Lou Pugliaresi testified at a hearing on June 5 before the House of Representatives’s Committee on Oversight & Government Reform. The hearing was entitled “Up Against the Blend Wall: Examining EPA’s Role in the Renewable Fuel Standard.”
Rising Corn Costs Limit Ethanol’s
Growth in the Gasoline Pool
Under U.S. law, U.S. petroleum refiners and other so-called obligated parties must blend ever larger volumes of renewable fuels into the U.S. gasoline and diesel fuel supply. The program is known as the Renewable Fuel Standard (RFS).
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.
This EPRINC report 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.