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E15 Will Make No Difference Now

December 1, 2009

By delaying a decision about allowing E15 in our gasoline for at least another six months, the EPA has sealed its fate as a non issue in avoiding the blending wall, especially considering the conditions it is talking about, like allowing it only for cars made on or after 2001 and not allowing its use in the marine industry and small engines.  These kinds of special conditi0ns will severely limit the ability to deliver any significant amount of E15 in time to avoid the blending wall.

Clearly government bureaucrats don’t have a clue about gasoline distribution and delivery.  We have the same problem on the state level here in Oregon, a mandatory E10 state.  E10 is causing economic dislocation in the marine and aviation industry and poses a threat to the public safety industry.  We have exceptions in our law for all of those users, but it is permissive, i.e. they have to find the supply.  Suffice it to say not many outlets want to supply it because ethanol free gasoline cannot affect the delivery of any other grade of gasoline.  And there is the rub.

The vast majority of gasoline stations only have two tanks for gasoline, and maybe one for diesel.  The distributor supplies premium unleaded to one tank and regular unleaded to the other tank.  If the station supplies mid-grade it is blended in the modern three button pumps you see in most gas stations.  In Oregon, both grades must be E10.  Any station is “allowed” to sell ethanol free gasoline if they can find it, but if they choose to pump ethanol free premium, the mid-grade must still be E10.  Do you see the problem?  Two tank stations cannot pump any ethanol free gasoline in Oregon, even if they wanted to, and more than 90% of the gas stations in Oregon are two tank setups, plus branded stations wouldn’t be allowed to sell ethanol free premium, mid-grade E10 and regular E10 by their brander.  So practically nobody offers ethanol free gasoline unless the station is an oddball that had an additional tank and manifold for off road diesel or is an unbranded three tank station, both setups I have run into.  Out of more that 1600 stations, and the number is declining every year, less than 30 of them offer any ethanol free gasoline in Oregon, along with 43 marinas and 1 airport.

Lets see how this applies to the E15 waiver.  Remember, the vast majority of the gas stations in the country have only two gasoline storage tanks.  If the E15 waiver restricts E15 only to cars made on or after the 2001 model year, who will choose to pump the E15?  All of the two tank stations will have to choose, either E10 or E15.  They don’t have tanks to store both E10 regular and premium and E15 regular and premium.  Do you think any station outside a few major metropolitan areas that can reasonably target those chosen new car E15 customers will choose E15?  If they do they cut their clientele significantly while the station that chooses E10 can serve all comers, even though E10 causes property damage and is a threat to public safety.

There are a couple of other problems having to do with infrastructure compatibility and liability.  There is a knotty problem with U/L approval of pumps and there are problems with storage tanks.   So how many service stations in this economy are going to jump at the chance to pump E15 without U/L approval for their pumps and possibly damage their storage tanks?

And, so called, “Blender Pumps”, the darling of the ethanol industry right now because they can “dial a blend”, aren’t going to provide much relief either.  They have an even bigger problem with U/L because they can theoretically blend anything between E10 and E85 and they represent as big an infrastructure upgrade as E85 and in this economy how many stations can afford to replace all of their pumps with new more expensive blender pumps and hope one of their tanks can withstand E85?

There is one further small wrinkle in this scenario nobody addresses, and that is the refinery product used to make ethanol blended gasoline called BOB.  Somebody needs to do some serious research on whether one BOB can be used for multiple blending levels.  I hear conflicting reports about this problem but gasoline refining is an opaque business and I haven’t seen anybody with knowledge discuss it.  I brought it up with the only refinery representative I know and he said information about BOB was confidential.

On top of that we are months away from any decision and the clock is ticking.  Next year more than 12 billion gallons of ethanol must be blended with gasoline, enough to take at least 120 billion gallons of gasoline E10.  That would take 88% of all of the gasoline consumed this year E10, but gasoline consumption is declining so that number may actually be closer to 100%.  Whenever the E15 decision is made it is going to take months if not years to figure out the logistics of which stations are going to take the risk to pump E15, and actually get product delivered.  By that time the ethanol industry will be up against the blending wall again.  Time is of the essence and time is running out.

Of course the whole scenario is absurd.  Anyone who has actually ever read the federal RFS mandate in EISA 2007 knows that it has nothing to do with E10 or E15 or even E20 or E30.  They are never mentioned in the act.  The only ethanol blending level that is mentioned is E85 and copious amounts of your tax dollars are offered to any taker that will invest in E85 infrastructure, supply and delivery or make flex-fuel vehicles and sell them.  It is a giant corporate welfare act for E85.  You get nothing more than the blenders credit for any other level.

So explain to me again how E15 is going delay the blending wall and save the ethanol industry.  The only thing that might save the ethanol industry is to invest in E85 delivery infrastructure and design and build E85 only engines, ones that use ethanol efficiently.  Flex-fuel vehicles are dinosaurs already.  They are neither efficient gasoline powered cars, nor efficient E85 cars.  They are nothing more than a computer controlled Rube Goldberg contraption.

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2 comments

  1. Hi Dean,

    Just saw your comments over at Forbes, and wonder if you can contact me. I have been trying to find the specific language in the law the lays out the fines for failure to comply with the blending requirements, and it looks like you may know? I have some language that implies that it is at EPA discretion, but you mentioned a specific number. I would like to understand the context.

    Thanks, Robert Rapier



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