In a statement as predictable as the sunrise, the American Petroleum Institute (API) said yesterday that EPA’s proposal to slightly reduce 2018 RFS blending volumes “does not go far enough.” True to form, API instead called on Congress to “fix” the program, citing a litany of familiar myths and misinformation about ethanol and the RFS. But beyond the PR spin and political hoopla lies a much different reality.
Indeed, a recent quote in the Houston Chronicle from Tom Kloza, founder of the Oil Price Information Service, poignantly summed up the debate over ethanol, the RFS, and E15 (a higher-level ethanol blend that would enjoy greater market access with both a strong 2018 RFS requirement and passage of Senate Bill 517, the Consumer and Fuel Retailer Choice Act). “You have not had a major oil company or a refiner roll out E15 at their stations and the reason is they’re interested in selling hydrocarbons,” Kloza said.
Bingo. This debate isn’t about boats and lawnmowers and motorcycles. It isn’t about auto warranties and fictitious “engine damage.” It isn’t about the fabled “blend wall” or food prices or land use change. No, the debate over the RFS and E15 is all about oil companies, those folks extracting petroleum from Mother Earth, losing market share. Period. It’s really that simple.
Thanks in large part to the RFS, oil companies have already seen ethanol’s share of the gasoline pool rise from 1.3% in 2000 to just over 10% in 2016. They certainly don’t want to lose another 5% of the market, even though E15 provides American consumers with a cleaner, higher-octane, and lower-cost fuel option.
The three charts below show exactly why Big Oil is pulling out all the stops to oppose the RFS and maintain an uneven playing field for E15. Chart 1 shows that while consumption of finished gasoline (i.e., gasoline blended with ethanol) reached record heights in 2016, consumption of the gasoline blendstock (i.e., unblended gasoline) produced by oil refiners remained well below the record levels seen in 2001-2007. The volume of ethanol blended with gasoline more than doubled between 2007 and 2016, meaning ethanol has accounted for the lion’s share of growth in total finished gasoline consumption over the past decade.
Keep these market share figures in mind the next time you hear the API raise “auto warranties” or “misfueling concerns” or “retailer liability” or any number of other red herring arguments aimed at undermining support for the RFS and E15.
In the end, RFA continues to believe biofuel and petroleum fuel producers should be working together to introduce liquid fuel formulations that offer optimal engine performance, superior fuel economy, reduced GHG and criteria emissions, and lower prices for consumers. That means transitioning to an ethanol-based high octane, low carbon fuel blend like E25 or E30 in the long term. Indeed, Kloza noted at EIA’s recent annual Energy Conference that “we’ll need more octane for the US gasoline pool if [liquid] fossil fuel is to remain dominant.” Another panelist at the EIA event surmised that if the gasoline market fails in the long-term to move to affordable high octane, low carbon fuels, the “alternative may be a world of battery-powered vehicles.” A strong RFS and passage of S. 517 are important steps forward on the path toward broad commercialization of cleaner, cheaper liquid fuel blends that offer American consumers optimum performance.