E85 could help U.S. avoid so-called ethanol blend wall: ISU study

Source: by Christopher Doering, Des Moines Register • Posted: Friday, August 9, 2013

A study from Iowa State University said the United States can overcome the so-called “ethanol blend wall” and meet the country’s renewable fuels mandate starting next year by lowering prices of 85 percent ethanol.

E85 is currently used in automobiles known as flex-fuel vehicles. A majority of U.S. cars currently run on E10, a blend of 10 percent ethanol and 90 percent gasoline.

E85 stations can be difficult for drivers to find. The study found that if consumers are forced to drive far to find these stations, they expect greater savings. As motorists save more money, overall demand for E85 grows, the researchers found.

“Pricing E85 low enough to generate fuel cost savings has the potential to quickly increase ethanol consumption, perhaps by three billion gallons over the next year or two,” Iowa State professors Bruce Babcock and Sebastian Pouliot said in the report. “Rather than being a physical barrier to increased ethanol consumption, the E10 blend wall is an economic barrier that can be overcome by increasing the incentive for drivers to use E85 to fuel their vehicles.”

The oil industry has warned about the “blend wall,” a threshold where refiners are struggling to blend enough ethanol into the country’s fuel mix to comply with a congressional mandate. As consumers cut back on driving and cars become more fuel efficient, gasoline demand has declined. The result is the public is using less fuel with a blend of 10 percent ethanol, making it more difficult for refiners to meet the volume levels required by Renewable Fuel Standard.

The Environmental Protection Agency this week said refiners must blend 16.55 billion gallons of renewable fuels in 2013 to comply with the RFS, a law that requires refiners to buy alternative fuels made from corn, soybeans and other products.

Ethanol supporters have said the oil industry could choose to embrace fuel containing 15 percent ethanol that would expand the market for the renewable fuel, preventing them from reaching the blend wall. But the renewable fuels industry has butted-heads with oil companies and car manufactures on the safety of the fuel on the automobile engine.