Oil industry urges EPA not to increase ethanol fuel mandate

Source: Christopher Doering, Des Moines Register • Posted: Thursday, May 1, 2014


The oil industry, an outspoken opponent of a law requiring ethanol to be blended into the gasoline supply, said Wednesday the Environmental Protection Agency should avoid pressure to increase the level in 2014.

The American Petroleum Institute, which represents more than 550 oil and natural gas companies, said in a letter to the EPA there is not enough demand to justify increasing the amount of ethanol that must be blended this year.

In November, the EPA proposed cutting the mandate to 15.21 billion gallons for renewable fuels in 2014. That’s down from the 18.15 billion gallons initially required in the 2007 Renewable Fuel Standard, a law that requires refiners to buy alternative fuels made from corn, soybeans and other products to reduce the country’s dependence on foreign energy. Traditional biofuels, comprised mostly of corn, would be reduced to 13 billion gallons from 14.4 million. But since then, data has shown that Americans are driving more, and as a result there may be room for more ethanol in the fuel supply.

EPA Administrator Gina McCarthy said earlier this month the agency will use the most current data in its final rule. Those who follow the ethanol debate expect the EPA will increase the blending level from the November estimate. A final rule is expected in June.

Bob Greco, API’s downstream director, told reporters on a conference call that uncertainty in gasoline use, support by boaters and other groups favoring fuel without ethanol and limited consumer interest in higher-ethanol blends show there is no reason to make ethanol responsible for a higher percentage of the gasoline pool. API said ethanol should be used in no more than 9.7 percent of motor fuel supply, leaving the rest to come from traditional gasoline.

“These mandates set the minimum amount of ethanol that must be used each year, not the maximum,” Greco said. “Greater volumes of biofuels could be used if the market demand is there. It’s better to err on the side of caution with the final mandate rather than force more ethanol into gasoline.”

Greco also announced a new TV, radio, and online ad campaign that will run in Washington next week urging the EPA and the White House to follow through with their November proposal.

Refiners are required to show they have blended in a certain amount of biofuels or buy credits from other companies that have made purchases. They are fined if they fail to do either. As a result, API and other opponents of the mandate have argued that if the demand for ethanol is less than what the EPA requires, oil companies get unfairly penalized and the higher costs make their way down to the consumer.

In a separate call held just an hour before the API event, pro-ethanol groups — Americans United for Change and VoteVets.org – said money from Saudi Arabia is helping to finance the “smear ads” that the API is waging against ethanol and the Renewable Fuel Standard. Americans United for Change said the group will run ads on the major Sunday news talk shows this weekend to highlight Saudi Arabia’s role and tout the benefits of ethanol.

“The American people deserve to know what is happening here,” said Brad Woodhouse, president with Americans United for Change.