Gainesville, Fla.–based Renergie Inc. says the 54 cent per gallon tariff assessed to imported ethanol should be repealed. Renergie was formed in March 2006 to raise capital to develop, construct, own and operate a network of ten 5 MMgy ethanol plants in Louisiana.
Brian Donovan, Renergie chief executive officer, said repealing the tariff would be advantageous to the U.S. because it would “create market competition by allowing U.S. blenders to purchase cheaper ethanol from foreign sources. U.S. oil companies are using ethanol merely as a blending component in gasoline rather than a true alternative transportation fuel,” he said.
Donovan said eliminating the 54 cent per gallon tariff “would help lower gas prices, increase the supply of ethanol to coastal markets, and ease the economic strain that is impacting the agriculture, food and beverage industries.”
Bryan Sherbacow, an ethanol industry veteran and financial consultant with Charleston, S.C.-based Armistead Group, doesn’t agree that eliminating the tariff would have a positive effect on the U.S. Sherbacow said there is simply not enough ethanol being produced to replace traditional fuel altogether. “There isn’t enough foreign-produced ethanol to enter into the United States such that we could use it as a primary fuel,” he said.
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Donovan said Renergie doesn’t believe the elimination of the ethanol import tariff would provide the U.S. with a sufficient supply of imported ethanol to entirely replace gasoline. Rather, he said the elimination of the tariff would provide the United States with sufficient ethanol to move ethanol demand beyond being just a blending component in gasoline to a truer transportation fuel alternative and create the required fueling infrastructure.
Donovan said a lack of ethanol infrastructure in the U.S. is part of the reason widespread ethanol use is not being realized. “Only 1,528 of the nearly 180,000 retail gasoline stations in the U.S. offer E85,” he said, noting that they are predominantly located in the Midwest.
Sherbacow said regardless of the number of stations providing ethanol, one of the major issues is the availability of ethanol that can be pumped. “Even the Brazilians state that they don’t have enough ethanol to do that,” he said.
“While alleging an oversupply of corn ethanol, U.S. oil companies still import thousands of barrels of ethanol from foreign sources every month without having to pay the 54 cents per gallon import tariff,” Donovan said, adding that ethanol can significantly lower the price of fuel at the pump if it’s produced from a non-corn feedstock and marketed directly by the producer as E85. “Ethanol must compete against, rather than be an inexpensive blending component in, gasoline,” he said.
Donovan said Renergie has a strategy which employs a concept called “field-to-pump” that is designed to market and produce ethanol locally. “Currently, ethanol providers blend E10 and E85 at their blending terminal and transport the already blended product to retail gas stations,” he said. “Once state approval is received, Renergie’s variable blending pumps will be able to offer the consumer a choice of E10, E20, E30 and E85.”
