WASHINGTON, March 8, 2012 – At an EPA hearing in Ann Arbor, Michigan today,
API Vice President of Regulatory and Economic Policy Kyle Isakower said that industry cannot blend more ethanol into gasoline and warned that severe gasoline supply problems could occur unless Congress repeals the unworkable renewable fuel standard (RFS):
“The RFS mandate is unworkable and API has joined a chorus of diverse interests calling on Congress to repeal it,” Isakower said. “The increasing price of renewable fuel credits indicates that refiners have breached the E10 blendwall. This sudden, added cost of producing gasoline and diesel fuel could have profound impacts on the marketplace, potentially restricting fuel imports and encouraging fuel exports. This is just the tip of the iceberg, and the negative economic consequences are bound to get worse unless EPA acts to address the blendwall.”
The price of renewable fuel credits (RINs) for corn ethanol have risen 2500% above the average for 2012 to trade at $0.75 each, according to OPIS. Isakower said that refiners cannot meet increasing ethanol mandates without blending more than 10 percent ethanol into each gallon of gasoline. Higher blends of ethanol could damage millions of vehicles on the road today,
according to research by the Coordinating Research Council.
“When Congress passed the Energy Independence and Security Act in December of 2007, EIA was projecting increasing gasoline demand into the future,” Isakower continued. “Instead, gasoline demand has fallen and such reductions coupled with the annually increasing biofuel mandates accelerated the blendwall and significantly increased its severity.”
Isakower said EIA’s latest projection of gasoline demand for this year is nearly 12% lower than it forecasted in 2007; and EIA’s latest 2022 projection is 25% lower.
API asked EPA to reduce the advanced and total renewable fuel requirements so that the total ethanol volume does not exceed 10% of the Energy Information Administration’s estimate for 2013 U.S. gasoline demand.
API is a national trade association that represents all segments of America’s technology-driven oil and natural gas industry. Its more than 500 members – including large integrated companies, exploration and production, refining, marketing, pipeline, and marine businesses, and service and supply firms – provide most of the nation’s energy. The industry also supports 9.2 million U.S. jobs and 7.7 percent of the U.S. economy, delivers $86 million a day in revenue to our government, and, since 2000, has invested over $2 trillion in U.S. capital projects to advance all forms of energy, including alternatives.