USDA Presses Oil Industry to Support 15-Percent Ethanol Blend

By Susan Jones | May 4, 2012 | 10:04 AM EDT

Corn ethanol production in Iowa. (AP Photo)

( - Agriculture Secretary Tom Vilsack is pressing oil companies to back fuel-blends that contain less gasoline and more ethanol. He says it will "increase America's energy security and spur additional job creation," particularly in rural areas -- a priority for the Obama administration.

Oil industry support is necessary if high-ethanol blends are to become commercially viable.

The oil industry says it is committed to using more ethanol in its fuel mix, but it opposes government mandates.

“EPA continues to move forward with its decision to approve the use of 15 percent ethanol (E15) in gasoline, even though testing to date shows this higher concentration would not be fully compatible with much of the dispensing and storage infrastructure at our nation’s gas stations," the American Petroleum Institute said on Thursday.

Fuel blends that contain 15 percent ethanol -- up from the current 10 percent -- present a major infrastructure challenge. Gasoline pumps will have to be changed, and so will car engines.

On Thursday, the American Petroleum Institute noted that around half of all gasoline station equipment is not compatible with E15.

"Adding these fuels into our gasoline supplies could result in damaged equipment, safety problems, and environmental impacts at our gas stations – to say nothing about car engines – and it could even erode support for the nation’s renewable fuels program," Bob Greco said.

“EPA has done an inadequate job of answering the many challenges surrounding E15, in particular dispensing equipment and other infrastructure implications,” Greco added.

A renewable fuels mandate passed by Congress in 2007 requires 36 billion gallons of renewable transportation fuel to be used by 2022. Advanced fuels such as cellulosic biofuel must make up 21 billion gallons of that total.

"Achieving this mandate will help speed the transition to cleaner, more secure sources of energy in the transportation sector, helping our nation address the challenges of climate change, dependence on oil, and job creation," the Agriculture Department said Thursday in a news release. "Increasing the amount of ethanol that is allowed to be blended in the fuel supply of cars to 15 percent is an important step in the effort to reach this goal."

To allow wider use of E15, the Obama administration plans to help gas station owners install 10,000 blender pumps over the next 5 years. In addition, both through the Recovery (stimulus) Act and the 2008 Farm Bill, the U.S. Energy and Agriculture Departments have provided grants, loans and loan guarantees to "spur American ingenuity" on the next generation of biofuels.

E15 requires dependable supplies of feedstock. That means more farmland must be devoted to growing corn and other crops for fuel use, something that would boost the cost of food.

The USDA says it is helping to build biorefineries, including the first-ever commercial-scale cellulosic ethanol facilities. It also is "supporting farmers, ranchers, and businesses taking risks to pursue new opportunities in biofuels."

In a 2010 blog post, an ExxonMobil executive said the federal ethanol mandate is an attempt to manufacture a minimum market for ethanol.

'[I]ntroducing any new transportation fuel, such as E15, is a complicated process," said Ken  Cohen, vice president of public and government affairs for Exxon Mobil. "Most engines have not been tested for E15, and it’s possible that vehicle warranties could be voided if vehicles suffer damage from higher ethanol blends. Additionally, most service stations do not have tanks and pumps that are certified for dispensing the higher ethanol blends – and the time required and costs of installing new equipment are significant."

Cohen also said many flex-fuel vehicle owners prefer to use gasoline, which provides better fuel economy than high-level ethanol blends.

API, which represents more than 500 oil and natural gas companies, has long insisted that forcing high-ethanol blends to market before the market is ready for them could be costly to consumers and damage the ethanol industry's long-term interests.

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