Ethanol Talking Points For Media And Legislative Action
Unleaded auto gas, defined by ASTM D-4814,
without ethanol is an approved aviation fuel. No state
can pass an ethanol blending law that affects fuel service on an
airport. However if premium unleaded is taken suboctane, there
will be no unleaded gasoline for LSA and STC'd aircraft.
There are six mandatory ethanol states,
Minnesota, Missouri, Hawaii, Oregon, Washington and Florida.
Montana and Pennsylvania have untriggered mandatory E10 laws.
The ethanol law in Washington is not an E10 law, it is a
volumetric law, 2% of the total gallons pumped must be ethanol,
this is similar to the federal RFS mandate.
Mandatory state ethanol blending laws have
been superseded by the federal RFS mandate in the Energy
Independence and Security Act of 2007 (EISA 2007) which now
affects every state, not just the six with mandatory blending
The RFS mandates of EISA are overseen by
the Environmental Protection Agency (EPA). The EPA has complete
jurisdiction over the law.
EISA 2007 is NOT a mandatory E10
law, E10 is never mentioned in the act. It is a corporate
welfare act for E85 disguised as a volumetric law, every year
more and more ethanol must be blended into gasoline in America.
EISA 2007 requires 9 billion gallons of
ethanol be produced in 2008, and that goal was met. Ethanol
production and blending must increase every year through 2022
when 36 billion gallons of ethanol must be produced. Corn
ethanol can only grow to 15 billion gallons by 2015 but is not
allowed to grow any more after that. Starting in 2010, 100
million gallons of cellulosic ethanol must be produced rising to
3 billion gallons by 2015 when corn ethanol increases cease.
After that all of the annual increases demanded by EISA 2007
must be cellulosic ethanol.
By the end of 2012
ethanol production will be able to take every gallon of gasoline
produced in the US to E10, even though EISA 2007 is not a
mandatory E10 law. After that all of the ethanol will have to be
E85 or a mix of other ethanol levels higher than E10, i.e. E20,
E30, E50, etc. As of today only Flex-Fuel vehicles can use
ethanol blends higher than E10. It is against federal law
to run a higher blend than E10 in a non Flex-Fuel car.
Minnesota, the first state to pass a
mandatory E10 law, has passed a new law to move to higher blends
by 2010, E20 or E30, and has asked Detroit to warranty non
Flex-Fuel vehicles for these higher blending levels. There are
no current production vehicles that have a warranty for blends
higher than E10, except a Flex-Fuel vehicle.
Ethanol mandates are a hidden tax, state
and federal. Ethanol always reduces mileage. Every state
collects the taxes on the amount of fuel you buy. You have to
buy more fuel when ethanol is mandated, therefor you pay more
and Sticks in EISA 2007
Ethanol blending is not done at the
refinery, it is done at distribution terminals. Ethanol blended
gasoline cannot be shipped through a pipeline because it
would cause increased corrosion. Ethanol must be delivered by
railroad tank car, barge or tank truck to a terminal. The
terminal stores the ethanol in tanks and mixes it with gasoline
to the specification of an order.
The terminal gets the federal blending tax
credit. The tax credit is $0.45 / gallon of ethanol blended.
(That means each gallon of E10 generates a $0.045 tax credit for
the terminal, however blending E85 would generate a $0.3825 tax
credit for each gallon of E85 produced. Now you know why all of
the terminals are getting ready.)
Every large fuel marketer, especially the
branded gasoline distributors, must blend ethanol into their
gasoline at a proportional rate to the amount of gasoline they
market and the amount of ethanol produced every year under EISA
2007. The rate is set, and enforced, each year by the EPA. Since
the E85 market is so small now, this means that they must blend
ethanol into all gasoline which they can do up to 10%. If a
distributor doesn't meet their quota, there are substantial
monetary penalties, either they must purchase RINs or pay
substantial daily fines.
There is a way for an oil company to buy
their way out of their blending shortfall. It is called a RIN.
This is where ethanol blending gets very complicated. It is a
style of cap and trade system. Suffice it to say it is the
darling of the futures and derivatives markets, and you know
where they have taken our economy.
It is obvious that there is an economic
incentive for terminals to blend ethanol, the direct tax credit.
But there is another more subtle and insidious incentive for
refineries to get all of their distributors to blend E10. Once
that happens they can ship "suboctane" gasoline to the
terminals. Since blending ethanol at 10% or higher raises the
Anti Knock Index (AKI) by more than 3 points, refineries can
produce and ship 84 AKI BOB (Blendstock for Oxygenated Blending)
for regular unleaded E10 blending. This is already happening in
Oregon. They can also ship 89-90 AKI BOB for premium unleaded
blending. Suboctane gasoline generally costs less to produce.
BOB is not necessarily legal gasoline that can be sold at
The most acute problem for aviation is
that if the premium unleaded is taken suboctane, when all
gasoline is E10, there will be no 91+ AKI unleaded gasoline
made, which is required for 100 HP Rotax LSA engines and
Petersen high compression STCs.
Problem With Ethanol / The Three Phony Assumptions
Phony assumption #1: ethanol will reduce
the price at the pump.
Sometimes it does, sometimes it
doesn't, it is an agricultural commodity subject to all the
vagaries of speculation in the futures market.
Phony assumption #2: ethanol will improve
There is no proof, nor any way to
prove this statement. For every study that says ethanol will
improve air quality there is another study that says it
won't. There are studies that say it will reduce certain
green house gasses and other studies that say it will
increase other noxious chemicals.
This argument is dubious when you
consider the clearing of rain forests in third world
countries to either plant more sugar for ethanol or to
replace the loss of food crop imports, especially soy beans.
Phony assumption #3: ethanol will reduce
our dependence on foreign oil.
Just because you say this over and
over it doesn't make it so. Nobody actually knows if it is
There has never been a statistically
significant, large scale, independent study of mileage
before and after a mandatory E10 program. Without such a
study there is no way to prove this statement.
Nobody knows how the engine control
units in cars respond to E10. It is clear that some handle
it better than others, because there are many reported cases
of mileage decreasing 10% or more, which would indicate that
a lot of cars are using more gasoline than before the
ethanol mandates. Who knows how many? Where is the data?
Needs To Be Done In Oregon
The Oregon mandatory ethanol law has been
superseded by the federal RFS mandate EISA 2007. The state
mandate needs to be repealed for two reasons:
There is no escape clause in HB-2210.
Now that ethanol is more expensive than gasoline, Oregon has
the highest gasoline price in the four Northwestern states
according to AAA.
(Be sure to take the tax out.) No matter what the price of
ethanol, Oregonians will have to pay it. Even worse, if
ethanol becomes unavailable for any reason, mother nature or
shortage because ethanol companies go bankrupt and can no
longer deliver, then gasoline distribution must cease. If a
terminal can't get ethanol, it cannot ship gasoline,
especially if all of its blending stock is suboctane.
SB-1079, the promised relief for the
people who can't use ethanol blended gasoline in certain
engines doesn't work. Large areas of rural Oregon have no
access to unblended fuel. SB-1079 does not prohibit
suboctane production of premium unleaded. If premium
unleaded is taken suboctane, which is rumored, SB-1079 will
The mandate needs to be repealed and a new
law passed prohibiting the blending of ethanol in premium
Repealing the mandate and prohibiting
ethanol blending in premium unleaded will not interfere with
the ethanol mandate in EISA 2007, because EISA isn't an E10
Oregon will see no change in ethanol
blending in regular gasoline unless EISA 2007 is repealed.
If premium unleaded gasoline is not
protected from ethanol blending there will be a direct negative
impact on aviation and other SB-1079 constituents in Oregon.