The Easter Bunny and the ‘Blend Wall’

The Renewable Fuels Association President and CEO shares key findings from the organization's analysis of EIA data regarding ethanol blending in this View from the Hill column that appears in the June print issue of Ethanol Producer Magazine.
By Bob Dinneen | May 30, 2017

Spoiler alert: There is no Easter Bunny. Sorry, kids. That’s a fiction promoted by candy companies to sell lots of chocolate every spring. Don’t get me wrong, I’m a big fan of chocolate bunnies, particularly those that aren’t hollow. But it’s still fiction.

Here’s another fiction: the “blend wall.” Like the Easter Bunny, the blend wall mystique has been perpetuated by an economic incentive—oil companies that want to mislead consumers about the potential of biofuels and the Renewable Fuels Standard.

But the truth is there is no blend wall preventing the growth of renewable fuels or the effective implementation of the RFS. According to a recent Renewable Fuels Association analysis, “Ethanol Consumption Breaks Through the Blend Wall in 2016,” U.S. Energy Information Administration data shows gasoline consumed in the U.S. in 2016 contained more than 10 percent ethanol on average for the first time ever. The data demonstrates that the blend wall is not a real constraint on ethanol consumption.

Here’s a deep dive into the numbers. According to EIA data, finished motor gasoline consumption totaled 143.367 billion gallons in 2016. That volume of gasoline contained 14.399 billion gallons of ethanol, meaning the average ethanol content of gasoline consumed in 2016 was 10.04 percent. 

Growing consumption of E15 (gasoline blends containing 15 percent ethanol), midlevel blends (containing 20 to 50 percent ethanol) and flex fuels (containing 51 to 83 percent ethanol) was responsible for the increase in the average ethanol content of U.S. gasoline in 2016. Our analysis found that 2016 consumption of midlevel blends and flex fuels was at least 450 million gallons, and may have been more than 1 billion gallons, if the American Petroleum Institute’s assertions about ethanol-free gasoline (E0) demand are correct.

Among other key findings:

• National average ethanol content was 10.0 percent or higher in six of the last seven months of 2016, culminating with a record high monthly rate of 10.30 percent in December.

• On a weekly basis, the ethanol blend rate hit a weekly record of 10.41 percent in early January 2017.

• April 2015 was the last time average ethanol content was below 9.7 percent. These data undermine the assertion by API and others that the gasoline market cannot accommodate more than 9.7 percent ethanol due to purported infrastructure and vehicle constraints.

• Using the most conservative assumptions, EIA data imply that 447 million gallons of midlevel blends and flex fuels containing 313 million galllons of ethanol were consumed in 2016.

• Using API’s assumptions about E0 demand, however, consumption of midlevel blends and flex fuels was 1.2 to 1.7 billion gallons, which translates to between 843 million and 1.17 billion gallons of ethanol.

As the analysis shows, consumers are gravitating toward E15, E85 and other midlevel blends where they are available. The oil industry can no longer claim the “blend wall” is any barrier to the effective implementation of the RFS.

So, the next time you hear the petroleum industry claim the marketplace couldn’t possibly handle more than 10 percent ethanol blends, give them a basket of chocolate bunnies and tell them to scurry along. There is no blend wall. But do give them the hollow ones.

Author: Bob Dinneen
President and CEO,
Renewable Fuels Association