News & Ideas

ACE tells EPA its RFS proposal is unlawful and ignores retail success with higher ethanol blends

Sioux Falls, SD (January 28, 2014) – The American Coalition for Ethanol (ACE) today submitted comments inresponse to the Environmental Protection Agency’s (EPA) proposal to reduce ethanol use under the Renewable Fuel Standard (RFS) in 2014 below ten percent of gasoline demand.  ACE made a strong and convincing case that that Congress did not provide EPA with the authority to adjust the RFS based on the blend wall, and that a 14.4 billion gallon conventional biofuel target in 2014 is doable through E15, E85, and carryover RINs as long as EPA doesn’t cave into Big Oil foot-dragging.

“Oil companies have done virtually nothing to meet their obligation to sell greater volumes of renewable fuels under the RFS, and EPA is inexplicably preparing to reward their belligerence by undermining the RFS.  It’s like the Internal Revenue Service lowering someone’s taxes because they’ve refused to pay,” according to ACE’s comments.

“Tonight President Obama will deliver the 2014 State of the Union address.  It is anticipated the President will describe income inequality as one of the defining issues of our time.  Yet ironically, this Administration is contemplating an RFS proposal that would drain billions of dollars from consumer pocketbooks and transfer billions more to oil company profit statements, making income disparity worse, not better.”

Media reports revealed that Office of Management and Budget (OMB) officials fear high Renewable Identification Numbers (RINs) and are generally confused about how RINs work. ACE’s comments explain how RIN prices help provide incentives to fuel marketers to offer E85, E15, and other blends to their customers.

“For Bruce Vollan, owner of Midway Service, enactment of the RFS was a signal for him to move to offer E15, E85, and other blends of ethanol.  ‘The best way to get over the blend wall is to try to get over the blend wall’ Vollan said.  Before RIN prices rose in 2013, his station’s sales were already 6 percent above the so-called E10 blend wall, giving credence to Vollan’s statement that getting past the blend wall can be achieved by just allowing consumers the choice.  At Vollan’s Midway Service station, drivers can choose E85, E30, E15, E10, and even E0.  To show how easy it is to overcome the E10 blend wall, Vollan provided ACE the 2013 ethanol sales data from Midway Service Station.  ACE obtained monthly 2013 RIN price data from OPIS and developed a chart illustrating how RIN prices played a role in helping increase ethanol sales volume.  Last year Midway Service’s overall monthly ethanol volume was as high as 27 percent, and its lowest month was 16 percent ethanol.  When Vollan sells RINs, he uses most of the proceeds to reduce his ethanol cost.  The lower-priced ethanol brings down the price at the pump, with higher ethanol blends offering the greatest savings.  While not specifically related to RIN values, an interesting fact shown in Midway Service’s sales data is that E15 sold at a 10 percent pace during the low Reid vapor pressure season (when it was sold it as a flex fuel), and has been over 23 percent of Midway’s sales since September 15th providing strong ethanol sales even as RIN prices fell,” according to ACE’s comments.

ACE Executive Vice President Brian Jennings said “While ACE made the legal and data-based arguments why the EPA needs to maintain the integrity of the RFS, we’re most appreciative of our members who submitted their personal and unique comments about how cutting the RFS will hurt their family, farm, or business.  We thank our members for being so engaged during the comment period and look forward to working with them to help EPA come to their senses before a final rule is published later this year.”

ACE’s comments can be read in full here.

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