Ethanol free gasoline: Demand up, ethanol production at record levels

American Petroleum Institute cautions EPA that ethanol free gasoline use is growing

Demand for ethanol free gasoline appears to be on the rise at the very time American ethanol production reached record levels in 2014.

According to the American Petroleum Institute, demand for ethanol free gasoline is on the rise, growing from 3.4 per cent of gasoline demand in 2012 to just shy of 7 percent in 2014, according to a chart compiled using data from the Energy Information

Administration. But the EIA released data last week that shows fuel ethanol production grew to 14.3 billion gallons, the highest level ever. The growth in U.S. fuel ethanol production has outpaced growth in corn consumed as feedstock—as the industry has grown, it has become more efficient, using fewer bushels of corn to produce a gallon of ethanol.

“Demand for ethanol free gasoline is strong and growing, and EPA must take this into account as it prepares to release biofuel mandates for 2014, 2015, and 2016,” API Downstream Group Director Bob Greco told reporters in a joint conference call Wednesday with the National Marine Manufacturers Association (NMMA). “Consumers want E0 for their boats, for lawn equipment, for recreational vehicles and for classic cars.”

According to the EIA, the growth in ethanol production has been made possible by a rise in demand for ethanol to increase octane levels as MTBE (methyl tert-butyl ether, a gasoline additive) has been phased out of gasoline, and to meet Renewable Fuel Standard (RFS) targets enacted in 2005 (expanded by subsequent legislation in 2007).

RFS requirements effectively placed a floor under ethanol demand. Recently, ethanol’s volumetric share of total U.S. motor gasoline supply has been just below 10 per cent, reaching 9.8 per cent in 2014.

Strong demand for ethanol free gasoline stands in stark contrast to demand for high ethanol blends like E85, which represents only 0.15 percent of overall gasoline demand, according to Greco. He claims that demand for E85 in recent years has been relatively flat, despite more stations offering E85 as an option.

Greco says the API remains concerned that the EPA may raise ethanol requirements based on the “specious” reasoning that E85 – a mixture of up to 85 percent ethanol with 15 percent gasoline – is a workable solution.

“EPA should not try to mandate a market for fuels like E85 for which there is no demand while trying to eliminate fuels like E0 for which actual consumers have shown a substantial demand,” Greco said “Consumers’ interest should come ahead of the ethanol interests.”

Many boaters rely on ethanol free gasoline to power their vessels and ethanol free gasoline is not guaranteed to remain available as a result of the RFS and the influx of higher ethanol blends.

“An inability to find ethanol free gasoline or a simple mis-fueling mistake could cause boaters to see engine stalling, corrosion leading to oil or fuel leaks, increased emissions and damaged valves, rubber fuel lines and gaskets,” said Nicole Vasilaros, vice president of federal and legal affairs for NMMA.

If ethanol plant yields per bushel of corn in 2014 had remained at 1997 levels (when ethanol made up just one per cent of the total U.S. motor gasoline supply), the ethanol industry would have needed to grind an additional 343 million bushels, or 7 per cent more corn, to produce the same volume of fuel.

To supply this incremental quantity of corn without withdrawing bushels from other uses would have required 2.2 million additional acres of corn to be cultivated, an area roughly equivalent to half the land area of New Jersey.

Several factors contributed to the yield increases from a bushel of corn.

Increased scale has allowed producers to incorporate better process technology, such as finer grinding of corn to increase starch conversion and improved temperature control of fermentation to optimize yeast productivity.

The growth of the corn ethanol industry also enabled the development of better enzymes and yeast strains for improved output per bushel of corn.