Firing back, industry group touts fuel’s economic benefits 

Source: Amanda Peterka, E&E reporter • Posted: Wednesday, April 1, 2015

The Renewable Fuels Association is sparring with petroleum retailers over the economic impacts of ethanol.

The ethanol trade group today sent a letter to House Energy and Commerce Committee leaders responding to what it characterized as “misleading and erroneous statements about the economic competitiveness of ethanol” made earlier this month by petroleum marketers.

In a March 16 letter, the Petroleum Marketers Association of America told Energy and Commerce Chairman Fred Upton (R-Mich.) and ranking member Frank Pallone (D-N.J.) that the drop in oil prices had made ethanol less competitive compared with gasoline.

But according to the Renewable Fuels Association, ethanol prices have been below those of gasoline more than 90 percent of the time since January 2011. On average, wholesale daily ethanol prices have been 51 cents a gallon cheaper than gasoline.

The ethanol group acknowledged that ethanol had traded near parity and sometimes above gasoline prices this past November, December and January.

But market conditions are back to “normal,” RFA President and CEO Bob Dinneen argued today.

“While the ethanol market was somewhat caught off guard by the plunge in crude oil and gasoline prices, as noted above, a more normal pricing relationship between ethanol and gasoline emerged in February 2015,” the letter said.

Dinneen also told lawmakers that most gas stations already have much of the equipment needed to add more ethanol to the market and that oft-cited costs of hundreds of thousands of dollars to convert fueling infrastructure were rare.

The Petroleum Marketers Association of America’s letter told the Energy and Commerce leaders that there were “few viable options to invest in renewable fuels infrastructure” for small gasoline retailers because of the high price to convert fueling infrastructure.

The vast majority of gasoline sold today contains about 10 percent ethanol. PMAA said individual sites would need to shell out $200,000 to retrofit with equipment compatible with higher blends of ethanol.

“Such compliance costs would be staggering for small business retailers and would undoubtedly force many, particularly in those rural areas, to close,” PMAA wrote in its letter. “Those few retailers who could afford a system retrofit would be forced to pass the cost along to customers in the form of significantly higher gasoline prices.”