The People of America's Oil and Natural Gas Indusry

Energy Tomorrow Radio: Episode - 126 E15: Moving Forward Too Quickly

Jane Van Ryan

Jane Van Ryan
Posted January 18, 2011

In today's episode, I interview API's Downstream and Industry Operations Group Director Bob Greco about the Environmental Protection Agency's (EPA) decision regarding the amount of ethanol permitted in gasoline. Use the audio player below to listen to information about the article and follow along with the show notes. I hope you find the podcast informative.

00:16 Nearly every gallon of gasoline sold in America today contains ethanol. This alcohol fuel is made primarily from corn here in the United States and blended into gasoline in accord with federal guidelines. Gasoline containing no more than 10 percent ethanol has been in the marketplace for several years. But recently the Environmental Protection Agency (EPA) decided to allow fuel containing up to 15 percent ethanol to be sold for 2007 and newer model vehicles. The decision was quite controversial and API's Bob Greco is here today to explain.

00:55 Can you tell me, since you represent the oil and natural gas industry, how does the industry feel about ethanol being added to gasoline?

01:03 Mr. Greco: The oil and natural gas industry supports the responsible use of ethanol in gasoline. We are currently implementing a congressional mandate and actually more than 90 percent of gasoline in the market right now has ethanol in it. We are the largest users of ethanol. In fact, oil companies are investing in both corn-based ethanol and also future new advanced ethanol forms that haven't even been marketed yet. There is a big interest in providing safe and reliable fuels containing ethanol to our customers.

01:33 Yet, the oil and natural gas industry is quite concerned about E15. Why?

01:45 Mr. Greco: As you mentioned, gasoline currently is limited to 10 percent ethanol. It's called E10. Going from E10 to E15 is actually a 50 percent increase in the amount of ethanol in fuel, which is one of the biggest changes in gasoline we have ever experienced. Cars and trucks on the road today have been warranted to operate on E10 or a 10 percent ethanol blend. That is why we have been making that type of fuel. To go beyond that is a decision that needs to be made very carefully in light of the hundreds of millions of cars and trucks on the road today that are currently designed and warranted to operate on no more than 10 percent ethanol.

02:22 But EPA is approving this E15 form of fuel for the newer vehicles only. Do they have studies showing that it is safe for new vehicles, and do we have any reason to suspect that it might cause problems?

02:35 Mr. Greco: EPA is relying on a single study largely funded by the U.S. Department of Energy that looked at one aspect of vehicle performance, namely catalytic converters and how their performance is impacted by higher level of ethanol. But as auto companies and oil companies, our two industries are worried about much broader concerns for the consumer. For example, do higher levels of ethanol affect seals and gaskets on cars? Do they overload the emissions controls on your car? Do they trigger your check engine light going on, which is a very real possibility. These are all problems that affect not only your emissions but also the customer's experience with the car and fuel, so we are very sensitive to that and it is a significant legal liability that we are concerned about. That is why the auto and the oil companies have been testing since 2008 in a multimillion dollar research program to look at precisely these impacts on cars.

03:31 Now when consumers fill up at the pump, they have to choose between regular, mid-grade or a high-test, high-octane type fuel. Those pumps are all labeled accordingly so they know which nozzle to put into the fill pipe of their car. But what happens when if you end up with another blend of fuel? How would the pumps be labeled if you have 15 percent ethanol instead of 10 percent ethanol because most of the pumps we see today have a sticker on them that says "contains no more than 10 percent ethanol?"

04:02 Mr. Greco: You are right. EPA has proposed a labeling requirement, which we support, that clearly notes that the fuel now has 15 percent ethanol instead of 10 percent ethanol. We submitted comments to EPA on that. However, our concerns are multiple in what EPA is proposing. First off, what EPA is proposing doesn't mean that the vehicle manufacturer endorses or warrants the vehicle or small engine to use that new fuel, E15. Ultimately, we feel the customer needs to consult with their engine or vehicle manufacturer to determine what fuel is suitable. Secondly, the label does not provide protection against misfueling, which is a big concern of our members and the service station owners because in effect, even if you put this label on your pump, and the customer either accidentally or intentionally misfuels and uses the wrong fuel in the wrong vehicle, we have no legal liability protection because of that label.

05:00 You're talking about misfueling, of course, and we have been talking primarily about vehicles, but how could E15 affect chainsaws, snow blowers, snowmobiles and pieces of equipment like that?

05:12 Mr. Greco: EPA in the waiver decision has only approved E15 for cars and trucks. They specifically denied the use of E15 in smaller engines such as chainsaws, motorcycles and leaf blowers because there is no testing data to support their use. We agree with that assessment. These smaller engines are less sophisticated than engines in cars and trucks and can run significantly hotter as a result of using E15. That could be a real safety problem in something like a chainsaw for example. The small engine manufacturers have been very concerned about this and have been vocally opposed to a partial waiver. When you think about when you fill up your car at the tank you typically go from the fill pipe of your car right to the red portable tank that you are filling up for your small engines. There is a very real threat and concern about misfueling.

06:08 What about E15 and the infrastructure at service stations like the underground storage tankss, the piping that comes from underground tank up to the fuel dispenser and so on? Are there concerns about E15's affect on that equipment as well?

06:22 Mr. Greco: Yes, certainly. Just as there are seals in gaskets in cars that can be affected by E15, similar seals and gaskets can be found at the service station and the pump above the ground and the underground storage tank. The DOE recently released some test results of gas station dispensers and the results were pretty sobering. About 70 percent of the older equipment in existence failed these tests and about 30 percent of the new equipment failed these tests. That is a real liability concern because if you are a service station owner and have to determine whether to use E15 in an existing underground storage tank when the replacement costs for that storage tank could be $50,000 to $200,000. The testing that the DOE did was only above ground. They didn't even look at underground storage tanks which have similar seals and gaskets. It is a huge unknown liability that we have to confront in whether to sell E15.

07:20 Is it possibly a safety issue or perhaps an environmental issue?

07:24 Mr. Greco: It is possibly both. A safety issue from gasoline leaking on the ground while customers are refueling their car and an environmental issue if it were to leak into the groundwater around a service station for an underground storage tank.

07:37 I understand that the EPA is considering expanding the use of E15 to older vehicles despite the fact that the testing isn't complete and there are these concerns. What do you think about that?

07:48 Mr. Greco: Well we are very concerned about extending a decision that was already premature for the newer vehicles, if they extend it to older vehicles. Right now EPA has approved the use of E15 in 2007 and newer vehicles. They are considering extending that to 2001 to 2006. According to EPA, anything from 2001 and newer could use E15. That again is relying on some DOE testing and EPA has decided not to wait for the ongoing tests that the auto and oil industries are doing on these similar older vehicles. We're concerned that a shaky decision by EPA could be even shakier if they extend it.

08:24 This is all very perplexing, particularly for people who have made major investments as people do in their vehicles and other forms of equipment. Why do you think EPA would consider expanding the use of E15 when it appears potentially unsafe?

08:41 Mr. Greco: Any discussion of ethanol in gasoline gets very political, very quickly. When you look at how parties align on this issue, really the only proponents of this were the ethanol manufacturers and the corn growers. They are the folks who submitted this waiver request to EPA. Aligned up against it is a large and surprisingly diverse group of interests who think it is a premature decision. That includes the oil and natural gas industry and the auto industry, but it also includes environmental groups, as well as farm groups. It includes feed manufacturers, small engine manufacturers, sportsmen, consumer groups, all sharing a similar concern with EPA rushing to judgment on this decision. In addition to our opposition, it has also attracted bi-partisan opposition in Congress. I would not be surprised if this year there were some hearings in Congress to better understand and probe EPA decision making on this waiver.

09:36 Clearly this is going to be an issue to watch for the next several months or longer perhaps.

09:40 Mr. Greco: Yes it will be.

09:42 Thank you, Bob. I really appreciate you joining us today on Energy Tomorrow Radio.