Can E15 Really Replace Russian Oil Imports and Curb High Prices At The Pump?

Source: By Tyne Morgan, U.S.Farm Report • Posted: Sunday, March 20, 2022

Earlier this month, the Biden administration signed an Executive Order (E.O.) to ban the import of Russian oil. The move came with bipartisan support, and as the White House looks to fill the gap of displaced Russian oil, ethanol groups say E15 is a ready-made answer today.

The Nebraska Ethanol Board released a white paper that shows the conversion of 33% of all E10 fuel in the U.S. to E15 could potentially displace 100% of Russian import generated gasoline. That’s as, currently, about 8% of all U.S. imports of oil and refined products come from Russia.

NEBRAKSKA ETHANOL BOARD

Jan Tenbensel, chairman of the Nebraska Ethanol Board, says when you do the math, it clearly shows E15 is a viable option to fill the void.

“Over the last five years, we’ve averaged about 400,000 to 440,000 barrels a day (18 million U.S. gallons) of imports from Russia,” says Tenbensel. “Now, about half of those barrels, or about 200,000 to 220,000 barrels, are actually gasoline or become gasoline products for us. The rest are various other petroleum products, kerosene, jet fuel, those sorts of things. So, of the 220,000 barrels a day of Russian imports that become gasoline, we could replace that tomorrow with E15.”

Tenbensel says on a national level, the Nebraska Ethanol Board is looking at about a one-third of market penetration with E15 could do the job to eliminate all Russian gasoline imports.

“It’s a shocking number, but it’s there,” he adds. “And the amazing part of this is the unused capacity of the American ethanol industry is about 220,000 barrels a day.”

Timing Could Be Immediate

What’s the timing to replace it all? Tenbensel says by bumping blends to E15  from E10, it could essentially happen tomorrow. The Nebraska Ethanol Board’s white paper shows if  the  entire Midwestern defense pad  (PADD 2) alone converted E10 to E15, this could displace 98% of Russian import generated gasoline. And based on U.S. Energy Information (EIA) data, Nebraska Ethanol Board found the conversion would utilize less than half the unused ethanol capacity across the U.S.

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“The industry could ramp up pretty quickly for the first portion of that simply by increasing the throughput and the current corn grind that we have in the industry with the biorefineries we’ve got going. Now, of course as with anything, the final 20% to 30% of that takes us several more months. So, I’d say between six months and nine months, if we wanted to go to a full 33% market penetration,” says Tenbensel.

White House Says E15 Is On The Table

Just this week, Biden blamed Russia and Vladimir Putin for the pain at the pump.

“The second big reason for inflation is Vladimir Putin and gas prices,” Mr. Biden said. “We’ve seen the price of gas go up over $1 just since he put his troops on the border of Ukraine…. then Putin invaded. The current spike in gas prices is largely the fault of Vladimir Putin. It has nothing to do with the [$1.9 trillion] American Rescue Plan,” Biden said, during a speaking engagement earlier this week.

While the blame game is in full force, claims E15 could ease the price pain face regulatory issues, as current  regulatory hurdles prevent the sale of E15 year-round. The White House did acknowledge this week that utilizing higher blends of ethanol is an option on the table.

“A bipartisan group of lawmakers have called on the White House to lift the ban of summer sales of gasoline with higher blends of ethanol. It’s cheaper than traditional blends of gasoline. Is that something — you mentioned a menu of options, but is that something specifically that the White House is considering?” asked a reporter during the press briefing this week.

“(It’s) in the menu of options,” answered Jen Psaki, White House press secretary.

Ethanol Reserves Highest Since April 2020

If the White House decides to tap into E15 to help fill the void, it appears there’s plenty of ethanol to go around.

Ethanol stocks grew by 2.7% recently, according to Energy Information Administration (EIA) data analyzed by the Renewable Fuels Association (RFA). The Association found ethanol reserve levels sit at almost 26-million barrels, which is the largest level since April 2020.

The Nebraska Ethanol Board says with the reserves on hand, and ethanol’s ability to help lower prices at the pump, the white paper should reassure the Biden administration that E15 is the clean energy option that should be tapped into today.

“This white paper was so eye-opening for me, because it allowed us to realize we have the capacity today to eliminate Russian imports as a national security issue. And we as farmers and people involved in agriculture, we need to ask our local retailers, we need to ask our co-ops, ‘Hey, we need to switch to E15 today, we need to do it now. It’s for our country. It’s for our economy. It’s for the entirety of rural America,” says Tenbensel.

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