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 Alongside the EPA
publication, the Trump administration changed the language of
trading restrictions that refiners have to abide by to prove that
they provide biofuel products, which improves the position of E15.
These two moves are the first steps in fulfilling Trump's promises
to corn farmers last fall to remove restrictions preventing the
proliferation of E15 in the U.S. marketplace.
Last fall we wrote that the expanded production of ethanol from E10
to E15 would help corn producers. Since that time a tariff war with
China has further damaged the corn market and has caused a
stockpiling of corn stocks in storage, waiting for better days.
With continued research into new hybrids and GMOs, and the expansion
of corn production acreage, we have experienced incredible increases
in yields, and the result is that we have more corn but not an
appetite for greater consumption. The result for producers is
non-sustaining lower prices.
So the greater challenge is to find new markets or expand existing
markets for the consumption of corn.
In the 1970s the addition of ethanol to gasoline began because the
current stabilizing additive, MTBE, was found to be contaminating
groundwater. By 2005 MTBE was banned in 20 states and the norm
became the addition of 10% ethanol to gasoline to raise the octane
level, and provide the needed oxygenating stabilizer.
Corn prices at the time were around $2 a bushel, and with the
nationwide adoption of E10 as a standard for automobile gasoline, it
is estimated that ethanol production added somewhere between 75
cents to $1 a bushel to the price of corn.
The aim in 1970 was to achieve energy self-sufficiency, avoiding
politically charged purchases and commitments for fuels to unstable
regimes in middle-eastern countries.
Today the aims have changed. With the expansion of shale oil
production in the gasoline industry we are now energy
self-sufficient and are now a petroleum exporter. The aim of ethanol
use now is for environmental protection and agricultural support.
Most gas stations in the U.S. sell a blend of gasoline and the 10%
ethanol produced mainly from corn goes to motorists driving
automobiles and light trucks. In 2011 the EPA cleared all
automobiles produced after 2001 to use E10. With government
subsidies, the ethanol industry grew, corn consumption grew,
independent ethanol producers went out of business and sold out to
big grain consortiums (like ADM and Cargill), and the farmers who
grew corn were rewarded.
In an attempt to grow the ethanol industry, new ethanol blends such
as E85 were produced and marketed. E85 is a blend of 85% ethanol and
15% gasoline, and still exists today. Approximately 11 million E85
flex fuel vehicles have been produced since their advent in 2008 but
only about one-half million of the E85 capable vehicles get fueled
with E85 gasohol today for two reasons: First, the availability of
E85 has been hampering E85 sales. Few gas stations were able to sell
E85 because of the infrastructure changes needed to support E85; and
second, drivers found that they got poor mileage from low-energy E85
compared to E10, and few continued to use E85 despite the lower
price.
In March 2009, a lobbying group, Growth Energy, formally requested
that the EPA allow the ethanol content in gasoline to be increased
to 15% from 10% for general consumption in the United States. Their
aim was for E15 to replace E10 as the automobile standard for cars
and light trucks produced after 2001. Growth Energy's motivation was
to expand the ethanol industry, and the result would be to expand
the consumption of corn.
The EPA gave tacit approval, with the restriction that E15 only be
sold from October thru May each year. Since ethanol requires great
quantities of electricity to produce, the EPA wanted to limit the
production of E15 to reduce the amount of carbon put into the
atmosphere by coal burning power plants during the high electricity
production summer season (an Obama administration environmental
regulation).
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 This seasonal restriction
prevented the expansion of E15. Service station owners stayed with
the old standard E10 rather than spending significant money to
expand for a fuel that was only used for eight months a year. E15
was shelved except in a few markets, and is only sold in 1,300 gas
stations in 29 states currently.
The major problems are insufficient infrastructure and seasonal
restrictions by the EPA.
In July 2018, President Donald Trump said in a speech to Iowa
farmers that he would work to lift the E15 EPA seasonal restrictions
and promised E15 sales year round. The expansion from E10 to E15
would raise the consumption of corn from 40% of the current crop to
approximately 55% if E15 replaced E10 nationwide according to the
USDA.
The oil industry is actively fighting E15 because the expansion of
ethanol would mean a reduction in the consumption of gasoline in the
midst of a boom in the production of petroleum fuels in the United
States. The oil industry has issued press releases and established
websites listing the hazards, dangers, ecological and economic
reasons not to use E15, much of which is full of innuendo,
hyperbole, and outright misdirection.
In addition to the opposition from the oil industry, E15 also faces
another hurdle. State governments currently provide sales tax
exemptions for the ethanol portion of E10 (a savings of 20%) but
there is no sales tax exemption presently for E15. Any service
station replacing E10 with E15 would immediately price themselves
out of the market to other stations that continued to sell E10.
There is currently one service station in the state of Illinois
selling E15 in the city of Rochelle.
If there are no serious political or legal challenges to the
published rule change, year-long selling of E15 will be possible and
removes the marketing restriction that has hindered the adoption of
E15 as the gasoline biofuel standard. But further financial
incentives may be necessary to move a market which is decade-long
entrenched in the use of E10, as well as encouraging consumers to
desire the new product despite a barrage of propaganda being
circulated damaging E15's reputation. Even with no further
impediments, the move to E15 will take time.
[Jim Youngquist]
Sources
EPA Publishes Year-Round E15 Rule
Wikipedia: "Ethanol fuel in the United States"
Fox 28: "Trump promises Iowa farmers E15 all year" by Matt Hammill
July 26, 2018
Iowa State Agricultural Policy Review: "USDA's Projections for 2018"
Genesis Communications Network: "The many reasons not to buy E15
gasoline"
Chicago Tribune: "Mandating E15 gasoline is a bad idea"
Illinois News Network: "Illinois farmers cheer Trump's E15 fuel
expansion plan" by Greg Bishop Oct 11, 2018
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