E15 Gasoline on Horizon

Press Release by Issuing Company

Tuesday, February 21st, 2012

Ethanol and farm groups praised an Environmental Protection Agency decision Friday to approve a higher level blend of ethanol known as E15, but the Environmental Working Group announced a campaign to discourage consumers from using it, and an Agriculture Department economist said he did not think it will win acceptance soon.

In formal terms, EPA released an evaluation of information submitted by the Renewable Fuels Association and Growth Energy for satisfying the emissions and health effects data requirements for registration of E15, gasoline containing 15% ethanol.

The evaluation document concludes that the submission would be sufficient to satisfy those requirements, which makes it legal for a fuel or fuel additive manufacturer to sell E15 once it is registered with EPA. The agency had granted partial waivers for E15 for use in 2007 and newer light-duty motor vehicles and for use in 2001-2006 light-duty motor vehicles. But those decisions were dependent on the evaluation of the health data.

"This is a remarkable achievement by America's clean, renewable fuels industry, as moving to E15 results in reduced dependence on foreign oil, jobs here in America and consumer savings at the pump," according to a news release from Tom Buis, CEO of Growth Energy, which represents ethanol plant builders and managers.

"Growth Energy commits right now to the American public that we will work with the retail industry to bring E15 to their stations," Buis said.

"For three years, Growth Energy has led the effort to clear the way for consumers to have access to affordable, renewable and cleaner-burning fuel," he said. "Now it is up to the retailers and individual fuel companies to register for approval to sell E15. With ethanol selling an average of 76 cents a gallon cheaper than gasoline and $4-a-gallon gasoline on the horizon, we'd encourage all Americans to ask their local filling station how soon they will see more-affordable E15."

Growth Energy also noted in a memo that Friday's announcement is the final federal regulation that needs to be met in order for E15 to enter the marketplace, and that it expects Iowa to be the first state where retailers register to sell E15.

Iowa's state codes are already in conformity with EPA's decision last year to approve the E15 waiver for cars and light trucks 2001 and newer, the memo said. Illinois, Indiana, Nebraska, South Dakota, Minnesota and North Dakota are expected to follow.

"We are one step closer to having E15 available for widespread distribution in the U.S.," said National Farmers Union President Roger Johnson in a news release. "American consumers deserve a choice at the pump."

"E15 is a homegrown fuel that saves consumers money and helps wean us off of our addiction to foreign oil," Johnson said. "Today's decision is a win for rural America, a win for national security, and a win for the environment."

But USDA Chief Economist Joe Glauber told The Hagstrom Report today that he does not expect E15 to have much impact on the market or the rural economy right away, as the cost for retailers to switch from E10 to E15 is "substantial."

"I don't see that happening any time soon," Glauber said in an interview.

In a speech to the crop insurance industry in Scottsdale, Ariz., on Wednesday, Glauber said that blender pumps, which the gas stations need for ethanol fuel sales, "are an expensive proposition." Following the expiration of the ethanol tax credit and the protective tariff "after years of growth, ethanol has begun to flatten," Glauber said.

The Environmental Working Group, which opposes ethanol in general, said that it would launch a campaign to urge motorists to stay away from E15.

"Every major automaker has warned that millions of vehicle warranties will be voided if drivers fill up with E15," EWG said in a news release.

"That means consumers will pull into gas stations that could have as many as four pumps with different kinds of fuel: one for E10 (up to 10% ethanol); one for E15; possibly one for E85 (between 70% and 85% ethanol); and maybe one for old-fashioned gasoline. The EPA intends to approve E15 only for vehicles manufactured after 2000."

Some gas station pumps may not even have labels specifying which ethanol blend is which, because not every state requires them, although industry officials have said they do expect stations to label the pumps once they are selling E15.

Jerry Hagstrom can be contacted at jerry.hagstrom@telventdtn.com

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