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EPA Approves Limited Sales of E15

posted on October 15, 2010

Hello, I'm Mark Pearson. Prompted, in part, by favorable prices, U.S. consumers spent more on cars, furniture and other goods last month, boosting a key factor in the economic recovery.

According to the Commerce Department, retail sales rose 0.6 percent in September in their biggest advance since March.

Meanwhile, the Consumer Price Index rose 0.1 percent last month. Apart from the volatile food and energy sectors, so-called, "core" inflation was flat, and over the past 12 months, core prices rose just 0.8 percent in the smallest annual increase in nearly 50 years.

Wall Street had mixed reactions to the day's events, with the tech-heavy NASDAQ index advancing, while concerns over bank exposure to botched foreclosures pressured financial shares. But some of the dollars have fled equities in favor of high-flying commodity markets, where gold soared to an all-time high this week.

U.S. farmers also are benefitting from the spike in commodity prices, with everything from corn to cotton trading at, or near contract -- if not all-time -- highs.

And in a development with significant ramifications for agriculture, the Environmental Protection Agency, this week rendered its official decision on increased blends of ethanol.

EPA Approves Limited Sales of E15

On Wednesday, EPA announced a new standard of E15, a blend of 15 percent ethanol and 85 percent gasoline, is safe for vehicles built in model year 2007 or newer.

However, EPA stopped short of approving E15 for vehicles in model years prior to 2007 and claimed further testing is needed. Ethanol industry officials say an EPA decision on the 2001-2006 model years could open up more than 50% of the U.S. vehicle fleet to E15.

The incomplete decision by federal environmental regulators is a mixed bag for biofuel producers. Growth Energy, a biofuels advocacy group, originally petitioned the EPA to raise the blend rates of ethanol in domestic gasoline. Federal officials cited the need for additional testing between EPA and the Energy Department as the eventual decision faced numerous delays. Growth Energy's CEO Tom Buis called this week's approval of E15 in some vehicles the "first crack in the E10 blend wall" in 35 years.

But concern remains among consumer organizations like the Environmental Working Group, or EWG. EWG spokesman Craig Cox questioned the unknown affects EPA's decision may have at gas stations across the country, saying:

"We're really going to make the consumers a guinea pig here. Have we really thought through what it's going to take to distinguish E15 to E10?"

Biofuels giant POET cast aside critics and characterized the decision as a positive first step. POET CEO Jeff Broin said:

"The arguments being made right now against E15 are the same as those made about E10 back in the late 1980s, when I entered the ethanol industry. Seventy billion gallons later, we have proven those arguments false, just as research on E15 is proving critics wrong today."

EPA expects to make a second decision on the ethanol blend rates allowed in cars manufactured between 2001 and 2007 after further testing is completed in November.


Tags: biofuels Environmental Protection Agency ethanol news