EPA’s Un-depth E15 Un-analysis

Big Oil has done little to meet its increased biofuels obligations. Now, the EPA is proposing to reward their belligerence by curtailing the renewable fuels standard. It’s like the IRS lowering someone’s taxes because they refused to pay.
By Ron Lamberty | January 22, 2014

By now, most of you have had an opportunity to read some form of the U.S. EPA’s “2014 Standards for the Renewable Fuel Standard program (RFS2): Notice of Proposed Rulemaking.”  Most of us probably read the summary of the bill and have focused on “the numbers” and the impact that EPA’s proposed reductions would have on our industry.  But for those who have had the time to plow through the text of the entire proposed rule, I wonder how many stopped to reread and re-reread the section of the rule that appears to be the crux of EPA’s nonsensical argument that “you can’t get there from here.”

Following in-depth discussion of EIA projections, which show that gasoline use is much lower than what was projected, but which ignores the fact that EIA’s projections were based on gas prices that were a buck lower than what they are now, EPA barely mentions the one fuel that could force gas prices down while at the same time helping obligated parties reach their required volume obligation: E15. If people don’t like the price of gas or E10, and if ethanol is cheaper, it stands to reason they might give lower-priced E15 a try. That would force gas prices to compete, wouldn’t it?  Yet, in one very brief section, a little more than halfway through the proposed rule, EPA gives only brief mention of E15. Four or five paragraphs contain 14 total mentions of E15 (compared to 136 times that the word gasoline is used in the rule), saying, essentially: We don’t think anyone is going to buy E15.  EPA went to great lengths to analyze potential E85 demand, but it sounds like their E15 investigation was akin to “some guys told us it’s probably not gonna work.” Or maybe they found some stuff on the Internet.

In fairness, what they actually said was: “For the purposes of this proposed rule, we have assumed that all gasoline-powered vehicles and FFVs [flex-fuel vehicles] would use either E10 or E85.” EPA offered no explanation of where those assumptions came from. They want credit for approving E15, saying, “EPA has taken a series of regulatory steps to enable E15 to be sold in the U.S. in 2010 and 2011…” and “EPA issued partial waivers to enable use of E15 in model year 2001 and newer vehicles,” but don’t seem to be aware that oil companies subsequently issued a total denial of station owners’ ability to sell E15 for drivers to use in those vehicles. EPA takes a see-no-evil stance on oil industry lawsuits, phony “studies,” a well-funded smear campaign against E15, enormous Big Oil lobbying outlays and oil companies’ outright ban on the sale of E15 at branded stations. 

EPA summarizes its E15 un-depth un-analysis saying, “However, based on information currently available to the agency, the volume of E15 being supplied in the market to date has been very limited.” In other words, “the guy said” there isn’t much E15.  Can the agency really not find anyone to tell them why the volume of E15 “has been very limited?” Oil refiners have created a self-fulfilling prophecy: There are no E15 sales because they do not allow E15 sales. 

Oil companies have not done a single thing to meet their obligation to sell greater volumes of renewable fuels, and EPA is inexplicably preparing to reward their belligerence by making the requirement go away. It’s like the Internal Revenue Service lowering someone’s taxes because they’ve refused to pay. Come to think of it, Big Oil’s income taxes are lowered because they paid them to other countries . . . so maybe this shouldn’t be a surprise.

Author: Ron Lamberty
Senior Vice President,
American Coalition for Ethanol