API: Keep Ethanol Blend Below 10%

NEW YORK (DTN) -- The American Petroleum Institute on Wednesday, Sept. 9, urged the U.S. Environmental Protection Agency to keep the blend ratio of ethanol in gasoline below 10% when mandating renewable demand, and to reject calls by ethanol supporters to expand the use of ethanol since the biofuels policy is likely to end up reducing domestic supply of gasoline and diesel fuels while raising fuel prices and wrecking the economy of the United States.

Citing a study by NERA Economic Consulting, Bob Greco, API's head of downstream group, said the statutory biofuel mandates under the Renewable Fuel Standard, a key part of the energy security law initially enacted in 2005 and updated in 2007, are infeasible to achieve in 2015 and beyond and could cause severe harm to consumers and the U.S. economy.

"Current mandates try to force more ethanol into gasoline than is safe for the majority of cars on the road," he said in a conference call with reporters Wednesday morning. "Rather than risk damage to vehicles, NERA predicts that refiners will instead be forced to reduce the nation's supply of gasoline and diesel by as much as 30%."

Fuel blends with higher than 10% ethanol could damage engines and fuel systems in millions of automobiles, and damage lawn and marine equipment, Greco added, citing a separate study.

Greco also highlighted the NERA study's conclusion that consumer demand for higher ethanol content gasoline like E85 and E15 is too small to serve as an outlet for higher ethanol mandates.

"You don't have to be an economist to know that removing almost one-third of our nation's fuel supply would deal a crippling blow to our economy," Greco said. "Such a large decrease in fuel supplies would have a broad impact across the entire economy, and NERA predicts this would dramatically increase fuel costs for consumers.

He added, "While API continues to press for full repeal or significant reform of the RFS, we understand that will take time. And in the meantime, as the NERA study concludes, the consumer could feel the pinch in the form of higher energy costs. That's why we urge EPA to reduce the total renewable fuels volume requirement and waive the cellulosic ethanol requirement for 2014, 2015, and 2016."

API's comments come ahead of EPA's intention to issue its statutorily required RFS annual rules by Nov. 30.

On May 29, EPA proposed lower RFS targets for 2014, 2015 and 2016 than stated in the Energy Independence and Security Act over concern with exceeding the 10% ethanol blend ratio, with the 2014 RFS reduced from 18.0 billion gallons to 15.93 billion gallons. The EPA proposed total RFS requirement for this year is 16.3 billion gallons and at 17.4 billion gallons in 2016.

The D6 Renewable Fuel nested category, which is satisfied nearly exclusively with traditional corn-based produced ethanol, was reduced from a 14.4-billion-gallon mandate for 2014 to 13.25 billion gallons in the EPA proposal. For 2015, EPA set the D6 category mandate at 13.4 billion gallons and at 14.0 billion gallons for 2016 versus 15.0 billion gallons stated in the statute for both years.

API is a national trade association representing the oil and natural gas industry.

(BM/AG)

Copyright 2015 DTN/The Progressive Farmer. All rights reserved.