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 has an untriggered mandatory E10 law. The ethanol law in Washington is not an E10 law, it is a usage 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• Mandatory state ethanol blending laws have been superseded by the federal RFS mandate in the Energy Independence and Security Act of 2007 (EISA 2007) which now affects every state, not just the six with mandatory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 laws.
• 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 usage law, every year more and more ethanol must be blended into gasoline in America.
• EISA 2007 requires 9 billion gallons of ethanol be produced this year (2008), and that goal has been met. Ethanol production and blending must increase every year through 2022 when 31 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.
• About 2014 or 2015 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 tax.

Carrots 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. Since we produced more than 9 billion gallons of ethanol in 2008. the tax credit will be $0.45 / gallon of ethanol blended, starting 1 January 2009. (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.)
• During this year, 2008, when ethanol production exceeded 9 billion gallons / yr. the ethanol blending credit was $0.51 / gallon, so the total tax credit amounted to more than $ 4.5 billion dollars that was not remitted to the federal hiway trust fund. Next year ethanol production must reach 11.1 billion gallons which means the total tax credit will be in excess of $ 4.9 billion not remitted to the hiway trust fund.
• 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 gasoline for regular unleaded E10 blending. This is already happening in Oregon. They can also ship 89 AKI gasoline for premium unleaded blending. Suboctane gasoline costs less to produce and more product results from every barrel of oil.
• 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.
• If you want to understand the looming disaster of EISA 2007, click here.

The Problem With Ethanol / The Three Phony Assumptions

• Phony assumption #1: ethanol will reduce the price at the pump.
  • Maybe it would have six months ago, but it is now more expensive than gasoline, which is declining in price much faster than ethanol.
• Phony assumption #2: ethanol will improve air quality.
  • 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 true.
  • There has never been a statistically significant, 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?

What 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 be worthless.
• The mandate needs to be repealed and a new law passed prohibiting the blending of ethanol in premium unleaded gasoline.
  • 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 mandate anyway.
  • Oregon will see no change in ethanol blending in regular gasoline unless EISA 2007 is repealed.
• If the state ethanol mandate is not repealed and 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, because there is the high likelihood that premium unleaded gasoline will be taken suboctane by the end of 2009.

---

Please Join The Ethanol Free Premium Coalition

We are looking for people willing to work on legislation in each state to prohibit the blending of ethanol into premium unleaded gasoline and requiring the accurate labeling of pumps that dispense ethanol.

If you are interested in supporting the Coalition please email us, or use the contact button above, and we will add your name in the state list below. You will be able to contact others in your state with a similar interest.

If you need information, with references, in order to frame arguments against ethanol blending, use these Talking Points.

---