- API’s letter to Congress supports biofuel producers.
- Groups support treating all gasoline blends equally.
- There are still “humps” in getting a legislative fix.
In a rare move, the oil, biofuel, and farming industries have come together to support legislation that would lift the summertime prohibition on the sale of gasoline blends containing 15% ethanol, as reported by S&P Global.
Regulators that set the annual percentage of renewable fuel that must be blended with gasoline and diesel have frequently caused disputes between oil refiners and biofuel producers. On the subject of E15, however, they all agreed that there should be a legislative fix for the inconsistent fuel volatility standards that have made it difficult for fuel marketers and retailers to supply E15 to US drivers.
The sale of E15 in markets that sell conventional gasoline, which accounts for about 70% of the US gasoline market, is currently prohibited from June 1 to September 1 despite the fact that E10, which contains 10% ethanol and 90% gasoline, is widely accepted and accessible from retailers across the nation all year round.
15 due to Environmental Protection Agency restrictions on air pollution from gasoline.
“Though oil and biofuel groups have fought like cats and dogs over the years, they have a common goal of limiting uncertainty and curtailing litigation expenses,” Corey Lavinsky, global manager of biofuels analytics at S&P Global Commodity Insights, said on Nov. 22. “Proposed legislation needs to overcome many hurdles before it becomes law. E15 use has expanded considerably in 2022, but laws restricting its use in the summer remain the status quo until new ones are passed.”
US ethanol production is anticipated to average 1 million b/d in 2022 and increase slightly to about 1.02 million b/d in 2023, according to S&P Global. The average ethanol demand is predicted to rise by nearly 3% to 931,000 b/d in 2023 from 904,000 b/d this year.
In a Nov. 21 letter to congressional leaders, energy and agricultural trade groups asked for quick adoption of a legislative fix that would provide equal treatment nationwide to all conventional gasoline blends by making them subject to the same fuel volatility limit.
The EPA 2019 issued a rule extending that waiver to blends containing more than 10% ethanol, but the DC Circuit Court of Appeals last year vacated that regulation.
The letter sent to Senate Leaders Chuck Schumer, Democrat-New York, and Mitch McConnell, Republican-Kentucky, as well as House Speaker Nancy Pelosi, Democrat-California, and House Minority Leader Kevin McCarthy, Republican-California, supports legislation extending the one-psi RVP tolerance to gasoline blends containing 10% ethanol or more.
That bill passed the House of Representatives June 16 in a 221-204 vote that saw a dozen lawmakers cross the aisle as seven Republicans voted with the majority and five Democrats joined the rest of the GOP to vote against the bill.
With funding the government to avert a shutdown, passage of the National Defense Authorization Act, and a slew of other key issues on the jam-packed to-do list for the lame-duck session, it is unclear whether E15 will make it onto the agenda as this Congress wraps up.
Margins will remain slim for the next Congress, with Democrats retaining control of the Senate while the House flips to Republican control.
The trade groups also called for simultaneously nullifying petitions from Midwest states that sought to exercise their Clean Air Act authority to ensure E15 could permanently be sold within their borders year-round.
They instead preferred to ensure uniformity across the US fuel supply chain, and pointed to federal legislation as offering more flexibility and in turn resulting “in more consistent outcomes than a state-by-state regulatory landscape.”
Signatories to the letter were the American Farm Bureau Federation, American Petroleum Institute, Association of Equipment Manufacturers, Growth Energy, National Association of Convenience Stores, National Association of Truckstop Operators, National Corn Growers Association, National Council of Farmer Cooperatives, National Farmers Union, National Sorghum Producers, Renewable Fuels Association and SIGMA, a fuel marketers association.
“Our groups have come together – for the first time ever – to support legislation that would resolve this issue once and for all,” they said in the letter.
“In the absence of such legislation, we could see gasoline marketplace uncertainty and political disputes over E15 continue to resurface every summer.”
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Source: S&P Global