Archive for the ‘Ethanol’ Category
Presentation Before the Energy Forum
On February 22, 2010 EPRINC made a presentation before the Energy Forum in New York at their event entitled “U.S. Refining Industry - Prospects for the Future.” EPRINC’s presentation, which assesses the impact of the Waxman-Markey cap and trade bill and other environmental and energy policies on the U.S. refining industry, has been posted on our website and can be downloaded here.
The presentation will also be posted at http://www.nyenergyforum.org
The Future of the U.S. Refining Industry Under Waxman-Markey
EPRINC has released an executive summary of its forthcoming report examining the future of the U.S. refining industry under the American Clean Energy and Security Act, also known as the Waxman-Markey bill.
A PDF version of the executive summary can be downloaded here and is posted on our publication page. The full report will be posted on our website later this week.
EXECUTIVE SUMMARY
EPRINC has evaluated the economic consequences to the U.S. refining industry of the American Clean Energy and Security Act (ACES), H.R. 2454, also known as the Waxman-Markey (W-M) energy and climate bill. The legislation calls for controlling emissions of greenhouse gasses (GHGs) by placing a price on GHG emissions. The bill passed the House of Representatives on June 26, 2009 and companion legislation is under discussion in the U.S. Senate.
Under the Waxman-Markey bill, both manufacturers (refiners) and importers of transportation and other fuels derived from crude oil would be required to purchase allowances to account for the carbon dioxide (CO2)emitted into the atmosphere as a result of combustion of these fuels beginning in 2012, two years before any free allowances are distributed. Allowances could be bought and sold under the legislation’s cap and trade program. U.S. refiners are responsible for approximately 45% of all emissions covered under Read More >>>
A Primer on Requirements for the Use of Renewable Fuels in the U.S. Transportation Sector
U.S. federal law has encouraged the use the renewable fuels in the U.S. transportation sector since the 1970’s. Under President Carter, Congress enacted several renewable-energy programs, including targeted subsidies to promote the use of ethanol in transportations fuels. Between 1981 and 1984, a “Solar and Energy Conservation Bank” was established which was authorized to spend $3 billion to provide loans for solar energy and conservation investments. These appropriations were cut by later Congresses.
The renewable fuels programs, which were largely dominated by a series of federal financial incentives since the 1980’s were modified in 2005 to include specific volumetric mandates for the use of renewable fuels, largely supplied by ethanol from corn. The Energy Policy Act of 2005 (EPACT05) included financial incentives and regulatory provisions to promote a broad range of domestic fuels, including nuclear power, conventional fossil fuels, renewable fuels, and greater energy efficiency. Among the requirements for alternative transportation fuels were volumetric mandates that required so-called obligated parties, such as refiners and importers, to phase-in renewable fuel volumes over 7 years, beginning with 4 billion gallons by 2006 and ending at 7.5 billion gallons in 2012. These mandates in EPACT05, also known as Renewable Fuel Standard 1 (RFS1), were implemented through a rule making process promulgated by the Environmental Protection Agency Read More >>>
A Primer on Gasoline Blending
An EPRINC Briefing Memorandum
Refineries produce a more expensive fuel blend during the summer to cut down on smog during hot months. Stations nationwide will start selling a less-expensive winter fuel usually by mid September, which on average means that winter gasoline is less expensive than summer gasoline.
Gasoline is composed of many different hydrocarbons. Crude oil enters a refinery, and is processed through various units before being blended into gasoline. A refinery may have a fluid catalytic cracker (FCC), an alkylate unit, and a reformer, each of which produces gasoline blending components. Alkylate gasoline, for example, is valuable because it has a very high octane, and can be used to produce high-octane (and higher value) blends. Light straight run gasoline is the least processed stream. It is cheap to produce, but it has a low octane. The person specifying the gasoline blends has to mix all of the components together to meet the product specifications.
There are two very important (although not the only) specifications that need to be met for each gasoline blend. The gasoline needs to have the proper octane, and it needs to have the proper Reid vapor pressure, or RVP. While the octane of a particular grade is constant throughout the year, the RVP spec changes as cooler weather sets in.
The RVP is the vapor pressure of the gasoline blend when the temperature is 100 degrees F. Normal atmospheric pressure varies, but is usually around 14.7 lbs per square inch Read More >>>
Will Ethanol Increase the Price of Transportation Fuels?
This EPRINC report (Download PDF) evaluates the consequences to the U.S. transportation fuel sector of increasing the volume of ethanol in the U.S. gasoline pool above current volumes - now approaching 10 percent of the fuel supply. Additional volumetric increases in ethanol use are mandated by federal law. As federal mandates take the U.S. gasoline pool above 10 percent ethanol blend, and ultimately to higher levels through E-85, the value of additional ethanol supplies is likely to decline dramatically. This cost can only be recovered through higher prices for E-10 and distillate, and depending on a wide range of factors, the mandated volumes could easily drive gasoline and distillate prices up by 10-25 cents/gallon over the next 2-3 years as compared to a scenario without the fuel mandates.
Ethanol has contributed to the U.S. fuel supply and reduced net petroleum imports. If wholesale gasoline prices had remained above $3.00/gallon and were accompanied by rising demand for gasoline, the ethanol volumes mandated by Congress could have been accommodated into the market at a relatively modest cost. However, we are now entering a period of low (or even negative) demand growth for transportation fuels, and more importantly, wholesale gasoline prices remain well below $1.50/gallon. In this market environment, accommodating increasing volumes of ethanol into the gasoline pool will likely require substantial increases in the price of E-10 and diesel fuels as refiners and marketers face the higher costs of meeting the Read More >>>
