Posts Tagged ‘blender pump’

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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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CAN YOU SAY BLENDING WALL?

March 8, 2013

Apparently I’m not the only fool who can see that we are crashing into the blending wall.

This informative article in Platts arrives at the same conclusion.  (Platts is a leading global provider of energy, petrochemicals and metals information, …)

One slight problem in the article, the authors completely misunderstand the cause. Here is their excuse:

“When the volumetric blending levels were set for the RFS in 2007, lawmakers, as well as industry representatives, didn’t expect the level of ethanol produced to exceed 10% of the national gasoline supply until much later this decade. But steadily declining gasoline demand coupled with increased fuel efficiency mean that benchmark, called the “blend wall,” will hit this year and, for some refiners, may have already been reached.”

Are you kidding me? Clearly the four people attributed at the end of this article never read the RFS mandate in EISA 2007, or having read it, did not understand it. My guess it is the former.

Nowhere in the act is there any discussion of a 10% level of ethanol blending. E10 is NOT mentioned in the act and the act is not a mandatory E10 law.  Gasoline with 10% ethanol is NOT a Renewable Fuel as defined in the act. The entire act is obviously targeted towards increasing the production and distribution of E85 and the increased production of flex-fuel vehicles.  All of the corporate welfare granted by the act is for these three objectives. The only Renewable Fuel defined in the act is E85 in several places, and in one place it is defined as any blend of E11 and above. Since the blending quota table in the act continues to require ever increasing amounts of ethanol be blended out through 2022, the only possible way of ever meeting the blending quotas was to produce copious amounts of E85.

It is going to be absolutely hilarious in the next couple of years when the blending quotas, which are cast in stone in the law, completely swamp the gasoline pool, with no place to put billions of gallons of excess ethanol and there will finally be no way to strip RINS because every producer will have to purchase a quota of ethanol that will exceed 100% of the amount that they can put in their gasoline production.  All I can imagine is a tank farm boom to store the excess ethanol at our terminals and a steady increase in gasoline price to cover the ethanol that the producers will be forced to buy with nowhere to use it.  I guess they are hopeful they can sell it in the international market.

Of course the supreme irony is that the ethanol production increases demanded for every year from 2015 to 2022 must be met essentially by cellulosic ethanol production which nobody can make in economically viable commercial amounts.  So it isn’t just a blending wall we are finally crashing into, it is also a production wall.

I wonder when the EPA, the politicians, the media and the American people are going to finally figure what a ridiculous, unworkable  sham the RFS mandate in EISA 2007 really is.  I may be a fool, but I figured it out as soon as I actually read the act back in 2009.  If you would like to read the act, you can find it here.

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EPA DENIES RFS WAIVER

November 20, 2012

FULL SPEED AHEAD INTO THE BLENDING WALL!

On Friday, November 16, 2012, the EPA denied the waiver petition made by several states to drop mandatory ethanol blending as required by EISA 2007 for one year.  You can find the denial as quoted here, “Based on the entire record before it, EPA has determined that each of the petitions and requests should be denied.” in the EPA document.

This is what the waiver denial portends.  Even with the carry forward RINS, which are delaying the blending wall by maybe 20 billion gallons of E10 / year, by 2014, at the latest, the ethanol quota, cast in stone table, in EISA 2007 will swamp the gasoline pool and there will be nowhere to put the ever increasing ethanol quotas after that and the ludicrous E15 waiver will not delay this fact.

It was clear that the quota table in EISA 2007 was designed to produce Renewable Fuel, which is only defined as E85 in the act. OK, in one place in the act it is defined as E11 – E85, but it is NEVER defined as E10.  However, we produce a minuscule amount of E85 and that will not increase enough in the next few years to avoid the blending wall because of the massive infrastructure that would be demanded to distribute and sell it.  The fact that all of the gasoline in the U.S. is becoming E10 is an unintended consequence of EISA 2007 since E10 is NOT Renewable Fuel as defined by the act.

So here is a suggestion for the states that were denied the waiver.  Any state can prohibit the blending of ethanol in all of the gasoline in their state, except for those few mandatory oxygenate areas that are still left, which are a few big urban areas and most of Southern California.  There is no mandatory federal E10 law.  EISA 2007 certainly isn’t a mandatory E10 law, it is a Renewable Fuel law, and E10 is NOT Renewable Fuel as defined in the act.  So if a state can pass a mandatory E10 law, like my home state of Oregon did, useless as it is now, any state can clearly pass a law prohibiting E10 being sold in the state.  This would certainly accelerate hitting the blending wall thus exposing what a farce and sham the federal Renewable Fuel Standard really is.

Of course until such time as the congress critters repeal the federal RFS in EISA 2007, which they might do if they finally wake up and understand that it can’t possibly fulfill its intended purpose, the gasoline producers will have to deal with ever increasing quotas of ethanol with nowhere to blend it.  If the EPA is as obstinate as it is now with the cellulosic ethanol quotas that the gasoline producers must pay waiver penalties for a product they can’t buy, then the gasoline producers will have to do something with the ethanol they can’t blend.  I have a suggestion.  Start constructing large tank farms in Illinois, as near to ADM headquarters as possible, and the Iowa home of Senator Chuck Grassley, the champion of the RFS and the water boy for ADM.  Just store the billions of gallons of ethanol in their back yards, by 2022 you are going to have to be able to store about 15 billion gallons of the stuff every year that you can’t use.  You can just pass along the costs to us consumers just as you do with the millions of dollars in penalties for the cellulosic ethanol waiver credits.  I’m sure we won’t mind, because we certainly don’t mind that you must pay for a product you can’t even buy, and you are passing along the costs to us right now.

Oh, and by the way, the whole EPA waiver review was a complete farce.  Look on page 79 of the Notice, “The commenter failed to acknowledge that EPA is not required to issue a waiver when severe economic harm to a state, region or the United States is demonstrated. The statute provides that EPA “may” do so in that situation.”  Bazinga!  There was never the remotest chance in Hell that the EPA was going to grant the waiver.  I hope the states wake up and take matters into their own hands.  They have every opportunity to as outlined above, just ban E10 in your state.

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WHERE’S THE E15?

February 7, 2011

I’ll bet you are waiting with baited breath for E15 to show up at your corner service station.  So where is it?  The EPA has granted the ethanol lobby’s waiver to allow E15 to be put in cars and light trucks made from 2001 on, which apparently represents about 2/3 of all vehicles on the road.

Could the delay possible stem from three major lawsuits against the EPA for granting a waiver that apparently they don’t have the legal authority to grant?  (NPRA lawsuit here, API lawsuit here and NMMA/auto mfg. lawsuit here)

Or could the delay possibly be that there is no ASTM specification for E15 and many states will not allow the sale of motor fuel without ASTM specification.

Or could the delay be that 21 states have statutes that only allow blending up to E10 to be sold for non flex-fuel vehicles in those state, including California which is the largest gasoline market in the nation.  These laws will have to be changed before E15 can be put into other than a flex-fuel vehicle.

Or maybe it is because the waiver is NOT MANDATORY, it is only voluntary, and the gasoline producers and service station associations said quite clearly in their E15 waiver remarks that unless they were granted immunity from damage claims for E15, they wouldn’t distribute it.

Or possibly it is because of the most ironic reason of all, there are a number of current EPA regulations that are going to have to be changed.

As I have pointed out before, the clock is ticking.  We will reach the blending wall by early next year, at the latest, and E15 was supposed to delay the blending wall.  But all of the reasons cited above will probably take years to sort out.  So if you were really counting on putting E15 into your new car that has no warranty for it, and paying more for less mileage, it would be better to exhale now.

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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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Ethanol Mandates, A Black Swan?

February 27, 2009

Nassim Taleb defines The Black Swan as “The Impact of the Highly Improbable.”  It has led me to the conclusion that the ethanol mandates of the states and especially the federal RFS mandate of EISA 2007 are a Black Swan.  Who could have predicted the negative economic impacts that are being caused by the misguided government manipulation of the gasoline market by forcing ethanol blending.

First, everyone should understand that ethanol blended gasoline on a mass scale should only be allowed in computer controlled, fuel injected cars.  It has no place in fixed jet, carbuerated engines, especially in humid environments.  This is why every state that passed a mandatory ethnol fuel law provided for the availability of ethanol free gasoline for certain engine applications, most notably marine and aviation use, antique and classic cars and motorcycles, snowmobiles and like recreational vehicles, and small engines used in stationary applications like generators and pumps and 2 cycle engines used in tools.  None of the states, except Missouri, made ethanol free gasoline easy to get, but all of the statutes have exemptions.  Missouri did the right thing and prohibited the blending of ethanol in premium unleaded gasoline so it was widely and easily available for everyone that needed it.  Be advised that there are only five states with active mandatory E10 laws, the rest of you have no exemptions and no protection.

Having said that, one must wonder what the federal politicians were thinking when they passed EISA 2007.  It contains a massive production quota that does not take into account what the annual gasoline consumption in the US might be.  Of course the entire RFS portion of the bill is predicated on a massive build up of Flex-Fuel cars and fueling infrastructure to support them.  But there was no guarantee when the bill went into effect in 2008 that the auto industry was going to embrace Flex-Fuel cars on a massive scale and gasoline dealers were going to install the expensive infrastructure to support them, especially considering that this created a chicken and egg scenario.  The gasoline distributors and stations would only add infrastructure if there were cars to buy E85, and Detroit would only build cars if there was demand created by the availability of cheap E85 pumped at omnipresent gas stations.  None of that is going to happen in this crumbling economy.  But the inflexibility in the federal statute is forcing the gasoline distributors to put the ethanol in every bit of gasoline that they can find, even though in a couple of more years they will crash into the “blending wall“.

The blending wall is truly a Black Swan.  But there are so many others.  One of the most ironic is the battle over the blender pumps which is causing states to be sued by the American Petroleum Institute for putting into effect laws governing the delivery of ethanol that they believed would economically benefit their citizens.  Now the citizens get to pay for the lawsuits.

The most  unfortunate Black Swans are the economic damage caused by pigheaded greed that could have been avoided had people in the ethanol and gasoline industry recognized that ethanol blended gasoline can cause property damage and should have only been allowed for computerized fuel injected cars.  But it appears that greed and the politicians ignorance got the best of them and now ethanol will be in all of the gasoline, and the only remedy for those who suffer damages is to sue.  The saddest Black Swans are the people put out of business who don’t have the economic clout to sue.  The problems with ethanol and boats and airplanes and 2 cycle engines, etc. have been known for a decade, yet nothing has been done to avoid the negative publicity and lawsuits.  This particular Black Swan could have been avoided by prohibiting the blending of ethanol in premium unleaded gasoline and labeling all gas pumps accurately as to ethanol content.  But then that is what a Black Swan is, the impact of the highly improbable.  I am indebted to Mr. Taleb for helping me understand the world I live in.

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Are You Ready For E15?

February 19, 2009

Minnesota was the pioneer in mandatory ethanol laws, the first state in the US to have a mandatory E10 law.  They want to be the first in the country with a mandatory E20 law.  According to 239.791, Minnesota Statutes 2007:

“Except as provided in subdivisions 10 to 14, on August 30, 2013, and thereafter, a person responsible for the product shall ensure that all gasoline sold or offered for sale in Minnesota must contain at least 20 percent denatured ethanol by volume.”

There are a couple of caveats in this law:

“(1) the commissioner of agriculture certifies and publishes the certification in the State Register that at least 20 percent of the volume of gasoline sold in the state is denatured ethanol; or”

Which means if E85 takes off big time in Minnesota, then this law would not trigger … not likely to happen.

“(2) federal approval has not been granted for the use of E20 as gasoline.”

There has to be an EPA air quality study to satisfy this requirement and car manufacturers must warrant their non flex-fuel cars to be able to use E20.

Federal approval is not proceeding smoothly.

Turns out that UL has given its blessing for regular gas pumps to vend E15, with caveats, but it appears E20 will need new approval.

Notwithstanding Minnesota’s bold leadership, there is another reason that higher ethanol blending will be coming to a service station near you in the foreseeable future, the dreaded “Blending Wall“, so others are pushing for raising the blending limit for non flex-fuel cars.  It was even discussed during the stimulus bill debate so recently signed.

Of course nobody is talking about the unitended consequences of raising the blending limit for non flex-fuel vehicles, and there is the crux of the matter.  All anyone ever talks about is cars.  But what about all of the other engine applications that use auto gasoline, like boats, airplanes, antique and classic cars and motorcycles, snowmobiles, ATVs, small engines both 2 cycle and 4 cycle, that are used in all kinds of tools and stationary applications.  How are they going to do on E15 or E20?

When is it going to dawn on the ethanol and gasoline industry that ethanol blended fuels should only be used in autos with computerized fuel injection systems.  It should not be used in any engine with a fixed jet carburetor.  That is why all of these other engines are exempted in states with mandatory ethanol laws.  The other problem is any vehicle with a fiberglass fuel tank.  There are already class action lawsuits for damage to boats with fiberglass fuel tanks and I have heard of damage in motorcycles and ultralight aircraft that had fiberglass fuel tanks.

You would think that the ethanol and gasoline industry would want to avoid the negative publicity from property damage that their products cause.  There is a simple answer.  Don’t blend ethanol in premium unleaded gasoline and label all of the pumps that have ethanol gasoline.  So far though, greed has triumphed over logic and the lawsuits and negative publicity will continue.

To get a sense of the urgency, google general clark e15 The ethanol industry has hired General Wesley Clark to be their poster boy.