API calls for safety margin in final ethanol mandate

In a letter released April 29, the American Petroleum Institute (API) asked the US Environmental Protection Agency (EPA) to build in an adequate margin of safety when setting the final ethanol mandates for 2014 because projections of gasoline demand often miss the mark.

“Given the uncertainties in gasoline demand projections, a 9.7 vol% ethanol mandate represents the minimum buffer needed to protect consumers against economic harm and safety concerns associated with the ethanol blend wall,” API Downstream Group Director Bob Greco told reporters in a conference call.

Greco said the overwhelming majority of vehicles and refueling infrastructure have not been certified or warranted for ethanol blends above 10 %, and that Coordinating Research Council testing shows that ethanol concentrations in gasoline that exceed 10 vol% can lead to engine and fuel system damage. He asked for an ethanol mandate of no more than 9.7 vol% in order to preserve consumer choice for ethanol free (E0) gasoline, which represents about 3% of the market.

“EPA shouldn’t try to micromanage ethanol mandates based on slight changes in gasoline demand forecasts,” Greco said. “These mandates set the minimum amount of ethanol that must be used each year—not the maximum. So it’s better to err on the side of caution with the final rule rather than force more ethanol into gasoline than is safe.”

Greco also announced a new TV, radio, and online ad campaign that will run inside the beltway, beginning next week.

“The ads will urge EPA and the White House to follow through with the proposal and cut back on ethanol mandates to protect consumers from the impending blend wall,” he said.

Greco also reiterated the need for improved estimates on gasoline demand when setting the RFS ethanol volumes. These volumes are set using EIA’s October motor gasoline estimates. However, the agency has overestimated gasoline consumption by as much as 70%. Ethanol volumes should be viewed as minimums; if gasoline demand increases then ethanol consumption will increase.

In 2013, gasoline consumption was more than 17 billion gallons lower than what was projected in 2007, when Congress passed the RFS. Annual EIA gasoline projections since 2007 have missed the mark by an average of 220 million gallons a year.

“So EPA shouldn’t try to micromanage ethanol mandates based on slight changes in gasoline demand forecasts. Instead, the agency must be conservative with ethanol mandates to provide consumers with a buffer against the consequences of the blend wall,” said Greco.

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