From the Farm: Ethanol Amount in Gasoline

Agriculture

CHAMPAIGN COUNTY, Ill. (WCIA) – The Environmental Protection Agency made a long-awaited announcement on about how much ethanol would be used in the nation’s motor fuel supply – known as the Renewable Fuel Standard. But is it really going to make any difference?

Corn grower groups, the Farm Bureau and the nation’s ethanol industry all expressed a mixed reaction when the EPA sided with ethanol in how much could be used in gasoline last year and this year. But motorists have already used it, said University of Illinois agriculture economist Scott Irwin.

“What grain farmers in Illinois really need to understand which is that the RVOs [Renewable Volume Obligation] have very limited impact on the amount of ethanol that will be used in the U.S.,” Irwin said. “That is basically determined by the E-10 blend wall. Ethanol is competitive without the RFS as a blend component up to 10% of US gasoline. That’s why there is 10% ethanol in almost every gallon of gasoline in the United States.”

The EPA announced the RVO some 2 years late

“That’s not going to change how much physical ethanol is used in the United States. That is determined in the physical market by those economics,” Irwin said. “That is not to say there is some demand impact on ethanol, but it’s not billions of gallons. It impacts the potential for growth in higher ethanol blends like E-15 and E-85, which are starting in a very low level. Yes, they are giving up some potential, but we are talking about a few hundred million gallons at most when we are using 13, 14 billion gallons anyway.

“So I’m not saying it’s not politically important, and I know the U.S. ethanol industry really disagrees with me because it’s a political issue for them,” Irwin continued. “But economically, the important message is: no matter what you hear about those RVOs if you are a corn farmer, they are not going to have much impact one way or another on the amount of ethanol that is used.”

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