The Biden administration is recommending for approval a rule that would allow expanded sales of gasoline with a higher ethanol blend (15 percent ethanol), based on a request from governors in Midwest states. Governors from major corn and ethanol-producing Midwestern states including Iowa, Nebraska and Illinois requested that the EPA effectively lift the ban on summer E15 sales in their states. E15 sales are currently not allowed in the summer (June 1 to September 15) because it is believed that E15 contributes to smog in hot weather, at least more than E10—a blend of 10 percent ethanol with gasoline. Ethanol enhances Reid Vapor Pressure (RVP) of gasoline. Consequently, it evaporates more quickly at higher temperatures and adds pollutants to the air.
The Midwest governors expect that lifting the summer ban will encourage filling stations to sell higher-ethanol E15 gasoline and offer it year-round. According to the governors, expanding E15 supply would ease pump prices and help farmers, but critics indicate that a piecemeal approach to increasing E15 sales could introduce distribution challenges as ethanol is both costly and difficult to blend. Ethanol is corrosive to rubber and certain metals and can damage the fuel lines of boats, lawnmowers, and other small engine equipment. Ethanol also attracts and bonds with water from the air, and that water can separate inside a fuel tank, forming a brown goo that can clog pumps and filters. A brief discussion with anyone familiar with small engines and their upkeep will inform a person of the challenges presented by ethanol in gasoline, and there are websites devoted to helping consumers find ethanol-free gas.
President Joe Biden lifted the ban on E15 last summer to lower the high gasoline prices resulting from his policies, but the infrastructure was not totally in place for sales of E15. Under the Environmental Protection Agency proposal outlined on March 1, 2023, the waiver banning summer sales would be removed in the following states: Illinois, Iowa, Minnesota, Missouri, Nebraska, Ohio, South Dakota, and Wisconsin, and would take effect on April 28, 2024. A state, however, may request to reinstate the waiver. EPA will hold a virtual public hearing for the proposed rule in late March or early April 2023.
EPA delayed the start date until next year because of requests from stakeholders and the recognition of the requirements needed in the fuel production and distribution system to make the change. The change affects the entire fuel supply chain, from refineries to filling stations. According to the American Petroleum Institute (API), the change will require modifications to the fuel infrastructure system because high ethanol fuel grades require different equipment and it will take one or two years after the rule’s implementation to mitigate the effects on consumers. Further, API warns that implementing a new fuel blend in select states could leave the Midwest region with tighter fuel supplies during the peak summer driving season because not every refinery, pipeline and terminal serving the Midwest has the ability to produce, transport and store a new blend of gasoline. The rule could cost the Midwest’s fuel supply chain and consumers $500-$800 million per year, which would show up in gas prices.
Some groups prefer nationwide, legislative action. There is a proposed bill in Congress, the Next Generation Fuels Act—a bill that would establish a minimum Research Octane Number of 98 for gasoline–higher than the standard of 91 set today, which benefits ethanol since it is higher in octane than gasoline. The tradeoff is that ethanol has less energy content per gallon than gasoline, meaning a driver will travel fewer miles per gallon as the amount of ethanol per gallon increases. The Next Generation Fuels Act would also require sources of the added octane value to reduce carbon emissions by at least 40 percent. The act would add 1.8 billion bushels of new corn demand.
Conclusion
The Midwest governors of corn and ethanol-producing states want E15 to be sold year-round because currently there is a ban on summer sales, allowing only E10 to be sold between June 1 and September 15. The EPA has proposed a rule allowing E15 sales to be sold year-round in the Midwest beginning April 28, 2024. The piecemeal effect of such a rule causes problems for refiners as different equipment will be needed for the higher ethanol blend and not all refiners have the capability to blend ethanol because of its corrosiveness, which could cause shortages of gasoline during the summer months in the Midwest. Despite criticism of the “Balkanization” of fuel supplies which has distorted markets and hurt consumers, the Biden Administration is pursuing yet another policy that will exacerbate the problems, even as the United States is losing refining capacity. U.S. consumers will pay the price.
