June 25, 2013 in Business

Higher-ethanol blend may spread as big oil loses fight

Matthew Daly Associated Press
 
Associated Press photo

This photo taken June 20 shows a sign advertising no ethanol gasoline available at a station in Oklahoma City.
(Full-size photo)

WASHINGTON – It’s a dilemma for drivers: Do they choose a gasoline that’s cheaper and cleaner even if, as opponents say, it could damage older cars and motorcycles?

That’s the peril and promise of a high-ethanol blend of gasoline known as E15. The fuel contains 15 percent ethanol, well above the current 10 percent norm sold at most U.S. gas stations.

The higher-ethanol blend is currently sold at fewer than two dozen stations in the Midwest, but could spread to other regions as the Obama administration considers whether to require more ethanol in gasoline.

As a result, there’s a feverish lobbying campaign by both oil and ethanol interests that has spread from Congress to the White House and the Supreme Court.

On Monday, the Supreme Court rejected a challenge by the American Petroleum Institute, the oil industry’s chief lobbying group, to block sales of E15. The justices left in place a federal appeals court ruling that dismissed challenges by the oil industry group and trade associations representing food producers, restaurants and others.

Tom Buis, CEO of Growth Energy, an ethanol industry group, hailed the decision as a victory for U.S. consumers, who will now have greater choice at the pump.

“Now that the final word has been issued, I hope that oil companies will begin to work with biofuel producers to help bring new blends into the marketplace that allow for consumer choice and savings,” Buis said.

The API called the decision a loss for consumers, safety and the environment.

“EPA approved E15 before vehicle testing was complete, and we now know the fuel may cause significant mechanical problems in millions of cars on the road today,” said Harry Ng, API vice president and general counsel.

The ethanol industry called that a scare tactic and said there have been no documented cases of engine breakdowns caused by the high-ethanol blend since limited sales of E15 began last year.

“This is another example of oil companies unnecessarily scaring people, and it’s just flat-out wrong,” said Bob Dinneen, president of the Renewable Fuels Association, an ethanol industry group.

The dispute over E15 is the latest flashpoint in a long-standing battle over the Renewable Fuel Standard, approved by Congress in 2005 and amended in 2007. The law requires refiners to blend increasing amounts of ethanol into gasoline each year as a way to decrease reliance on fossil fuels and lower greenhouse gas emissions that contribute to global warming.

The Environmental Protection Agency has proposed a 16.5 billion-gallon production requirement for ethanol and other gasoline alternatives this year, up from 15.2 billion gallons last year. By 2022, the law calls for more than double that amount.

Biofuel advocates and supporters in Congress say the law has helped create more than 400,000 jobs, revitalized rural economies and helped lower foreign oil imports by more than 30 percent while reducing emissions of carbon dioxide and other greenhouse gases.

But the oil industry, refiners and some environmental groups say the standard imposes an unnecessary economic burden on consumers. Using automotive fuel that comes from corn also has significant consequences for agriculture, putting upward pressure on food prices, critics say.

Along with the E15 court case, the API and refiners have swarmed Capitol Hill and the White House to try to have the current mandate waived or repealed.

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