Oil and ethanol producers unite in push for year-round E15

(The Center Square) - Farm-state ethanol producers, major oil companies and convenience store owners have formed an unlikely alliance to support permanent year-round sales of E15, a fuel blend of 15% ethanol and 85% gasoline, now allowed from mid-September through May.

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For nearly 20 years, the rival industries fought over federal mandates forcing oil companies to blend billions of gallons of ethanol into the nation's fuel supply. Now, they are urging the Senate to pass the Nationwide Consumer and Fuel Retailer Choice Act (H.R. 1346) during the lame-duck session ending Dec. 18.

Since Congress created the mandate in 2005, big oil companies have fought it, instead arguing for blending more gasoline into the fuel mix, while gas station owners objected to being forced to pay for new fuel pumps and underground tanks to store ethanol.

Unlike large integrated oil companies, smaller independent refiners in states such as Texas, Louisiana and Pennsylvania typically do not own ethanol plants or retail gas stations and objected to the high cost of complying with the blending mandates.

The U.S. House passed the bill on a 218–203 vote in May after the three industries negotiated a deal. To win support from major oil companies, ethanol producers agreed to limit hardship waivers that had allowed smaller refineries to skip blending quotas, while convenience store owners backed the bill because it ends seasonal supply disruptions while keeping E15 sales strictly voluntary.

"With gas prices remaining top of mind for American families, this legislation gives consumers more choices at the pump by removing an antiquated federal barrier to year-round E15 sales," Matt Durand, National Association of Convenience Stores deputy general counsel, said after the House vote. "It means retailers nationwide would have the long-overdue option to sell E15 alongside other fuels."

American Petroleum Institute President and CEO Mike Sommers also urged the Senate to pass the House bill, saying it "delivers greater certainty for consumers while expanding choices at the pump" and prevents a state-by-state patchwork of summer fuel rules.

Growth Energy, the nation’s largest biofuel trade group, urged Senate leaders this week to pass the bill before Congress adjourns next month. The trade group notes that E15 sells for about 30 cents less per gallon than regular gasoline, which averaged $3.87 nationwide on Friday, according to AAA.

“Last week's elections delivered a clear mandate for lawmakers: bring down the cost of living,” Growth Energy CEO Emily Skor said Thursday. "Congress has a prime opportunity to do just that with a permanent year-round fix for E15.”

Midwest Republicans, including Sen. Chuck Grassley of Iowa and Rep. Adrian Smith of Nebraska, say the measure simply expands consumer choice without forcing gas stations to participate.

"Let me be clear: this is not a government mandate," Sen. Deb Fischer, R-Neb., lead sponsor of the E15 bill, said on the Senate floor. "It simply gives fuel retailers the choice to sell E15 at their gas station. It gives consumers the choice to fill up with E15 at the gas pump and save some money."

Lawmakers from oil-producing states contend that the bill’s tighter blending rules threaten smaller regional refineries. Rep. Harriet Hageman, R-Wyo., warned after the House vote in May that the legislation would impose billions of dollars in compliance costs on small refineries and put thousands of energy jobs at risk. "We cannot allow policies that devastate small refineries and drive up fuel costs in the name of green mandates," Hageman said.

The American Fuel & Petrochemical Manufacturers said after the House vote in May that the bill "goes well beyond" consumer fuel choice by rewriting federal blending rules and restricting relief for small refineries. Neither the refiners group nor the American Petroleum Institute responded to requests for comment Thursday.

According to the Congressional Budget Office, H.R. 1346 would add $2.27 billion to the federal deficit over the next decade through higher clean-fuel tax credits and farm subsidies.

Congressional analysts also noted that because ethanol packs less energy than pure gasoline, drivers get slightly fewer miles per gallon using E15. Buying more total gallons means motorists end up paying hundreds of millions of dollars in extra federal gas taxes, according to the analysis.

Taxpayers for Common Sense called the bill "a costly handout" that expands federal fuel mandates at taxpayers' expense.