The EPA’s E15 Ethanol Decision Deserves a Yawn

This post was written by James Coan, Research Associate at the Baker Institute Energy Forum

On Wednesday, the EPA made what, on first glance, appears to be a major announcement: vehicles made in model year 2007 or later can now run on 15 percent ethanol, a product more commonly known as E15. Currently, most vehicles are only allowed to run on fuel up to 10 percent ethanol, or E10.

The decision unleashed an overwhelmingly negative reaction from both ethanol opponents and supporters. The National Petrochemical & Refiners Association called it “unwise and premature,” the Friends of the Earth said higher ethanol blends “could increase emissions of toxic air pollutants,” and even the ethanol-friendly Renewable Fuels Association decried the policy’s limit to only vehicles made in 2007 or newer.

Despite the outcry from all sides, the decision will likely have very little impact. Very few gas stations will choose to sell E15 anytime soon.

The first issue concerns how gasoline is stored at your typical neighborhood gas station, which would essentially require a station owner to give up selling mid-grade and premium fuel. Most stations only have two tanks, one for regular and another for premium, and some have a third if they sell diesel. Mid-grade combines regular and premium. Thus, to sell E15, stations would mostly likely have to use the tank used to sell premium fuel. Station owners are unlikely to want to give up sales of this profitable grade, just to attract owners of cars purchased in the last three years who might be interested in the obscure benefits of E-15. Also, if a car owner would mistakenly buy E-15 for a car older than a 2007, the station owner might be held liable for damages to that car, creating a legal and public relations mess. To sell E 15 properly, station owners would have to have extra signage with warnings and rules about E-15.

While a station could in theory choose to install an entirely new tank and create the necessary signage to sell E-15, the process is very expensive, and it is unclear how carrying E15 would lead to additional profits for a gas station, so the upgrade would be an investment with no return. Only if a company blends in more ethanol than mandated and sells excess credits known as Renewable Identification Numbers (RINs) might they have any revenue to make such an investment.

Even if a gas station figured out a plausible way to carry E15 – maybe they have a station across the street, so one station would be the “E15” station and the other one would be the “premium” station – they may need to upgrade their above-ground gas pumps. Most currently installed pumps, which are technically called “dispensers,” are not certified to handle more than E10. While the safety group Underwriters Laboratories has made it clear that 15 percent ethanol should be fine in the dispensers, they are unwilling to certify them for E15 because that blend actually sometimes has more than 15 percent ethanol. According to Ken Boyce at Underwriters Laboratories, it will be up to the local authorities such as fire marshals to decide whether to allow existing dispensers to pump E15. If they don’t allow it, gas station owners will need to replace gaskets and seals to handle the fuel or completely replace the dispensers, all of which add costs. Some newer gasoline dispensers are certified for blends up to E25.

Some car warranties only insure vehicles using up to E10, and the liability issue of who’s responsible if the E15 damages the vehicles is not completely cleared up by the EPA ruling.

The E15 decision may have a little more impact if the EPA decides to allow it for model years 2001-2006, which it is currently debating. However, even in this case, gasoline station owners might not want to lose customers with vehicles made in 2000 or earlier.

The raw politics of the EPA’s E15 decision, made just weeks before the country’s midterm elections, seems politically relevant but as a practical matter, relatively meaningless as a means to create significant extra markets for corn-based ethanol. The really important ethanol issue still awaits the new Congress. The 45-cent per gallon ethanol blenders’ tax credit expires at the end of this year. In a period of large budget deficits, the government has an opportunity to stop spending more than $5 billion per year on corn ethanol.

No Comments yet

  1. Reed Mah

    My lawnmower says not to use anything higher that E10. I’m sure most everyone’s mower has that warning. A confederate of dunces strikes again.

    #1
  2. bob

    this is really good for us citizens. Anything that will raise the energy prices and get less mileage is a good thing. Just ask the prez.
    Anyone know where we can get communist bumper stickers? I would also like to fly the communist flag at the house since we live under communism now.

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  3. Roger Willco

    .
    Eat corn
    .
    Drink ethanol
    .
    Burn gasoline
    .
    .

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  4. Bill

    The only people who won’t admit that ethanol is a bad deal for all are those who are making money on it.

    #4
  5. Oh great. More corn, the alternative fuel that everyone know knows costs more than it yields. Oh well, too late, fat cats are in the corn businese already.

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  6. TXSFRED

    Anybody who causes me to accidentally put that crap in my cars will find out what it costs them. Corn Gas SUCKS. MORE corn in gas SUCKS MORE.
    .
    Anybody that has fuel injection has already had to have injectors cleaned and gasoline additives put in up the wazzu. Corn gas was a total mistake as was scotching MTBE. The States (Connecticut and California ) where they found MTBE in their water REFUSED to demand the extensive retanking of their Gas Stations that we all saw done here in Texas. Europe still burns MTBE becasue they did nt go for the Corn gas head fake.

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  7. My name is Stephanie and I work for Growth Energy, the group that petitioned the EPA to move the blend wall from E10 to E15. I would like to say that the EPA’s decision is by no means insignificant. It is the first crack in the blend wall in more than 30 years! This week’s decision will apply to 43 million cars – nearly 20 percent of the car park. And a decision on cars 2001-2006 would add another 86 million cars – bringing total cars impacted to 54% of the US fleet.

    No one is saying that you will see E15 in your gas pumps tomorrow, but every journey starts with a single step and this week, the EPA took that first step toward reducing our dependence on foreign oil, creating US jobs and improving our skies.

    To learn more about E15 and what it means for the US go to http://www.growthenergy.org/e15

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  8. namsmog

    Actually, in some Mid-West states (e.g., Iowa, Illinois, Indiana) where the states further subsidized EtOH in gasoline, mid-grade has EtOH, regular and premium are “clear”, and the mid-grade sells for a price less than regular. Check a few of the Kroger dispensers that have E85 for those “flex-fuel” vehicles. Betcha the sales volume for that stuff is so low that it spends a lotta time down there in the ground.

    Right–corn is for food, feed, and booze–NOT autos! Get your EtOH from beer, wine, and Jack or Jim! Stop subsidizing fuel EtOH, and you’ll stop lobbyists’from putting your tax $$$ in the hand/wallet of your politicos.

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  9. Sterling A Minor

    I respect Professor Jaffee’s knowledge. As she notes at the end of her column, the REAL political issue is yet to come: “The 45-cent per gallon ethanol blenders’ tax credit expires at the end of this year. In a period of large budget deficits, the government has an opportunity to stop spending more than $5 billion per year on corn ethanol.”

    #9
  10. Sterling A Minor

    On, re-review, I see Professor Jaffee did not write the column, as it is by one of her fellows at Rice’s Baker Institute.

    #10
  11. ksstexas

    Bob,
    You are an idiot. What you are seeing is the result of the appropriation and manipualtion of “gov’t” by the captains of radical capitalism. Produce a negative backlash against a ridiculous policy and stop momentum for any substantive change in how we acquire and use energy. These are the same people who would destroy the 40 hour work week if possible and don’t allow me to smoke a joint in my own house. We need to wake up and make gov’t work for us against them. If it’s not too late.

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  12. Bert Chadwick

    http://www.washingtontimes.com/news/2010/jul/2/open-standards-for-auto-fuel/

    http://www.energyvictory.net/energy_victory_book.htm

    http://www.energyvictory.net/energy_victory_reviews.htm

    I believe that’s enough to illustrate and educate a few people who have no ideas of what they are talking about when they speak against the new energy.

    #12
  13. Valkyrie

    I have now lost two fine garden machines, a tiller and a vacuum/lawnmower because I used this idiot new gas… I was NEVER told not to use it, and both engines were destroyed – beyond repair… AND – it now turns out that anyone with an old Corvette (or any auto with fiberglass tanks) will have their engine destroyed. We did receive info that any boat, large or small, that uses fiberglass fuel tanks will have their engines destroyed. Even if you use certain fuel lines, as the chemicals in this new “super fuel” will dissolve the tanks and the fuel lines and send the gunk into the engine, where it fouls up the carb and turns into solid gunk! What a total unnecessary mess, all thanks to this IDIOT government – Nanny State – that we have allowed to take over! NOV 2 – CLEAN HOUSE!

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  14. Firmgrip

    A concise and plausable article. Ethanol is very unfriendly to rubber and gaskets not designed for its use. It is corrosive and causes problems in pipelines. Another indicator that the EPA is politically motivated to the current administration as well as being inconceivably illiterate to the needs of Americas motorists and the good of the majority of the population. Once again EPA oversteps its boundaries for the good of the politically elite in Washington.

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  15. Charles Neilson

    The Obama administration has shown total disregard for the recreational boating industry by dismissing the plight of these outboard engines and their inability to operate on gasoline with greater than 10% ethanol (that they are promoting). Apparently the thousands of boaters represent a middle and upper class whose needs are not very important. Although the poor will undoubtedly suffer engine problems from the water effects on their auto engines, it will not be as serious as the problems impacting boating, one of the largest industries in our economy. With the actual inefficiency of ethanol added to gas, such as decreased gas mileage, transportation costs for ethanol, etc, why even add it? So much for the Obama Stimulus Package.

    #15