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You Can’t Make This Shit Up

November 24, 2015

Another year has passed and nobody is willing to admit the Federal ethanol mandates in EISA 2007 aren’t working and should be terminated. What I said a year ago still apples today: “As 2014 comes to a close, it is interesting to note that the ethanol mandate in EISA 2007 is all but dead, though nobody seems to have a silver bullet to put it out of its misery or the nation’s misery. No one is willing to drive a stake through its heart, so we will pretend that it’s still a viable program.”

I earnestly believed that EISA 2007 would be put out of its misery by congress this year. But I was wrong. Since the EPA waffled on setting the quotas as required in the act, in 2013, 2014 and 2015, the American Petroleum Institute (API) and the American Fuel and Petrochemical Manufacturers (AFPM) sued them and they settled the suit this way: with a Proposed Consent Decree. Pretty damned ironic that the EPA had to be sued by the oil industry to do what they are mandated by congress to do to implement the Renewable Fuel Standard which forces oil companies to blend ethanol into their product.

However, if you read all of the press articles carefully, it is obvious we are hard up against the blending wall. Everyone can see that the only way to blend even the reduced amount of ethanol mandated for 2016 is to increase the consumption of E85 and E15. Of course, as I’ve said for years, EISA 2007 is an E85 corporate welfare law. After all, the only places in the Act that mention Renewable Fuel are those sections dealing with E85 and all of the corporate welfare in the act was only for E85. In fact, E10 is never mentioned in the Act.

So, now the Department of Agriculture (USDA) has come up with a corporate welfare project to boost the usage of E15 – E85: a “Blender Pump” subsidy … that doesn’t have to be used for “Blender Pumps.” The summary in this Farm Futures article should give one pause for concern.

First of all, it is a state “grant” system. States are going to get grants, match them and then spend the money any way they want. There is no requirement that they actually install a single pump: “The matching contributions may be used for these items or for related costs such as additional infrastructure to support pumps, marketing, education, data collection, program evaluation and administrative costs.”

Secondly, you need to understand what is not explained. Statements like this: “USDA estimates that this investment will more than double the number of stations that offer intermediate blends of ethanol, mainly E15 fuel levels, nationwide.” are patently false. No station that doesn’t already pump E85 is going to benefit from this subsidy. They don’t have a tank to receive E85. You can’t put E85 in just any gasoline storage tank. You must also have stainless steel manifolds to deliver it to the special pump designed to handle corrosive E85. So, only stations with E85 already are going to participate in this program, by replacing their E85 only pump with a blender pump.

There is a list of the projected number of stations in 21 states that will benefit from this program. Notice there is not one state west of the Rockies and most of the winners are corn states. Neither California nor New York is on the list, the most populous states in the nation. Somehow, I doubt putting 74 blender pumps in South Dakota is going to significantly change the amount of ethanol blended in the U.S. In fact, since the program does not require the money to be spent on any new stations, or even on infrastructure, I’m betting there will be no increase in the amount of ethanol blended in our gasoline, whatsoever.

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