look at the way fuels have developed over the last 78 years, you will see that there is always a creep.
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with respect to mr. nicholson, somebody at gm is going to look at you and say, if you want it to purr like a kitten, you would run it on 98 or 100 r.o.n.. that's the way things happen. we anticipate that 95 r.o.n. will ultimately become a floor. >> i would hope that there would be a continued -- for greater octane in the country. >> mr. nicholson? >> mr. shimkus, i'd like to do this kind of analysis that you talked about. we be willing to work with everyone on this panel to just do that analysis, peer- reviewed, so that we can get back to this committee with those numbers. >> thank you for that offer. >> and to anybody on the panel that would like to be part of that. to your question, for sure, there will be premium fuels on top as there are today. as mentioned, corvettes will always want to use the best possible, as well as luxury cars. so, i see that market
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developing. in fact, i would go even further to say there could be even more demanding the future, given the very difficult c.a.f.e. regulations that are in front of us. you know, oems actually have an incentive to specify premium required. because we then get to take advantage of that octane, with the regulators in certifying that. what prevents us from doing that today is the cost prohibitive $0.50 per gallon that you see at the pump. and most customers except for performance vehicles won't put up with that. >> mr. jeschke? >> i would hope that we will look to those higher plans, higher octane and higher blends. because i think concern for the environment will not get less. i think it will continue to become greater and greater. i think the higher octane fuels as mr. nicholson said, will help them to achieve those goals. >> esther thompson? >> we are certainly prepared to
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offer of 95 r.o.n. as a floor, not a ceiling. and let the market decide. where did it go? i will note that e-15 and e-85 has been around for a long time. consumer preference has not decided where those products go. so the consumers are going to decide whether they go higher. we would be open to it, provided that the floors 95. >> let me finish with this last one. what regulatory actions would be needed to make that extra high-octane fuel available? >> you have to have a modification of the one pound rvp waiver. and, i think you have to let the infrastructure involved, or you have to change the regulations. ultimately on the storage tanks at epa, or the latter, which i do not think any of us will be prepared to do. for the reason we are supportive of this ruling, as we are, as we believe the infrastructure will build out. and it will build out earlier because they will see down the road there is a return.
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>> my time is expired. i'm looking at my colleagues. can we kind of finish this question? >> ms. skor. >> i want to clarify, what's most important from the consumer perspective, especially when you are looking at fuel diversity and choice at the pump, it's access. when consumers have access to e- 15 which is unsettled 88 and a $.05-$.10 a gallon savings, what we are seeing is, they embrace it. they wholeheartedly embrace it. and if you look at the sales of e-15, they are increasing when consumers have access. but the most important point there is access. a big impediment is vapor pressure. you grant that and allow full- year sales. and i think that is one of a few impediment that we need to allow consumers to be able to access higher plant and better for the environment fuels. >> first of all, i would say that perhaps a national standard for a premium kind of fuel might be a facilitator for a market demand for such a thing.
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should be, from my point of view, a performance-based standard. but 95 r.o.n. can be the regular fuel and there could be a national standard for a higher one. that might be a good idea. we will need some kind of cooperation with regard to epa. it has been briefly mentioned here. and i just wanted to point out that our vehicles today are certified to the 9.0 psi rvp certification fuel. so it needs to be ensured that this requirement is met regardless of fuel composition. to ensure the proper operation of the evaporative emission system. so we are going to have to work out some details, but i think it can be done. >> i guess, mr. chairman, i would just point to the points that i mentioned in my opening statements. >> very good. thank you. quickly, i can't help myself. access. access refiners, we own less than 4% of the retail
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stations. we don't control access. mr. columbus can attest to that. so this notion that big, bad oil is preventing access is simply is not true. as far as, if i understand your question about how do we get to 95 r.o.n., it is for the rfs to sunset and in return we will be committed to a 95 r.o.n. standard. >> yeah. i think it is if 95 is the floor, what would be the regulatory actions that we need? or what would we need? >> i'm sorry. the issue is epa has mechanisms now. e-15 got to the market without a big overhaul to the clean air act. epa has mechanisms now for certification fuels to get authorized. they go through the process. >> thank you. and i will return the balance of my time and i thank you for allowing us to go a second round and i recognized him for five minutes. >> thank you, mr. chair.
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as i understand it, any and all cars on the road today use premium fuel. >> you say, can they use premium? >> yes. >> well, yes, you can. >> so when gm creates this new vehicle, this new engine, they are recommending use of premium. you are suggesting it runs it better. but what is to deny the consumer from fueling up with regular without damaging the engine? so, basically if it is 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? >> well, thank you very much, and i just want to come back to mr. mckinley's point. you know, consumers could do that today. i don't really know anybody that does that because putting premium in a regular-fueled vehicle doesn't get you any benefit.
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what we are proposing is not premium fuel. you know, it's a new 95 r.o.n. high-octane fuel for new greenhouse gasses. we still definitely have to deal with the misfueling issue. for example, if someone generally were to use the new 95 r.o.n. fuel in a 2018 model regular vehicle, there would really be no problem. you would have higher octane, but it would be very little benefit because the vehicle wasn't designed for that. so what we're proposing is the engines are designed and they use the new fuel. 91 now, the misfueling problem we worry about is they use today's regular fuel in their new vehicle designed for 95 r.o.n. that's a problem and that the remaining issue. >> so do you -- do you then require premium? not recommend it?
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>> we require the new 95 r.o.n. fuel. that's what we would do. and we need all oems to go together to do that. the analogy is maybe the way we switch from unleaded fuel to let it fuel. >> you are redesigning an engine that would require, not recommend. >> exactly. it will be required. and we are going to need all the oems to go together to make this work. >> okay. >> gentlemen, the chair recognizes the gentleman from texas for five minutes. >> thank you, mr. chairman. ms. skor, you recommend that we have a one pound rvp waiver, year-round, for all blends of gasoline, e-10 and above. well, any e level, is that correct? >> correct. >> okay.
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what, mr. columbus, would there be any problems with that from your constituents' perspective? >> it's not a problem for us. what we propose is a waiver for any fuel that has an rvp that is equal to or less than e-10. and you can go up to v-25 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% of the retail outlets in the united states have changed hands at the turn of the millennium. most of those tanks, the owner doesn't know exactly what he's got. so the impediment to taking the fuel on through is that it is a violation of the resource conservation recovery act to store e-15 or e-20 in an underground storage tank that the owner and operator cannot demonstrate was warranted to be compatible with that blend. >> let me try to come back to the original question, though. is there a downside to having the rvp waiver, the one-pound
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waiver, year round, for your constituents? >> no, sir. >> okay. sorry, i did not mean to cut you off. under the chairman will eventually. is there any problem for your constituent? for u.s. car? >> as i mentioned previously, our vehicles are certified to the nine psi rvp certification fuel. it needs to be enjoyed that the requirement is met regardless of the waiver or not. to ensure the proper function of the evaporative emissions. >> okay. what your constituents have any issue? i think you asked for it in your testimony, if i recall. >> that's correct. >> okay. mr. thompson, is there any problem with your constituency? with the one pound waiver, year- round, for all grades? all blends? >> we are willing to entertain the idea as part of a
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comprehensive solution. >> that's where i'm going with this. if we talk about it. >> we would not be too keen to the idea and as has been reported yesterday in exchange for nothing, because, that is not something we are interested in. we are willing to put all of it on the table like we are doing. we've been very candid. >> right. and that's what i'm talking about. i'm trying to address the needs of the broadest constituency possible. from the environment, to the consumer, from all of your contingencies at the table. you have introduced the next part of this question. and that is, if we don't do anything then we got status quo. and i think several of you have complained about the way the epa is adjudicated, the rfs. and so, do all of you feel like a statutory solution is the better outcome here? and where we are today? mr. thompson, i will start with you. >> okay. >> i could not answer that.
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i guess without the consultation. >> okay. mr. nicholson? >> we believe a legislative solution will be helpful to the overall process, to make sure that all of the parties are coordinated together, which is really important. >> okay. i believe that a conversation about high octane fuel 10, and i'm glad we are having that, i also believe that conversation can have outside of any conversation to deal with the renewable fuel standards. this body can move us to a path of a national fuel standard, and does not need to do that in the context of the renewable fuel standard. >> would you repeat your answer? say that again. i want to make sure i can drill into that one. >> okay. i applied the conversation today, about moving toward a high-octane standard. but, this body can move toward that goal, without touching the renewable fuel standards. >> i see what you are saying. okay. let me say this. is what we are looking at in
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terms of a statutory solution preferable to where we are today, where you've got the epa that is doing things that you already said today you don't like? >> i actually would not say that a statutory action is preferable to the situation. i think the challenge with the epa are on the administrative side, and we need to make sure that the important -- epa is implementing as envisioned by congress. >> and, this is going on in years prior to this administration? >> yes. we've got some different challenges most recently, yes. >> mr. columbus? >> my answer is yes. my concern about what is going on in status quo, because things have been going on, there is a significant amount of uncertainty in the market. and, commodities markets really like certainty. when there is uncertainty, you see values go up, down, sideways. people involved in this system get caught in a box.
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we think we should move forward? and we like the high-octane solution as we replace the start. >> can i indulge the chair and ranking member to give me one more minute? >> without objection. >> okay, thank you. my final question is this. mr. nicholson, this would be for you. i'm glad to hear that there is a fight in texas in terms of worldwide propulsion for gm. i can't wait for you to build a 700 horseplay all -- horsepower tahoe for me. that said, we are talking about something that is really broader than the u.s. possibly here. when we talk about worldwide environmental impact, you said there is already a 95 r.o.n. standard in europe. if we have one, single, nationwide standard in the united states for 95 r.o.n., what other countries would likely follow on? which would make u.s. car and u.s. refining, and u.s. ethanol, put us all, consumers, kind of all on the same page? >> yeah, thank you. as you pointed out, europe has already pointed out that 95
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r.o.n. is a great solution that delivers efficiency. as i said earlier, i think americans deserve at least as good of fuel as the europeans have. by historical patterns, let's say there is high likelihood that canadian and mexican wood, let's say, follow. >> okay, so we can set a new emissions profile for the entire north american economy? >> i think one national standard would provide leadership and show leadership that would likely be followed. >> okay, thank you for your indulgence. i yield back. great hearing today. >> seeing no further members wishing to ask questions for this panel, 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 fuels association. without objection, so ordered. in pursuant to committee rules, i remind members that they have 10 business days to submit additional questions for the record.
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i ask that witnesses submit their response within 10 days, except for that, probably lengthy review of billions of gallons, that will take longer than 10 days, i would assume. without objection, the subcommittee is adjourned. >> [ captioners transitioning ] in 1979, c-span was created as a public service by america's
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cable television company. and today, we continue to bring you unfiltered coverage of congress. the white house, the supreme court, and public policy events in washington dc and around the country. cspan is brought to you by your cable or satellite provider. this weekend on real america, and american history tv. the 1988 u.s. moscow summit between president ronald reagan and soviet leader gorbachev. >> democracy is sometimes complicated and sometimes it is trying. but it is a good way and we believe the best way. and once again, mr. general secretary, i want to expand to you and to all those who labored so hard for this moment, my warmest personal
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thanks. watch real america sunday at 4 pm eastern on american history tv on cspan3. truman daniel, president harry truman's eldest grandson, returned to the white house neighborhood to talk about why president truman found it necessary to move his family out of the white house for a restoration that last between 1948 and 1952. the white house historical association based adjacent to lafayette park across from the white house, hosted this hour- long event. >> good evening everyone. good evening class, this is good, i like this. my name is stuart mclaurin and i'm the president of the white house historical association. it is my privilege to welcome you on behalf of my colleagues, my staff colleagues, and our board of directors.


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