Weak demand for ethanol in gas keys API push for lower RFS 

Source: Amanda Peterka, E&E reporter • Posted: Thursday, May 21, 2015

Pointing to demand for ethanol-free gasoline, the American Petroleum Institute today sought to persuade U.S. EPA to lower annual requirements to use the corn-based fuel.

The oil industry trade group released data showing that demand for E0, or gasoline without ethanol, grew from 3.4 percent in 2012 to just below 7 percent in 2014. As of January, demand hovered around 5 percent.

API, which has long opposed the federal renewable fuel standard, said the data show there is a “strong” demand for ethanol-free gasoline.

“Demand for E0 is strong and growing, and [U.S.] EPA must take this into account as it prepares to release biofuel mandates for 2014, 2015 and 2016,” API Downstream Group Director Bob Greco said today on a conference call with reporters.

API and the National Marine Manufacturers Association said on the call that the demand was being driven by recreation enthusiasts.

“Many boaters rely on E0 to power their vessels,” said Nicole Vasilaros, vice president of federal and legal affairs for NMMA. “E0 is not guaranteed to remain available as a result of the RFS and the influx of higher ethanol blends.”

EPA is poised to release proposed targets for conventional ethanol and advanced biofuels by June 1 under a tentative settlement agreement with API and American Fuel & Petrochemical Manufacturers.

As it released the data today, API called on the agency to limit the rule’s requirements for conventional ethanol to no higher than 9.7 percent of the total gasoline supply — which would equal about 13.26 billion gallons based on 2014 gasoline demand data from the Energy Information Administration.

When Congress passed the RFS into law in 2007, it mandated that 14.4 billion gallons of conventional ethanol be blended into gasoline in 2014; from 2015 and beyond, Congress capped the ethanol target at 15 billion gallons.

EPA, however, has the leeway to lower the targets if they cause economic harm or if there’s an inadequate supply of biofuels. Oil groups have argued that there’s a limit known as the “blend wall” to the amount of ethanol that can be used in the fuel system.

Greco said API plans to meet next week with the White House Office of Management and Budget, which is currently reviewing the targets, to press its case.

Ethanol group Growth Energy, which has called on EPA to set robust biofuel targets that reflect the congressional directive in its upcoming rule, today slammed the push from oil and marine groups to lower the targets.

Tom Buis, CEO of Growth Energy, noted that boats are approved by EPA for the use of gasoline containing up to 10 percent ethanol.

“Once again, API and its allies are trying to keep Americans addicted to foreign oil,” Buis said. “They are afraid of competition, plain and simple, and are using every possible tactic, whether it be legal, regulatory or through false public relations campaigns designed to fool people to buy into their false narrative to discourage the use of a cleaner, less expensive, homegrown renewable fuel.”