Higher ethanol use in gasoline is helping drive fuel savings while supporting America’s biofuels and agriculture industries.
U.S. gasoline is increasingly being blended with ethanol, with the average ethanol content exceeding 11% for the second straight month in June. Data from the U.S. Energy Information Administration (EIA), reviewed by the Renewable Fuels Association (RFA), also showed that the 12-month average ethanol blend rate reached a record 10.58%.
Most gasoline sold across the country is E10, which contains 10% ethanol. However, demand for higher-level blends, including E15 and E85 flex fuel, has gained momentum this year.
Favorable market conditions have supported the trend, with ethanol selling for at least $1 per gallon less than gasoline blendstock at the wholesale level. Renewable Fuel Standard (RFS) RIN credits have also added economic value to ethanol blending.
“Ethanol’s blending economics have been compelling this spring and summer, and consumers and fuel suppliers have clearly responded,” said RFA Chief Economist Scott Richman.
“The response would have been even greater if legislation permanently allowing year-round sales of E15 had already been enacted. The additional volume would have helped hold down prices at the pump even more, at a time when U.S. fuel supplies have tightened and oil refineries have been running near full capacity,” Richman added.
Richman previously noted that substantially higher ethanol consumption would likely reduce the value of RIN credits associated with ethanol. He argued that refiners concerned about elevated RIN prices could benefit from such a development.
California, where motorists use more than 13 billion gallons of gasoline annually, is preparing to introduce E15. Meanwhile, legislation under consideration in Congress would permit year-round E15 sales nationwide.
Removing current restrictions could create benefits across the fuel and agricultural sectors. Consumers could see lower gasoline costs, farmers could gain from increased demand for corn and other feed grains, and refiners could have greater flexibility in meeting federal Renewable Fuel Standard obligations.
Photo Credit: renewable-fuels-association