EPA Poised to Push Consumers Into The Blend Wall

Mark Green
Posted October 28, 2015

Next month EPA is scheduled to finalize 2014, 2015 and 2016 ethanol-use requirements under the Renewable Fuel Standard (RFS) – and where EPA sets the volume standards could have big impacts on consumers and our economy.

API is launching a new advertising campaign – TV, radio and online – to underscore problems with the RFS and the need for Congress to repeal or significantly reform the program. The TV ad:

We’ve been talking about flaws in the RFS for some time, and the chorus of voices has grown because requiring increasing volumes of ethanol in the nation’s fuel supply could affect vehicle owners, consumers paying for fuel and food, the environment and the global food supply. Bob Greco, API’s downstream group director, discussed the RFS and the new ad campaign during a conference call with reporters:

“EPA seems poised to continue their heedless rush to raise ethanol volumes regardless of costs, market demand or vehicle compatibility. Ultimately, Congress has a responsibility to repeal or significantly reform this outdated – and potentially dangerous – program.”

Greco ticked off major issues with the RFS:

• EPA’s initial proposal for 2016, if finalized, would breach the ethanol “blend wall” – the point where required use of ethanol in the fuel supply exceeds the safe level of 10 percent.
• Extensive testing has shown that higher-ethanol content E15 fuel could damage engines and fuel systems in millions of cars on the road today. Auto manufacturers have said the higher blends may void new car warranties.
• Reports by the Congressional Budget Office (CBO) and NERA Economic Consulting caution of possible increased consumer costs if the “blend wall” is breached. CBO said the price of standard E10 gasoline could increase up to 26 cents per gallon than gasoline, and NERA projected a possible 30 percent reduction to the fuel supply and national economic harm from fuel shortages and rationing.

Greco explained that pushing more E15 and E85 fuels into the marketplace – seen by some as a way for the fuel supply to absorb more ethanol – won’t work because of “continued consumer disinterest” in those fuels.

In addition to potentially damaging vehicles, E15 isn’t compatible with much of the existing fuel infrastructure, he said. Costs to retrofit gasoline stations, most of them independently owned small businesses, could reach an average of $375,000 to $425,000 per site, according to the Petroleum Marketers Association of America.

Meanwhile, just 6 percent of vehicles can use E85, and gas station owners report it’s not a big seller, Greco said – probably because ethanol has 30 percent less energy per gallon, and using E85 means more stops to fill up. 

Greco said until Congress can act to repeal or majorly correct RFS flaws, EPA should move to protect consumers:

“We urge EPA to reduce the total renewable fuels volume requirements for 2014, 2015 and 2016 to below 9.7 percent of gasoline demand.  This will keep us below the 10 percent ethanol blend wall while allowing consumers the option of non-ethanol gasoline – demand for which remains high. EPA can effectively offer a Band-Aid for this failed program to protect consumers until Congress can act.”