National Petroleum News (NPN) has been the independent voice of the petroleum industry since 1909 as the opposition to Rockefeller’s Standard Oil. So, motor fuels marketing and retail is not just a sideline for us, it’s our core competency.
Issue link: https://read.dmtmag.com/i/166098
Marketing & Supply By KEITHREID Blend Wall Forces an Ethanol Showdown Hitting the Wall A Renewable Fuel Standard (RFS2, now) had long been having enough ethanol to meet the ever increasing EPA mandated production requirements, given the slow pace with which cellulosic ethanol is developing. While the cellulosic-specific requirements are still an issue, that concern has been eclipsed as gasoline demand has dropped driven by the recession and higher fuel prices. Now, the industry faces too much mandated ethanol in the marketplace even from corn-based production creating a "blend wall." The production requirements were made on assumptions, not off base at the time, which simply have not panned out and the results of mandating supply and demand in Washington are becoming impossible to ignore. Surplus renewable identification numbers from compliant ethanol blenders – RINs – have been seen as the safety valve for minor corrections to ethanol supply and demand imbalances. However, the major imbalance coming on the scene creates the current 12 September 2013 major concern with the blend wall where the supply of surplus RINs starts to dry up. And as that begins to happen RIN prices shoot up (as they have recently) and eventually there are no surplus RINs in the market with costly ramifications for both blenders (refiners, marketers and retailers) and, with pass along, consumers. With shrinking gasoline demand, there is enough ethanol now to maintain roughly an E10 level in the fuel supply. The convenient EPA approved solution of bumping up the approved ethanol content in gasoline to 15 percent – or E15 – to get past the blend wall has been pushed, though with great controversy. As NPN Magazine has covered regularly, there are potential liability issues related to warranties on the equipment used in the fueling infrastructure. Similarly, while EPA has approved E15 for vehicles 2001 or newer, there are warranty-related liability concerns over the accidental or intentional customer misfueling of vehicles older than 2001 (and generally any vehicle sold before 2014). Automakers have stated that vehicle warranties will likely be voided due to any damage related to ethanol beyond E10 in non flex-fuel vehicles. While ethanol/engine studies have been conducted they so far are limited in number and open to criticism to those on either side of the issue. The American Automobile Association came out against E15 earlier in the year. "It is clear that millions of Americans are unfamiliar with E15, which means there is a strong possibility that many motorists may improperly fill up using this gasoline and damage their vehicle," said AAA President and CEO Robert Darbelnet. "Bringing E15 to the market without adequate safeguards does not responsibly meet the needs of consumers." Under pressure from ethanol supporters AAA walked back some NPN Magazine n www.npnweb.com