As prepared for delivery
Press briefing teleconference on refineries
Bob Greco, downstream group director
Thursday, May 3, 2012
Good morning everyone. Thanks for calling in.
EPA continues to move forward with its decision to approve the use of 15 percent ethanol in gasoline, even though testing to date shows this higher concentration would not be fully compatible with much of the dispensing and storage infrastructure at our nation’s gas stations.
As a result, adding these fuels into our gasoline supplies could result in damaged equipment, safety problems, and environmental impacts at our gas stations – to say nothing about car engines – and it could even erode support for the nation’s renewable fuels program.
EPA’s decision on E15 would require gas stations to ensure that their equipment is compatible with the fuel. This would be challenging because the equipment is complex and inter-connected, with many parts from different manufacturers that were installed at different times.
API recently completed a review of studies on equipment compatibility with E15, and the results are sobering. An estimated half of the existing retail outlet equipment is not compatible with E15. Unfortunately, it may be hard for a station to know whether its equipment is or isn’t compatible, which could discourage many of the nation’s 157,000 gasoline retail outlets from selling E15.
Without a market for the higher ethanol blends, Congress’ biofuels mandate could result in higher compliance costs or production constraints that could place upward pressure on gasoline prices for consumers.
EPA has done an inadequate job of answering the many challenges surrounding E15, in particular dispensing equipment and other infrastructure implications.
DOE’s National Renewal Energy Laboratory said its 2010 testing showed that 70 percent of existing dispensing equipment and materials and 40 percent of new equipment had compatibility issues. The Oak Ridge National Laboratory research supported those conclusions.
And, a year ago, the U.S. Government Accountability Office said, [quote] “the vast majority of existing retail dispensers in the United States are not approved for use with intermediate ethanol blends under OSHA’s safety regulations.”
GAO also said that not enough research has been conducted and that many service stations lacked the records required to verify the compatibility of their equipment with E15.
It’s important to note that the ownership of America’s gasoline retail outlets is widely dispersed. Only three percent of retail gasoline stations are owned by API members. About 60 percent of all gas stations are owned by small businesses that only own one station.
The availability of biofuels for blending in gasoline is a good thing because of its favorable octane, and the industry supports a realistic and workable Renewable Fuels Standard. In fact, more than 90 percent of all gasoline sold in the country has a 10 percent blend of ethanol. But EPA has not done its homework before introducing E15 to America. The Agency’s enthusiasm for E15 has clouded its judgment and led to approval of a fuel before adequate study has been done.
According to news articles, Toyota is selling new cars with a gas cap warning consumers that using E15 will void the car’s warranty. And we are in the final stages of our own study, conducted with the auto industry, on the compatibility of E15 with car engines. The study will be publicly released in the coming weeks.
Thank you. And now I’ll be happy to answer your questions.