The US Environmental Protection Agency’s proposal to allow gasoline with a 15% ethanol blend to be sold year-round would be a mistake if it was implemented, an American Petroleum Institute official testified on Mar. 29. The nation’s largest oil and gas trade association also considers EPA’s proposed reforms of its renewable fuel credits program inadequate, said Frank Macchiarola, API’s Vice-Pres. for Downstream and Industry Operations.
“Nearly three out of four cars on the road are not designed to use E15, and vehicle testing demonstrates that engine and fuel system damage may result from using E15 in 2001 and newer vehicles that are not designed for its use,” he warned at a hearing the agency convened in Ypsilanti, Mich.
EPA held the hearing following its announcement that it intends to allow so-called E15 gasoline to be sold year-round by exempting ethanol suppliers from volatility requirements during summer months. Sales of E15 now are limited to winter months (OGJ Online, Mar. 13, 2019).
“Refueling infrastructure incompatibility continues to be a concern,” Macchiarola said. “EPA’s Office of Underground Storage Tanks recently concluded that sealants used on threaded connections at retail gas stations made before 2007 are probably not compatible with ethanol blends above 10%, and E15 incompatible sealants continue to be used in much of the market.”
API is not opposed to using E15 or other ethanol blends in vehicles and infrastructure designed for their use, he continued. “But EPA is pursuing a policy that puts consumers’ vehicles at risk, potentially forcing them to pay for expensive car repair bills, by pushing E15 into the market before it is ready,” Macchiarola said.
The agency’s proposed reforms of its program for renewable fuel credits, called Research Identification Numbers (RINs), basically is a solution in search of a problem, he asserted. “The proposal states that the agency has “yet to see data-based evidence of manipulation in the RIN market”, Macchiarola said.
EPA has access to data
He said that EPA has access to every RIN transaction in its moderated transaction system and it has an established memorandum of understanding with the Commodity Futures Trading Commission under which it has shared RIN transaction data to facilitate an investigation. “Consequently, EPA’s assertion that there is no evidence of RIN market manipulation is certainly not grounded on a lack of data or analytical tools,” the API official said.
Although RIN prices can be volatile, volatility alone is not an indicator of manipulation or misbehavior, Macchiarola said. RIN prices have tended to move based on information indicating how EPA implements the program, and how aggressively EPA is willing to test the limits of the blend wall, the maximum amount of ethanol which can be blended safely into gasoline, he explained.
“The blend wall is the fundamental structural problem with the [Renewable Fuel Standard] and RIN reform does nothing to address it. EPA can fix the purported problems these reforms are intended to address by setting feasible annual volume standards that recognize the vehicle and infrastructure limitations to using more ethanol,” Macchiarola maintained.
“Blocking access to the market, forcing entities to enter into uneconomic transactions, and disclosing the competitive information of some parties and not others are not measures that prevent RIN market manipulation. On the contrary, these so-called reforms are market manipulation, in a form that is officially sanctioned by EPA,” he declared.
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