The People of America's Oil and Natural Gas Indusry

The Facts on E15 – Chicago Edition

Mark Green

Mark Green
Posted July 24, 2014

Reading content produced by opponents of the oil and natural gas industry, you see a lot of distortion, misinformation, myth and falsehood. Yet, it would be hard to identify something as packed with baloney as the supporting arguments for an idea that’s being advanced by a pair of Chicago aldermen – mandating that all of the city’s self-service gas stations offer E15 fuel.

Backers of the soon-to-be-voted-on proposal have a website, www.cleartheairchicago.com, that’s basically a clearinghouse for corn ethanol industry sophistry, trumpeting E15 as the elixir of cleaner air, reduced oil imports and lower gasoline prices – taking advantage of the public’s earnestness for all three. Unfortunately, the promises they attach to E15 are like so much snake oil.

Over and over we’ve rebutted Big Ethanol’s E15 arguments – underlying the special interest’s work to prop up the flawed Renewable Fuel Standard’s mandates for ever-increasing ethanol use. A number of them are repeated to support the Chicago proposal: E15 is cleaner and cheaper than the E10 gasoline that’s the staple of the U.S. fuel supply. It’s acceptable for use in U.S. vehicles and is actually better for them than E10. E15, they claim, is about promoting consumer choice.

Quick analysis: balderdash on all fronts.

The Chicago proposal and Big Ethanol’s broader campaign for wider ethanol consumption poses a risk for vehicle engines, could make scarcer the fuels Americans want and could harm the economy – while failing to deliver promised benefits.

Clear the air Chicago? By all means, let’s clear the air.


Claim
: As a renewable fuel ethanol is cleaner than gasoline.

Truth: When you include emissions during the fuel-production phase, emissions are higher for fuels with greater corn ethanol content than E10 gasoline.

Chicago E15 proponents cite the Argonne National Laboratory in saying that higher blends of ethanol reduce the greenhouse gas emissions of motor fuel by an average of 34 percent compared to conventional gasoline. The Environmental Working Group (EWG), an environmental policy and research organization:

EPA’s Regulatory Impact Analysis estimated that corn ethanol’s greenhouse gas emissions for the year 2012 would be 33 percent higher than gasoline’s with dry distiller grains, and 21 percent higher with wet distiller’s grains. … The [EPA] proposed cut [in the 2014 RFS] of 1.39 billion gallons in the corn ethanol mandate would reduce emissions by 3 million metric tons of CO2 equivalent … as much as taking more than 580,000 cars off the road for a year.

More EWG:

The GREET model (developed at Argonne National Laboratory) underestimates land-use change emissions because it made several erroneous assumptions. … GREET also made unrealistic assumptions about how yields respond to price. … Accounting for resource constraints on corn production – which the GREET model ignored – is essential to get an accurate estimate of the emissions from land use change.

Clean Air Task Force 2013 white paper:

If EPA had analyzed corn ethanol produced during 2010-2015… the Agency would have found that corn ethanol’s net emissions over 30 years are approximately 28% higher than the emissions that would result from the use of gasoline over the same period.

Ingrid C. Burke, University of Wyoming professor and director of the Haub School and Ruckelshaus Institute of Environment and Natural Resources, in 2011 testimony before a House subcommittee:

“… the pollutant amounts emitted during the fuel-production phase (including feedstock production and transportation) are typically higher for corn-grain or cellulosic ethanol than for petroleum-based fuels.”

More Burke:

“There is evidence that RFS2 and the push of biofuels has caused more land to come into corn production. Increases in corn production have contributed to increasing nutrient loadings to surface water and to exacerbating eutrophication and hypoxia. … Increasing corn production to produce corn-grain ethanol for meeting RFS2 likely will have additional negative environmental effects.”

National Academy of Sciences:

“For corn-grain ethanol, life-cycle emissions of major air pollutant species (for example, CO, NOx, PM2.5, VOC, SOx, and NH3) are higher than for gasoline.”


Claim
: E15 is cheaper than E10 gasoline, with expected savings of between 5 cents and 15 cents per gallon.

Truth: The proponents’ cost-savings projection is based on unrealistic assumptions, failing to account for the fact ethanol has just two-thirds the energy density of gasoline. The statement also ignores likely increased infrastructure costs with E15 and potential engine repair costs that could impact consumers.

At current gasoline prices, after accounting for energy density loss (E15 vs. E10), retailers would need to acquire ethanol at a cost less than zero to realize a 15-cent-per-gallon cost decrease by increasing the ethanol concentration from 10 percent to 15 percent.  In Illinois, E10 receives a 20 percent tax incentive that does not extend to E15, which increases the cost to provide E15 compared to E10. This is on top of the four layers of taxes that often make Chicago gasoline prices the highest in the nation.

For consumers, E15’s lower energy density compared to E10 means poorer fuel economy compared to E10 – and more frequent refueling.

There are other cost implications to mandated E15 service. According to the U.S. Government Accountability Office, most existing equipment at retail fueling stations is not approved for use with intermediate ethanol blends including E15, and handling E15 without equipment modifications could lead to serious safety and environmental problems. An API study similarly found that more than 50 percent of retail infrastructure might not be compatible with E15. 

For Chicago-area retailers that have two underground tanks (most retailers), to store an E10 regular octane and an E10 premium octane, the midgrade octane fuel is made by using a blending pump to mix the right portions of regular plus premium. This proposed ordinance would require a retailer to tear up their driveway and install a third tank to accommodate the E15 at a cost of more $100,000, bearing in mind that the typical service station’s annual pre-tax profit is less than $48,000, according to a 2014 presentation given by the National Association of Convenience Stores’ John Eichberger . There’s no way that two tanks of products could supply E10 regular, E15 midgrade and an E10 premium.

To the claim that real-world infrastructure costs are a concoction of the oil and natural gas industry, 94 percent of retail gasoline stations are independently owned and operated. The investments needed to offer E15 would be borne by those independent franchisees, not the major refiners whose branded products they choose to carry.

Chicago E15 proponents say the proposal wouldn’t impact small business owners because it includes exemptions. Yet very few, if any, retailers would meet the exemption threshold. An exemption for stations with underground tanks not compatible with E15 is insufficient for sites that also have “hanging hardware” such as dispensers, hoses, nozzles and breakaways that aren’t E15 compatible. The entire delivery system from tanks to nozzles would need to be UL approved for E15. And the incompatibility exemption could be interpreted as not applying to any retailers due to compatibility interpretations incorporated into Illinois Administrative Code.

Claim: EPA has approved E15 for cars made in 2001 and later, and ethanol’s higher octane content improves performance and is being blended at higher levels used by professional race cars.

Truth: Consumers could be saddled with repair costs from using E15 in vehicles not designed for the fuel, and it’s erroneous to compare the vehicles driven by the average motorist with race cars.

Automakers have clearly said that their vehicles were not designed to use E15, and would not be warranted for damage caused by E15.  According to AAA, 90 percent of vehicles on the road today are not approved by manufacturers to use E15, including most 2001-2013 models.  Coordinating Research Council (CRC) testing shows that 2001 and newer automobiles could experience engine durability and fuel system durability issues, and research at the Energy Department’s Oak Ridge National Lab shows increased “check engine” light illumination on E15.

Further, E15 usage could damage small engines such as lawnmowers and chainsaws, motorcycles and non-highway equipment such as boats. E15 availability alongside other fuels could increase consumer confusion and raise the risk of misfueling.

We’ve addressed the NASCAR example before. Except for having four wheels and an engine, today’s NASCAR vehicles running on E15 have very little in common with cars owned by the average motorist. NASCAR engines are designed for racing and have been modified to be compatible with the sole-sourced, Sunoco-produced competition E15 racing fuel. The engine alone costs between $45,000 and $80,000 – significantly more than the cost of the engines in most consumers’ cars and trucks.

The fuel pumps on NASCAR vehicles are racing pumps that have been modified to specifically handle E15 and high-performance fuel-flow rates. Obviously, most consumer vehicles on the road have not undergone these modifications. As mentioned above, engines and fuel systems in today’s consumer vehicles can be harmed by E15. Furthermore, government research shows that E15 can adversely impact sensors that help control emissions on consumer vehicles. Conversely, race car emissions are uncontrolled and do not have similar sensors.

Finally, NASCAR engines and fuel pump systems are highly stressed components that undergo intense maintenance, inspections and rebuilds after each race. Unlike professional racecar drivers, typical car owners don’t have the time or money to get their cars serviced after each drive. So, to equate E15 miles accumulated on a NASCAR race vehicle with those driven on a typical vehicle sold to and operated by the average consumer isn’t relevant. It’s just silly.

Probably the most curious aspect of the Chicago E15 proposal is the notion of mandating choice. Think about it. Requiring E15 is a requirement for small business owners to spend tens of thousands of dollars on infrastructure modifications. No choice there. For consumers who can’t use E15 there could be fewer fueling options in the Chicago area due to the limitation of filling station tank capability, potentially encouraging customers with older vehicles to fill up outside Chicago. Some choice there.

According to the U.S. Energy Information Administration, nationwide demand for E0 (gasoline without ethanol) is about 3.4 percent of total gasoline supply. E0 is used extensively in small engine and non-highway applications – categories for which EPA has prohibited the use of E15! Mandating stations to sell E15 could force those that currently sell E0 to discontinue selling it. We suppose E0 customers would have the “choice” of hunting around for a new retailer. Bottom line: True consumer choice shouldn’t force E0 out of the market.

ABOUT THE AUTHOR

Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Mark also was a reporter, copy editor and sports editor. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela live in Occoquan, Va., where they enjoy their four grandchildren.