Refineries ask EPA for a break on biofuel requirements.
In the middle of falling gasoline prices (good news for motorcyclists!), U.S. oil refineries have made an odd request of the Environmental Protection Agency (EPA). To reduce production costs, the refineries would like to start producing more ethanol-free gasoline without paying additional fees.
It’s a bit of a weird situation, and requires some explaining. Here’s how it works: refineries turn crude oil into gasoline, using the magic of chemistry. In the U.S., the Renewable Fuel Standard requires refineries to blend their gasoline with ethanol.
There are two reasons for this. First, it’s supposed to be environmentally friendly, by producing allegedly cleaner emissions, and by moving towards renewable energy (ethanol is typically made from corn). Second, it’s generally understood this increased demand for ethanol means corn prices rise. This keeps some farmers very happy, and happy farmers make happy politicians. Of course, this latter reason would never appear in any official government policy handbook.
Refineries in the U.S. are still allowed to produce ethanol-free gasoline. Regulations require them to purchase Renewable Fuel Identification (RIN) credits to do so—they must pay to produce the non-blended fuel. To further complicate the situation, RIN credits are actually generated by refineries that produce blended fuel; they can turn around and use them themselves, or sell them to other refineries in a sort of trade-off. When everyone’s making lots of blended gasoline, RIN credits are cheap, because there’s a large supply. When refineries are cutting production due to reduced demand, RIN credits are more expensive, because there are fewer to purchase.
Refineries are now stuck with two problems. RIN credits are costing them money that comes directly out of profits, as gasoline prices drop and RIN prices rise. As well, refineries allege that government minimum requirements for biofuel blending will be difficult to meet. Federal regulations mandate refineries must blend in 15 billion gallons of ethanol and five billion gallons of other biofuels into gasoline this year, and refineries say a reduced demand means this is unfeasible.
For those reasons, refineries have persuaded the governors of Oklahoma, Louisiana, Texas, Utah, and Wyoming to ask the EPA for a break. They want the RIF restrictions lifted, at least for now. The ethanol industry is fighting back, of course, as it wants to maintain its own income.
If we do see a move towards more ethanol-free gasoline, it’s good for motorcyclists. Leaving aside arguments over environmental concerns over ethanol content, ethanol isn’t ideal for motorcycle engines, especially older machines. It deteriorates rubber carburetor parts and fuel lines, and can cause rusty gas tanks if left for long periods of time. For these reasons, many riders make special effort to search out ethanol-free fuel for their machines. Maybe that will become much easier in the near future, if refineries have their way?