The People of America's Oil and Natural Gas Industry

Consumer Interests Ahead of Ethanol Interests

Mark Green

Mark Green
Posted May 29, 2015

With EPA already embarrassingly late in setting requirements for ethanol in the fuel supply for 2014 (due 18 months ago) and 2015 (due six months ago), the agency finally has proposals for those years and 2016 that would continue to drive ethanol use – though not at levels dictated by the Renewable Fuel Standard (RFS).

Top EPA official Janet McCabe called the proposals “ambitious, but responsible.” We’ll agree on the ambitious part – in that it takes a whole lot of something to thread the needle between marketplace realities and the flawed RFS – difficult for the nimblest of bureaucracies, much less a regulatory colossus like EPA.

Unfortunately, EPA comes up short, particularly for 2016. An RFS program that long ago went awry remains lost in the tall weeds of process over substance.

Even as EPA exercises its waiver authority to deviate from eight-year-old ethanol requirements set out by the RFS – the agency misses on protecting American consumers. While EPA’s waiver move acknowledges what we’ve been saying – that the RFS is dysfunctional and unworkable – it doesn’t neutralize risks the RFS continues to level at Americans.

API President and CEO Jack Gerard talked about EPA’s latest ethanol proposal and the RFS during a conference call with reporters. Gerard:

“We were pleased to see that EPA proposes to use its authority to waive down ethanol mandates, acknowledging the threat to American consumers. But EPA assumes growing demand for high-ethanol fuel blends that are not compatible with most cars on the road today, potentially putting American consumers, their vehicles and our economy at risk.”

Still needed and underscored by EPA’s latest RFS proposal: congressional action to repeal or majorly overhaul the RFS. Gerard noted difficulties with mandating more ethanol into the nation’s fuel supply while fuel efficiency improves and overall demand remains flat:

  • Most cars on the road today are only approved by their manufacturers for ethanol blends of 10 percent or less – the E10 fuel that’s standard across the country.
  • Testing has shown that higher ethanol blends like E15, which would allow more ethanol to be absorbed in the fuel supply, could damage engines and fuel systems.
  • For model years 2014 and 2015, half of manufacturers do not recommend using E15 in their vehicles. For model years 2001 through 2011, zero manufacturers recommend using E15.


warranty

Gerard said while some believe that pushing more E15 and E85 fuel into the national supply is a way to satisfy RFS requirements, they’re not. Just 6 percent of the current vehicle fleet can use E85, and nationally, E85 use represents just 0.15 percent of overall gasoline demand. He said consumers have learned that E85 is less energy-dense than standard gasoline, getting fewer miles per gallon: A tank of E85 won’t take you as far as a tank of E10 gasoline.

Increasing the presence of higher-ethanol blends in the national fuel supply traces back to the flawed notion, under the RFS, that government can centrally direct marketplace behavior. Gerard contrasted the RFS’ attempts to herd consumers into using more higher-ethanol blend fuels, with consumer demand for E0 – fuel with zero ethanol, used in boats, classic cars, outdoor power equipment and other engines, which could be squeezed out by the RFS’ ethanol mandates:

“The administration should not try to force the use of fuels like E85 and E15 for which there is no significant consumer demand while trying to eliminate fuels like E0 for which actual consumers have shown a substantial demand. … That’s the great concern that we’ve got to bring into the conversation here: What’s the marketplace really doing? … We’re continuing to mandate higher and higher blends, (and) we’re getting out of sorts with the marketplace. Our concern as they continue to ramp these numbers up … we’re now going to force the blending of fuels that consumers can’t use in their cars and that the manufacturers of those cars won’t warranty. That’s why it’s important that we come back and look at the consumer impact here.”

It’s time for Congress to take a cold, hard look at the RFS, which was designed to help reduce oil imports during an era of declining domestic production. Imports have fallen – thanks to surging domestic production from shale and other tight-rock formations, using advanced hydraulic fracturing and horizontal drilling. The United States was the world leader in the production of petroleum and natural gas hydrocarbons in 2014, thanks to safe energy development. As a result, the RFS has become a relic of the past. Now Congress must act, and EPA must more effectively protect consumers. Gerard:

“… until Congress acts, EPA must do what it can to provide a stopgap to protect American families and businesses from rising ethanol mandates that threaten consumers and our economy. EPA must set the final ethanol mandate to no more than 9.7 percent of gasoline demand. This will help ensure drivers are not forced to put high-ethanol fuel blends into cars and equipment that aren’t approved to use them. It will also help ensure supply of ethanol-free gasoline for consumers who want it. Members on both sides of the aisle agree this program is a failure, and we are stepping up our call for Congress to act. Consumers’ interest should come ahead of ethanol interests.”

ABOUT THE AUTHOR

Mark Green joins API after spending 16 years as national editorial writer in the Washington Bureau of The Oklahoman newspaper. In all, he has been a reporter and editor for more than 30 years, including six years as sports editor at The Washington Times. He lives in Occoquan, Virginia, with his wife Pamela. Mark graduated from the University of Oklahoma with a degree in journalism and earned a masters in journalism and public affairs at American University. He's currently working on a masters in history at George Mason University, where he also teaches as an adjunct professor in the Communication Department.

Energy Tomorrow is a project of the American Petroleum Institute – the only national trade association that represents all aspects of America’s oil and natural gas industry – speaking for the industry to the public, Congress and the Executive Branch, state governments and the media.