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Bob Greco's comments during Press Conference Call on RFS ad campaign

Press briefing teleconference on RFS ad campaign
Robert Greco, API downstream group director
Wednesday, October 28, 2015

Opening statement, as prepared for delivery

Good morning everyone. Thanks for calling in. 

Today I’m announcing that, as the administration is finalizing its 2014, 2015, and 2016 Renewable Fuel Standard volumes over the next month, API will run a multi-faceted advocacy campaign that will include TV, radio, and online advertising. 

Our ads will focus on the negative consequences higher ethanol mandates could have on consumers, including unexpected repair bills and potentially broad harm to our nation’s economy. 

Right now, the majority of gasoline contains 10 percent ethanol by volume. But EPA’s initial proposal for 2016, if finalized, would increase ethanol volume requirements and breach the blend wall– the point at which the mandate exceeds the safe level of 10 percent ethanol in the fuel supply. 

EPA assumes that high-ethanol fuels like E15 and E85 will make up the difference, but continued consumer disinterest in these fuels demonstrates that large volume increases beginning in less than three months are just not practical in the real world. 

Extensive testing by the auto and oil industries shows that E15 can damage engines and fuel systems in millions of cars on the road today. And automakers have said these higher blends may void new car warranties.  

Furthermore, E15 is also not compatible with much of the existing fuel infrastructure. Costs to retrofit retail gas stations – most of which are independently owned small businesses – could reach an average $375,000 to $425,000 per site, according to the Petroleum Marketers Association of America.

And only 6 percent of vehicles can use E85.  But even among those drivers, gas station owners say it’s not selling. That’s probably because ethanol has 30 percent less energy per gallon than gasoline, so using E85 means more stops to fill-up.  And according to AAA, E85 has cost more than gasoline when adjusted on an energy content basis for as long as Triple-A has tracked this data.

We’re also concerned that mandating higher ethanol blends could raise costs for consumers.

A 2014 report by the nonpartisan Congressional Budget Office concluded that breaching the blend wall could increase the price of E10 gasoline by up to 26 cents per gallon. And a 2015 NERA Economic Consulting study projected a possible 30 percent reduction to the fuel supply and “severe economic harm” across the nation due to fuel shortages and rationing.

Despite all of this, 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. But as we all know, congressional action takes time.

So in the meantime, 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.

A final rule from EPA is due by November 30 of this year. 

Thank you, and now I’d be happy to take your questions.