Iowa ready to sell E15 ethanol
The Iowa Renewable Fuels Association recently held a press conference at the Linn Co-op Oil Co. gas station at Marion in eastern Iowa to highlight the need for “fueling freedom.” Linn Co-op is approved by the U.S. Environmental Protection Agency to offer the E15 ethanol blend, but petroleum refiners servicing Iowa refuse to provide the type of gasoline blendstock required to mix with ethanol to make a 15% blend.
The power of the oil industry’s petroleum distribution monopoly to restrict retailer and consumer options was the focus of the press conference. EPA has approved E15 for use in newer vehicles, those that are model year 2001 and newer.
• Fuel retailers are ready to sell E15 ethanol, but oil industry calling the shots.
• Petroleum industry controls the gasoline blendstock going into the pipelines.
• An EPA regulation is also involved in this limit on the availability of E15.
“On the cusp of Independence Day, Linn Co-op should be America’s first E15 retailer today, pumping E15 into cars and pickup trucks that are approved to use it,” said Jim Becthold, service manager of Linn Co-op Oil Co. “I’ve complied with all state regulations. I have my letter of approval for E15 from EPA.
“But my customers and I remain dependent on Big Oil because refiners won’t put the gasoline blendstock for E15 into the pipelines for our area. I’m frustrated that my customers are being denied fueling freedom as we celebrate our nation’s independence from foreign power.”
Due to a quirk in federal fuel regulations, during summer (June 1 through Sept. 15), the gasoline blendstock needed to blend E15 is different from the blendstock for E10. The regulation limits the amount of vapor pressure in gas during the summer. In some urban areas with smog concerns, there is a limit and petroleum companies sell gasoline that has lower vapor pressure.
Running into E15 roadblock
EPA granted a waiver to the traditional E10 blend of 10% ethanol since it would be over the vapor limit. If either E15 had an EPA vapor-pressure waiver similar to E10, or if gasoline refiners would sell the lower-vapor gas to blend with E15, an E15 blend would be available for customers in Iowa.
Refiners control what products go into pipelines that feed the fuel terminal for the Marion-Cedar Rapids area, says IRFA executive director Monte Shaw. The refiners have refused to provide E15 blendstock anywhere in Iowa.
Based on market conditions, E15 would save Iowa motorists 5 to 10 cents per gallon compared to E10.
At least until Sept. 15, Iowa is being forced to stick with the E10 ethanol blend instead of moving up to E15. That quirky EPA vapor limit regulation doesn’t apply to flex-fuel vehicles, however. Becthold can still sell E15 to flex-fuel vehicles, which can burn up to an 85% ethanol blend, but there aren’t a lot of those vehicles on the road compared to non-flex vehicles.
Need fueling independence
“Iowa needs fueling independence,” says Shaw. “One of the least understood ways Big Oil maintains its death grip on America’s fueling options is through control of products entering the pipeline system — what we call the petroleum distribution monopoly. Today, retailers who want to sell E15 are denied. Iowans who want to buy E15 are forced to buy higher priced products that have higher petroleum content.”
To bust the petroleum distribution monopoly by going around the pipelines is costly and logistically challenging. Shipping a lower-vapor gasoline blendstock to Iowa by truck or by rail would be too expensive. The most economical way to ship fuel to Iowa is by pipeline.
Shaw would like to get this situation solved by June 1, 2013, so customers who buy E15 after Sept. 15, 2012, would be able to keep doing so next summer and in the future. IRFA and other ethanol advocates are pushing to get EPA to equalize the treatment between E10 and E15, either by granting a waiver for E15 or getting rid of the waiver for E10.
Pipelines most efficient
Tax subsidies specific to the oil industry date back to 1913. The industry used the century of subsidies and federal loan guarantees to create a nationwide pipeline distribution network, and pipelines now provide the most cost-effective way to transport liquid fuel.
Today, even as many of the pipelines are owned by different entities, the oil industry can control the products offered at a corner gas station in Iowa by controlling what products go into the pipeline system. “To move products like E15 by truck instead of pipelines is costly and can result in the ethanol price savings being eaten up by added transportation costs,” notes Shaw.
Iowa leads nation
Iowa is the leader in renewable fuels production. Iowa has 41 ethanol refineries capable of producing nearly 3.7 billion gallons annually. In addition, Iowa has 13 biodiesel facilities with the capacity to produce 320 million gallons annually.
The Iowa Renewable Fuels Association was formed in 2002 to represent the state’s liquid renewable fuels industry. The trade group fosters the development and growth of the renewable fuels industry in Iowa through education, promotion, legislation and infrastructure development.
For more information, visit the Iowa Renewable Fuels Association site at www.iowarfa.org.
This article published in the August, 2012 edition of WALLACES FARMER.
All rights reserved. Copyright Farm Progress Cos. 2012.