Big Oil’s Last- Ditch Effort

By Brian Jennings | February 14, 2013

Believe it or not, Big Oil companies have started talking about the blend wall.  By dragging their feet on E15, the blend wall is largely a problem of their making—and a 30-some year old arbitrary U.S. EPA rule limiting the percentage of ethanol permitted in gas. But now, the oil lobby has suddenly decided to distort the meaning of the blend wall in a last-ditch effort to kill the renewable fuel standard (RFS) in 2013.

For years, the American Coalition for Ethanol and others have been cautioning about the E10 blend wall, the need for higher blends of ethanol, more blender pumps, and flex-fuel vehicles—putting consumers, not oil companies, in control, and doing so in a way that avoids any future blend wall problem. When federal law requires 36 billion gallons of renewable fuel to be used by 2022, much of that ethanol, we must overcome the blend wall.

Here’s why oil companies are in panic mode today. While ethanol production will remain flat or decline this year, the RFS provides for annual increases in ethanol use, so refiners are expected to draw upon their stockpile of renewable identification number credits (RINs). As RIN stockpiles thin, refiners will need to purchase physical gallons of ethanol to comply with their renewable volume obligations under the RFS for the latter half of 2013 and into 2014. Moreover, at the same time the RFS ensures annual increases in renewable fuel use, new fuel economy standards are shrinking overall gasoline consumption in the U.S. When the RFS2 was enacted in 2007, we consumed around 150 billion gallons of motor fuel. Today that total is closer to 130 billion gallons. An RFS calling for ethanol use to rise from 13.8 billion gallons in 2013 to 14.5 billion gallons in 2014, while the overall gasoline pool is shrinking, means refiners can no longer refuse to comply with the RFS by dragging their feet to adopt E15.

And it’s E15 that’s got the oil lobby talking about the blend wall. The idea of farmers and ethanol producers taking more market share via E15 is giving Big Oil sleepless nights.

Enactment of the RFS2 in 2007 disrupted the profitable status quo of oil companies (and many others). What ensued was an onslaught against the RFS and ethanol industry in general. The oil lobby has orchestrated attack campaigns, petitioned to waive the RFS, in 2008 and 2012, both denied, and filed more than half a dozen lawsuits. Bruised but not broken, the ethanol industry remains on its feet, so Big Oil has nothing left to do but distort the meaning of the blend wall as something that is unworkable and forces them to adopt E15. 

For those of us who view the need to overcome the blend wall and increase E15 use this year a top priority, the leverage we have is the RFS. The oil lobby views 2013 as its last best hope to repeal it. ACE is supporting the Fuels America RFS campaign, designed to counteract opposition efforts to distort ethanol’s reputation inside the Beltway. This month, we’re also hosting our fifth annual grassroots DC fly-in. It is the grassroots who put a human face on the blend wall and make the most compelling case for keeping the RFS. 

ACE’s grassroots fly-in doesn’t just tell the ethanol story, it shows the ethanol story. We show Congress how the blend wall affects real people when 60 grassroots ethanol supporters from dozens of states and various walks of life take the time to personally explain why the RFS and E15 are important to them. We prove how ethanol results in food and fuel when those same grassroots lobbyists show members of Congress and their staff samples of No. 2 yellow corn, distillers grain, corn oil and other coproducts from ethanol production like soap (yes, soap). Take it from me, as a former congressional staffer, showing your story is more effective than just telling it.

Welcome to the blend wall conversation, Big Oil. When our grassroots is successful in showing Congress why it’s important to keep the RFS to overcome the E10 blend wall, we look forward to your helping us prove the safety, affordability and reliability of E15.

Author: Brian Jennings
Executive Vice President
American Coalition for Ethanol