Not surprisingly, the proposal by the Environmental Protection Agency (EPA) to base Renewable Fuel Standard (RFS) requirements for 2014–2016 on the so-called “E10 blend wall” drew high praise from oil industry representatives testifying at last week’s public hearing in Kansas City, Kansas.
At the hearing, the American Petroleum Institute (API) told EPA officials that oil companies “…support EPA’s proposal to waive the RFS volumes in recognition of the blend wall. This action is appropriate and necessary to avoid near-term economic harm.” Meanwhile, the American Fuel & Petrochemical Manufacturers (AFPM) testified that “EPA’s recognition of the ethanol blend wall and the potential adverse effects on consumers is a welcome first step.” And Chevron USA characterized EPA’s acceptance of the blend wall concept as “…a step in the right direction.”
Since 2013, both API and AFPM have advocated that the RFS should be confined to levels that would require gasoline to contain no more than 9.7% ethanol. These groups speciously claim that anything above this level would force a breach of the “blend wall” and cause “harmful economic effects.” Unfortunately, it appears that some in the Obama administration and EPA bought into the oil industry’s “blend wall” narrative. Indeed, EPA’s 2014–2016 RFS proposal states that “…the ability of the market to use ethanol is constrained by the E10 blend wall.” What’s more, the Agency’s proposed Renewable Volume Obligations (RVOs) of 9.02% in 2014, 9.04% in 2015, and 9.63% in 2016 bear a conspicuous resemblance to the 9.7% “cap” requested by API and AFPM
Given their apparent belief that the “E10 blend wall” is some impenetrable and immovable barrier, it may come as quite a shock to EPA, the White House, and the oil industry that nearly half of our nation’s 50 states blew past the 10.0% ethanol level two years ago. Recently released data from President Obama’s own Energy Information Administration (EIA) show that in 2013 ethanol comprised more than 10.0% of gasoline consumption in 22 states and the District of Columbia. The data prove that augmenting E10 blending with even small amounts of higher-level blends like E85 and E15 can break through the so-called “blend wall,” further diversify a state’s fuel supply, and facilitating compliance with the congressionally enacted RFS volumes. Consider this: if E85 accounted for just one out of every 100 gallons of fuel produced by refiners and blenders (and E10 accounted for the other 99 gallons), the average ethanol content across all 100 gallons would be 10.65%.
The EIA data show that in 2013 ethanol accounted for 12.2% of the gasoline consumed in Minnesota. This is not surprising given that the “Land of 10,000 Lakes” is also referred to as the “Land of E85.” Nearly one out of every eight gas stations in Minnesota offers E85, and the state has made a sustained and concerted effort to educate consumers about the benefits of renewable fuels like ethanol.
In 2013, ethanol accounted for between 10.1% and 10.3% of gasoline consumption in 21 additional states and the District of Columbia. This group includes the Midwestern agricultural states of Illinois, Indiana, Ohio, Michigan, North Dakota, South Dakota, and Wisconsin. But a number of coastal states also broke through the so-called “blend wall” in 2013, including Louisiana, Massachusetts, California, and New Jersey. These states sailed past the 10.0% ethanol level without so much as a blink in 2013, and certainly there have been no claims of “harmful economic effects” coming from them. Nationally, ethanol constituted 9.75% of gasoline consumption in 2013, according to the EIA data—slightly above the supposed limit of 9.7% supported by API and AFPM.
If ethanol already made up more than 12% of the gasoline market in Minnesota in 2013 and more than 10% of the market in 21 states from Arkansas to New Hampshire, why shouldn’t we expect the same transition to quickly and easily occur in states that were below the 10% level? While we don’t yet have a state-by-state breakdown of ethanol consumption for 2014, we know that total U.S. consumption rose more than 2% over 2013 levels. Thus, it’s likely other states joined the “bye-bye blend wall” club last year.
The EIA data provide compelling proof that the so-called “E10 blend wall” can be conquered; in reality, it already has been conquered in almost half of our states! If the EPA would simply enforce the RFS volumes enacted by Congress—rather than kowtowing to the wishes of API and AFPM—all 50 states would bust through the oil industry’s self-imposed “blend wall” for good.
Source: Energy Information Administration
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