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Unlikely Coalition Opposes Higher Ethanol Blends

posted on January 2, 2009

Hello, I'm Mark Pearson. Wall Street trended higher in the final days of 2008, as weary investors welcomed a favorable report on the labor market and focused on prospects for 2009.

The Dow Jones Industrial Index rose 2 percent Tuesday on news that the government will extend $5 billion to General Motors' troubled financing arm, GMAC Financial Services.

The rally continued on Wednesday after the Labor Department announced new claims for unemployment benefits fell by 94,000 the previous week. Nevertheless, the total number of people claiming benefits stands at its highest level since 1982.

Oil prices also trended higher in the final hours of 2008 capping a volatile year in which the precious commodity surrendered four years worth of gains in just five months.

The increase in oil has yet to trickle down to the gas pump where prices are down more than 50 percent from last summer's record peak above $4.

But even gas prices below $1.40 per gallon in some parts of the country haven't spurred demand. According to the Federal Highway Administration, U.S. motorists drove more than 100 billion fewer miles between November 2007 and the same period a year earlier, marking the largest continuous decline in history.

Ethanol proponents take credit for reducing some of the pain at the pump. But an unlikely coalition of groups is telling the Bush Administration – and its successor – to put the brakes on expansion of the renewable fuel.

Unlikely Coalition Opposes Higher Ethanol Blends

Saying more study is needed, an unusual group of environmentalists and oil industry promoters joined together to stop an increase in the amount of ethanol blended in gasoline. The unlikely bedfellows of the National Petrochemical and Refiners Association and the Environmental Working Group are asking the Environmental Protection Agency to delay raising the current ratio from 10 percent ethanol and 90 percent gasoline to blends of 15 or even 20 percent ethanol.

According to the U.S. Department of Energy, the ratio of ethanol to gasoline must be increased if the federal production mandate of 36 billion gallons of renewable fuel is to be realized. The DOE has stated that without an increase in blending rates more ethanol would be produced than could be used in all the gasoline sold in the United States.

In a letter to EPA Administrator Stephen Johnson, the coalition's 14 members stated they were opposed to any increase because so-called mid-level blends, like E-15 and E-20, may be incompatible with today's motor vehicles and off-road equipment. They went on to say recent tests indicated mid-level blends may cause the failure of emission control devices, might defeat engine safety features and could lead to significant increases in emissions over the life of some engines. Their solution is to conduct further study so a decision can be made based on unbiased and comprehensive testing.

Ethanol makers dispute these findings. Research released earlier this month strongly suggests the optimal blend may be E-20 or even E-30. The study, sponsored by the U.S. Department of Energy and the American Coalition for Ethanol, further contends that higher blends may reduce harmful tailpipe emissions.

The EPA has little time left to make a decision and the debate will likely continue as the Obama administration takes the reigns next month.

This is not to say that some states are waiting for a nod from the corridors of power in Washington. Specialized pumps that allow motorists to choose the amount of the ethanol flowing into their gas tanks are springing up in farm country. Known as "blender pumps" the devices are allowing motorists in Iowa, Kansas, Missouri, Minnesota, and South Dakota to choose their ratio of ethanol in amounts from E-10 to E-85.


Tags: biofuels ethanol news renewable fuels