The People of America's Oil and Natural Gas Indusry

Energy Tomorrow Blog

biofuels  ethanol  rfs34  renewable-fuel-standard 

Bob Greco

Bob Greco
Posted April 11, 2013

Two members of the University of Illinois’ agricultural and consumer economics department have an article out this month that raises some important concerns about the Renewable Fuel Standard (RFS).  As agricultural economics experts at the flagship university of a farm-heavy state, which also is the third-largest ethanol-producing state in the country, their work merits a special mention.

First, Scott Irwin, chairman of the Agriculture Marketing Department, and Professor Darrel Good make some general observations about the RFS (sometimes also referred to as RFS2, for its 2007 revision), uncertainty surrounding potential higher compliance costs and where prices for Renewable Identification Numbers (RINs) may be headed under the RFS’ current framework:

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ethanol  renewable-fuel-standard 

Bob Greco

Bob Greco
Posted April 3, 2013

The Renewable Fuels Association (RFA) is no friend of its biggest customer, the U.S. oil and natural gas industry. That’s clear from the ethanol lobby’s attacks on our industry for raising questions about E15 gasoline (up to 15 percent ethanol) and the ethanol “blend wall,” addressed here, here and here. So, we were pleasantly surprised with last week’s RFA whitepaper showing that, yes – the high price of federal ethanol credits is increasing the cost of gasoline.

Quick review. Another study released last week, from NERA Economic Consulting, found that the fuel market is nearing the point where refiners no longer can satisfy ethanol blending mandates under the Renewable Fuel Standard (RFS) without elevating the ethanol content in gasoline to higher than 10 percent.

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ethanol  hydraulic-fracturing  natural-gas  keystone-xl 

Mary Leshper

Mary Schaper
Posted March 29, 2013

Chicago Tribune – Energy Security and American Jobs

Editorial: “It's time to approve, at long last, [the Keystone XL] pipeline. And to let the North American energy industry make the most of the opportunity afforded by the mining of shale-oil deposits and the expanded use of hydraulic fracturing, known as fracking, to produce natural gas and oil. Allow America to draw on its bounty. The economy will benefit. The nation will be more secure and successful. And Americans will go to work.”

Fuel Fix Blog – IHS: Gulf Coast Refineries Good Place for Canadian Crude

The Houston Chronicle’s Jennifer Dlouhy reports on a new study that says there’s a greater economic boost from processing oil sands crude at U.S. refineries instead of first upgrading it in Canada.

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diesel  ethanol  gasoline  renewable-fuel-standard 

Mark Green

Mark Green
Posted March 26, 2013

The biofuels/ethanol debate has moved over to National Journal’s Energy Experts Blog, with this week’s posts addressing whether the Renewable Fuel Standard (RFS) that mandates biofuel use should be left alone, amended or repealed. Some of what others are saying:


Bernard Weinstein – associate director of SMU’s Maguire Energy Institute:

“The biofuels mandate has done little or nothing to enhance America’s energy independence or security. Oil imports have dropped dramatically over the past five years, from 60 percent of consumption to around 35 percent; but the credit goes to the shale revolution that has greatly boosted domestic production. What’s more, the potential contribution of ethanol to the energy mix has been oversold. Processing the entire U.S. corn crop into ethanol would yield energy equal to just 12 percent of gasoline consumption. … But the most pressing reason for repealing the ethanol mandate is that refiners must blend a larger quantity every year. … Consequently, refiners are up against a “blend wall” as the mandate forces them to purchase more ethanol than they can safely put into gasoline.”

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renewable-fuel-standard  ethanol  gasoline 

Bob Greco

Bob Greco
Posted March 22, 2013

Paying for Ethanol's Infrastructure. Ethanol supporters have a blog post up suggesting that if the oil and natural gas industry simply invested in the “modern fuel distribution infrastructure needed to dispense greater than E10 blends,” industry’s issues with unworkable ethanol mandatesunder the Renewable Fuel Standard would vanish.

Maybe in some alternate universe – one that’s disconnected from economic reality, real costs and operating margins. Don’t take our word for it. Take a look at this letter to the Wall Street Journal from Dan Gilligan, president of the Petroleum Marketers Association of America, the folks who own the gasoline stations, convenience stores, heating oil businesses, truck stops and other companies that invest in and market petroleum products. 

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ethanol  renewables  renewable-fuel-standard 

Bob Greco

Bob Greco
Posted March 22, 2013

The Renewable Fuels Association (RFA) has been circulating a video titled “40 Facts about Ethanol.”  The first items demonstrate the growth in ethanol production over the past few decades:

  • 1982 – A handful of small ethanol plants produce 350 million gallons of ethanol
  • 1992 – 39 ethanol plants produce 985 million gallons
  • 2002 – 66 ethanol plants in operation, producing 2.14 billion gallons
  • 2012 – 211 ethanol plants produce 13.3 billion gallons

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ethanol 

Mark Green

Mark Green
Posted March 20, 2013

A new study by NERA Economic Consulting details severe impacts that could result by 2015 from continued implementation of the Renewable Fuel Standard (RFS) and its market-distorting biofuels mandates:

  • An almost $800 billion decrease in the U.S. economy, as measured by GDP.
  • $500 billion decrease in take-home pay for American workers.
  • 300 percent increase in the cost of making diesel.
  • 30 percent increase in the cost of making gasoline, which could result in rationing and other disruptions in the transportation sector.
  • Greater impetus for the export of refined petroleum products.

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ethanol  renewable-fuel-standard  refiners  e8534 

Bob Greco

Bob Greco
Posted March 18, 2013

The Renewable Fuels Association this morning tweeted:

RFA Tweet

This is in many ways progress in that it is a de facto admissionthat RIN prices are rising because we are hitting the “blend wall” on ethanol, and that a solution is needed.  Unfortunately the solution in this case is crazy.

 From Platts:

Well-known energy economist Phil Verleger several years ago first brought up the likelihood that the refining industry might need to promote the sale of E85 as a way around the Gordian knot of a 10% ethanol blendwall combined with a rising mandate for the use of renewable fuels plus a decline in gasoline demand in the US…“The obvious solution to the RIN price problem involves no EPA intervention and no regulatory action at this point,” Verleger writes. “It simply calls for boosting E85 sales.”

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renewable-fuel-standard  e1534  ethanol 

Bob Greco

Bob Greco
Posted March 15, 2013

In a March 7 blog post, Renewable Fuels Association (RFA) President, Bob Dinneen claimed that the recent increase in RIN prices is not related to the E10 blendwall, and that the blendwall itself is a myth perpetrated by oil companies as an “excuse for their refusal to move to higher-level ethanol blends.”  He then makes a number of claims that were presumably intended to bolster his misplaced conclusion.  Conveniently, the post does not propose an alternative theory for RIN prices that have gone from 3 cents apiece to over $1, before retreating to about 70 cents today, in less than one years’ time.

The post also ignores that the petroleum industry is only one in a sea of voices raising concern over the negative impacts that E15 and unrealistically high ethanol blending requirements would likely have on on-road and off-road engines and fuel systems, gasoline retail infrastructure and dispensing equipment, the environment, the price of food, food security for the needy, and a laundry list of other health and safety issues.

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rfa34  renewable-fuels-standard  ethanol-lobby  ethanol  epa34  e1534  coordinating-research-council 

Mark Green

Mark Green
Posted February 1, 2013

The ethanol lobby doesn’t like the latest research on E15 – gasoline containing 15 percent ethanol – because it raises questions about EPA’s premature decision to approve E15 for use in post-2001 cars and light-duty trucks. The Coordinating Research Council (CRC) study warns that E15 could damage fuel pumps and onboard fuel measurement systems, potentially affecting millions of vehicles. This follows last year’s CRC finding that E15 could damage car and truck engines.  

Since ethanol producers’ goal is more ethanol use, and an EPA pullback on E15 would get in the way of that goal, attacks on both studies – such as those by the Renewable Fuels Association – aren’t surprising. But let’s be candid: They won’t be around if and when motorists end up on the side of the road with a seized-up fuel pump, damaged by E15 use.

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