Ethanol repeal efforts make progress

Further evidence that consumers demand an ethanol-free alternative has been provided in recent weeks by actions at both state and federal levels. As reported by this blog on Feb. 20, Florida State Representative Matt Gaetz has led an effort to repeal his state’s mandates on the use of ethanol blends in vehicles.

While off-highway use, for instance in aircraft, was exempted from these mandates, their presence caused a massive shift in the gasoline supply chain for Florida, making it very difficult to find ethanol-free suppliers. GAfuels reader Drew Hatch of Ft. Walton Beach sent us the news last week that HB 4001 and SB 320 passed in the Florida Legislature and the repeal is expected to receive Governor Rick Scott’s signature soon.

While this is good news for mogas users in Florida, it does nothing to curb the influence of the federal ethanol mandates that are flooding our nation’s supply of gasoline, even though most experts now agree that we have hit the so-called “Blending Wall,” a situation whereby even with every drop of gasoline sold containing 10% ethanol, the federal mandates cannot be met. The resulting impact on the cost for blender credits and the higher price we’ll pay for the fuel was recently described in this Wall Street Journal article.

It appears that a few members of Congress have begun to realize that continued compliance with the EPA’s ever-increasing, unachievable blending quotas can only result in higher costs to consumers, bad news in our continued fragile economy. Earlier this month, a bipartisan group of House members led by Bob Goodlatte of Virginia introduced a bill to repeal the current federal ethanol mandates, as reported by Bloomberg News:

“Representative Bob Goodlatte, a Virginia Republican, and a bipartisan group of legislators introduced two bills. The first would repeal the U.S. ethanol mandate and the second would revise the definition of renewable fuels to include only advanced biofuels and exclude corn-based ethanol, Goodlatte’s office said. The Renewable Fuels Standard passed in 2007 started out with good intentions and turned out to be a “very dumb” idea, said Representative Peter Welch, a Vermont Democrat, who said the mandate has raised costs for dairy farmers in his state.”

That many consumers seek an ethanol-free alternative can be seen in the steady rise of sellers, shown best in this chart at Pure-Gas.org.  Having passed through the 6,000 mark last December, we’ll likely see some 7,000 sellers on this list soon, still representing fewer than 10% of the nation’s approximately 110,000 gas stations.

While we are still far from seeing the day when the more affordable option of lead-free, ethanol-free mogas is as common at our airports as in Europe, actions such as those from Representative Gaetz and Congressman Goodlatte do give one hope for optimism.  For those who claim that nothing can be done to change the current ethanol policies in our country, one should follow the lead of these two gentlemen and those who support their legislation.

Comments

  1. Mike Kilcher says

    FYI . . .

    Follow Reuters
    Facebook
    Twitter
    RSS
    YouTube
    RECOMMENDED VIDEO

    Motorcyclist leads California police on highway chase

    FACTBOX: Inside the Chinese firm buying up America’s…

    FACTBOX: U.S. jets struggle to evade Chinese hackers

    What Toyota Doesn’t Want You to Know About the Prius
    (Consumer Car Reviews)

    The 10 Most Incredible Cars of the Future
    (The Fiscal Times)
    [?]
    KEY RATES
    MORTGAGEHOME EQUITYSAVINGSAUTOCREDIT CARDS
    See today’s average mortgage rates across the country.
    TYPE TODAY 1 MO
    30-Year Fixed 4.03% 3.58%
    15-Year Fixed 3.18% 2.72%
    10-Year Fixed 3.12% 2.85%
    5/1-Year ARM 2.79% 2.57%
    30-Year Fixed Refi 4.01% 3.57%
    15-Year Fixed Refi 3.15% 2.72%
    5/1 ARM Refi 2.79% 2.57%
    30-Year Fixed Jumbo 4.29% 3.91%
    Rates may include points.
    SOURCE: BANKRATE.COM
    SEE MORE KEY RATE DATA
    READ
    ‘No Nile, no Egypt’, Cairo warns over Ethiopia dam
    09 Jun 20131Taliban launch large attack on Kabul international airport|
    6:25am EDT2INSIGHT-Ethanol lobby sees red over a yellow gas hose in Kansas
    1:00am EDT3Exclusive: U.S. finds long-lost diary of top Nazi leader, Hitler aide
    09 Jun 20134Disclosures on NSA spying alarm lawmakers, tech companies
    2:12am EDT5
    DISCUSSED
    357
    NSA is collecting phone records of Verizon customers: report
    204
    Government likely to open criminal probe into NSA leaks: officials
    114
    Obama to tap Susan Rice as top security adviser
    SPONSORED LINKS

    Elite PCs: The Best of Our Best. Built with Intel® Core™ Processors!

    HP Elite PCs with Intel® Core™ Processors: Our Toughest PCs!
    Ads by Marchex

    INSIGHT-Ethanol lobby sees red over a yellow gas hose in Kansas

    inShare
    Share this

    Email
    Print
    Related News
    REFILE-Cosan profits miss expectations on lower biofuel sales
    Thu, Jun 6 2013
    EPA to issue ethanol use targets this summer
    Wed, Jun 5 2013
    REFILE-RPT-Sell cheap fuel and profit – Delta Air Lines’ refining 101
    Thu, May 23 2013
    UPDATE 8-Oil falls on rising US gasoline stocks
    Tue, May 21 2013
    Insight: The road to a greener America is littered with road-kill
    Mon, May 20 2013
    Analysis & Opinion
    Efficiency revolution would put shale to shame
    Related Topics
    Stocks »
    Regulatory News »
    Markets »
    Energy »
    Non-Cyclical Consumer Goods »
    By Cezary Podkul
    NEW YORK, June 10 | Mon Jun 10, 2013 1:00am EDT
    (Reuters) – At a handful of gas stations in eastern Kansas, the intensifying fight between major oil refiners and the ethanol industry over the future of America’s fuel supply has found a new focus: the color of the gas hose.
    Scott Zaremba, owner of Lawrence, Kansas-based Zarco 66, says he is being forced by his main fuel supplier, Phillips 66 , to stop selling gasoline blended with 15 percent ethanol, the maximum level currently allowed for use in normal car engines but higher than the 10 percent norm.

    Zaremba, the first retailer in the country to sell the so-called E15 fuel, has found himself caught in a fierce market-share battle between ethanol makers and oil companies that is also being fought in the courts and in the U.S. Congress.

    On April 1, Zaremba received a notice from Phillips 66, the nation’s third-largest refiner, that he could no longer sell the E15 fuel from his regular black fuel hoses, as he had been selling it since last July.

    Instead, any gasoline with more than 10 percent ethanol has to be served from a separate, yellow hose, according to a copy of the Phillips 66 guidelines seen by Reuters. The aim is to distinguish E15 from other Phillips 66-branded gasolines with 10 percent or less ethanol.

    He has other options, but they aren’t cheap – or very feasible. For example, it would cost $100,000 to $250,000 to install new stand-alone gas pumps for E15, Zaremba said. Or he can always pay a $412,000 fee to Phillips 66 to break his marketing contract – expensive options that have so far kept him in compliance with the Phillips 66 guidelines, the only way he said he could.

    In April, Zaremba began phasing out E15 sales, leaving only some two dozen stations in the country that sold the blend as of the end of May, when the last of his eight stations gave up the fuel.

    “They’re just holding you to your 10 percent max,” he said.

    Asked about its new guidelines, Phillips 66 Spokesman Dennis Nuss said in a statement that they were simply part of an occasional update to its brand standards meant “to ensure a positive and consistent customer experience at the pump.”

    The Environmental Protection Agency, which administers fuel standards, declined to comment on Zaremba’s situation.

    The market-share fight is the result of the 2007 Renewable Fuel Standards law, which mandated the blending of gasoline with renewable fuels like ethanol.

    Congress’s goal was to make the U.S. less dependent on foreign oil by putting more home-made renewables into gasoline – from 9 billion gallons in 2008 to 36 billion by 2022.

    The increasing annual targets were based on expected growth in fuel demand that would allow more gallons of ethanol to be blended without increasing its share of supply.

    Instead, thanks to the 2007-2009 recession and rising fuel efficiency, consumers are buying less gasoline than expected.

    That has left oil companies actively trying to repeal those blending requirements, while ethanol producers are fighting to keep them in place.

    ‘ALL-OUT WAR’

    In the country’s heartland, ethanol proponents say refiners are resorting to technical rule changes and brute market force to keep E15 out of gas stations.

    In nearby Iowa, eight retailers who want to sell E15 say they can’t even make it because oil companies won’t sell them the ingredients necessary to make the appropriate summer blend of the fuel, according to a petition viewed by Reuters.

    “They’ve essentially declared an all-out war (on E15),” said Monte Shaw, Executive Director of the Iowa Renewable Fuels Association, which represents ethanol producers.

    Phillips 66’s Nuss said the company has 945 marketing customers like Zaremba covering more than 7,000 gas stations and has received no other complaints about the guidelines.

    “We strenuously deny any suggestion that our actions are part of a larger effort to frustrate the adoption of the Renewable Fuel Standard,” Nuss said.

    Oil producers say they are just doing the responsible thing – holding firm to a 10 percent maximum blend of ethanol in gasoline, or E10 – because anything more than that can cause engine damage in many vehicles on the road today.

    “We are not about to put something out there that we don’t think is safe or reliable for the consumer,” said Charles Drevna, president of American Fuel and Petrochemical Manufacturers, which represents refiners like Phillips 66.

    The EPA has approved E15 for cars made after the 2000 model year. But automakers have not extended their warranties to cover E15 use on pre-2013 models. That leaves only about 12 million of 240 million cars on the road, or about 5 percent, with warranties to use E15, according to a November survey conducted by the American Automobile Association.

    “Every automaker with the exception of Porsche said that E15 could void your warranty unless it was a very new car,” said AAA spokesman Michael Green.

    HEAVY LOBBYING

    So far most gas stations have been either unable or unwilling to carry E15.

    The Renewable Fuels Association, which represents ethanol producers nationally, estimates that with Zaremba’s exit, only about 25 gas stations nationwide sell the fuel – out of about 140,000. Sales of E15 over the last year have amounted to less than one percent of one day’s worth of daily U.S. gasoline use, according to Reuters calculations.

    The battle is being waged on multiple fronts. American Fuel and Petrochemical Manufacturers recently filed a Supreme Court challenge to E15 gasoline.

    The refiners argue the EPA over-stepped its authority when it approved the sale of E15 for only some cars, instead of looking at the market as a whole. “The EPA can certify fuels for engines – not for this engine or that engine,” Drevna argues.

    A who’s-who of the refining industry – including oil majors Exxon Mobil Corp, Chevron Corp, BP Plc, Valero Energy Corp, Tesoro Corp and Phillips 66 – are represented by the group.

    In case their legal challenge fails, Drevna says, the oil companies are actively pursuing “legislative” solutions to the issue in Congress.

    “It is very, very heavy lobbying right now from all sides and it’s going to be at least for another year,” said Dave Juday, a commodity market analyst in the Washington area.

    MARKET SHARE

    The ethanol lobby says oil companies are bluffing.

    “What it comes down to is we’re coming into their market share,” said Michael Frohlich, spokesman for Growth Energy, the ethanol group that made E15 possible by petitioning the EPA to approve its sale.

    Profits – more than vehicle safety or performance – are the main reason why refiners are “fighting tooth and nail” to get rid of E15, Frohlich said. If they wanted to, they could easily blend more ethanol into the gasoline supply, he said.

    The lobby has one high-profile ally: NASCAR, which uses E15 fuel for “every driver, every lap, every series,” said Michael Lynch, managing director of green innovation at NASCAR in Daytona Beach, Florida.

    Growth Energy has a marketing arrangement with the car racing group, though NASCAR denies money from the deal influenced its decision to use the fuel.

    NASCAR racers have traveled 4 million miles on E15 since the group started using it in February 2011, Lynch said.

    He says there’s only one reason why the rest of America isn’t running on the same fuel.

    “The fundamental difference is availability.”

  2. says

    The blend wall exists because federal law LIMITS how much ethanol can be in gasoline. In the real world, more ethanol equals more horsepower and less emissions and it would be very popular if regulations allowed consumers to see what they get for their money and environmental scientists to evaluate what they gain. Ethanol is a far superior fuel to gasoline and it scares the @@#$$%^ out of the petroleum industry to realize that American drivers may discover that. In the meantime, Shell imports “environmentally friendly ethanol made from renewable Brazilian sugar cane” for its U.S. service stations and American consumers are OK with that. Really, you dumb … Really?

    • says

      Personally I don’t mind Ethanol as a fuel for cars but we need to keep the science straight. Ethanol has a higher octane rating (resistance to combustion) but it doesn’t have a potential for more horse power for the same volume consumed as its energy density is lower than gasoline.

      Gasoline is approx 36 mj/l
      E10 is approx 33.18 mj/l
      E85 is approx 25.65 mj/l

      so per volume of fuel Gasoline has a higher energy density so for the same amount burned gas will provide more HP. Sure engines could be designed for combustion of Ethanol which would require a compression ratio above 13:1 for efficiency; I’ve seen calculation of 20:1 which will add a lot of cost and weight to the engine design. Even at the higher compression ratios you still don’t make up for the lower energy density.

    • Eagle275 says

      Oh ethanol is gas is great, especially for older cars, collector cars, lawn care machinery, chainsaws,etc.

  3. says

    Ironic that Florida may win the state mandatory E10 law battle, but they will lose the battle against having ethanol in all of their gasoline. Absolutely nothing will change the day after the governor signs the bill into law. As usual the repeal is nothing more than symbolic political posturing. Florida politicians can claim they have listened to the will of the people. It is obvious that the repeal means nothing because the ethanol lobby didn’t fight it because they know absolutely nothing will change. Demand for their product is built into the federal mandate. The inexorable flood of ethanol required by the quota table in the RFS mandate in EISA 2007 will require more ethanol be blended this year than can be absorbed by taking every drop of gasoline produced in the U.S. E10 and next year the quota rises, and the year after that. Actually, by repealing their mandatory E10 law Florida has opened the state up to the federal E15 waiver and now gasoline producers can try to meet their quotas by bringing E15 to market for non flex fuel vehicles, although it is doubtful any of them will because of damage liability. The only way that Florida, or any state can protect their users that must have ethanol free gasoline is to pass a state law requiring that all premium unleaded in the state be ethanol free, otherwise the producers have no incentive nor any requirement to provide any ethanol free gasoline, and with the ever increasing blending quotas will produce nothing but the blendstock for ethanol blending in order to meet their quotas and avoid costly penalties that are built into the federal act.

  4. larry maynard says

    If we ever do get relief from the Ethanol Mandate then it might just do more to get more people in the air than anything that the alphabet groups can and are trying to do to help the situation we are now in. I’m talking about having non-ethanol auto fuel of at least 91 octane available at most airports. Think about filling up at $4.50 per gallon instead of $5.50 to $6.50 per gallon. I’m lucky enough to have a station that usually has 93 octane ethanol free mogas 25 miles away so I can economically haul it to my airport. Mogas seems to burn cleaner and it may be my imagination but my CHTs seem to run lower allowing me to lean even further for better economy. Like to hear if lower CHTs are really the truth from other mogas users. Thanks.

    • says

      The CHTs makes sense sense though I don’t have real world experience to back this up. Octane rating is the resistance to ignition. This allows higher compression before auto combustion occurs (spark knocking). This intern makes it more energetic combustion when it does occur, and unless the engine is designed for the higher octane the energy goes mostly to heat and a small uptick in power. The other issue is with LL the lead sticks to surfaces and effects the thermodynamics of the engine. LL reduces wear on engines designed to use it but in engines like the Rotax 912 it really just gets in the way.

  5. Michael Dean says

    “The (legislation) started out with good intentions and turned out to be a “very dumb” idea…”

    Wow. That’s never happened before.

Trackbacks

Leave a Reply

Your email address will not be published. Required fields are marked *