OMAHA (DTN) -- Leading into President Donald Trump's trip to Council Bluffs, Iowa, on Tuesday, a senior White House official said Tuesday that the president has directed the Environmental Protection Agency to create a new rule allowing year-round sales of 15% ethanol blends.
Monte Shaw, executive director of the Iowa Renewable Fuels Association, said Monday that he didn't want to "count my chickens" until he sees EPA post a rule notice in the Federal Register, but Shaw noted anything that can increase demand for ethanol and corn right now is good news.
"It's hard to find the right adjective to express being on the cusp of getting something that really there was no legitimate argument against, but you fought for seven years to try to get it done," Shaw said. "It's going to be a short-term morale boost for the industry and a long-term market boost."
The rule, which White House officials expect would be completed by next summer, would reflect a significant win for the ethanol industry with expectations that more fuel stations would be willing to carry E15 if they could sell it without having to stop for the summer. EPA will oversee the timeline for drafting and finalizing a rule, but a senior White House official said, "the goal would be to get the rule finalized in time for the summer driving season next year."
President Trump has made several public comments in support of removing the barrier to E15 and had promised during the 2016 campaign to boost ethanol blend volumes. Last April, Trump told reporters the summer hold on E15 is "unnecessary and ridiculous." In July, Trump said his administration was "very close" to granting a waiver.
A senior White House official said Monday that the president's decision reflects he "is just committed to help farmers and expand biofuels and our market."
EPA approved the use of E15 in 2011, but the EPA did not grant the waiver on Reid vapor pressure -- a measure of fuel volatility -- even though E10 had been granted a waiver decades ago. So retailers in conventional gasoline areas are prohibited from selling E15 from June 1 to Sept. 15. Ethanol industry groups have been working over the past seven years to get EPA to grant a waiver for E15.
Opponents note EPA has already cited in the past that it does not have authority to grant an E15 waiver. But a senior White House official said Monday, "Lawyers in the agency have looked at this and we believe we have a good case going forward."
Looking at Renewable Identification Numbers, the White House official said EPA will look to introduce a rule providing some "market stabilization" for RIN prices and limit market manipulation by some of the possible options: allowing only obligated refiners and importers to purchase RINs; require public disclosure of RIN holdings that exceeds specific amounts; limit the length of time a non-obligated refiner can hold RINs; and require more disclosure of RIN holdings such as quarterly reporting.
EPA has a memorandum of understanding with the Commodity Futures Trading Commission and will be working with the CFTC on how to improve the RIN market.
Petroleum groups have sought more limits on RIN prices, but RIN costs are sharply lower than they were a year ago, falling as low as 10 cents a gallon in September, Sen. Charles Grassley, R-Iowa, told reporters last week. "RIN prices are down now. They (refiners) have gotten what they wanted and still ethanol and farming hasn't gotten E15 12 months out of the year that we started out to get," Grassley said.
Last week a group of 20 senators led by Sen. James Inhofe, R-Okla., asked the president not to allow year-round sales of E15. The senators, predominately from states that do not produce ethanol, claimed EPA had already ruled it lacked authority grant the waiver.
EPA approved E15 for use in all 2001 and later model cars and pickups, which accounts for 90% of the vehicles on the road, according to the Renewable Fuels Association. Still, the American Petroleum Institute has been waging a campaign against the fuel, arguing "three out of four vehicles on the road were not designed for E15."
RFA said there hasn't been a single reported case of engine damage or consumer misfueling as a result of the higher ethanol blend in the seven years since E15 was approved. In addition, an EPA waiver on the Reid vapor pressure, or RVP, requirement is not a mandate to sell or use E15. It simply expands the availability at local gas stations.
Still, Shaw said the summer freeze on E15 sales has been one of the biggest obstacles to convincing retailers to sell the fuel. For retailers that did sell E15, the loss of the market over the summer also took months to recover once the restriction was lifted in September. "It's hard to say how much or how fast it will grow, but here's one thing we know for sure -- market share will go up for ethanol over time."
The RFA said that in 2016 alone the U.S. ethanol industry supported nearly 360,000 direct and indirect jobs and displaced 532 million barrels of imported oil. Allowing year-round E15 sales is expected to grow farmer markets for corn, at a time when the agriculture economy is struggling.
Currently, E15 is offered by several major retailers, including Sheetz, Cenex, Kum and Go, Murphy USA, Kwik Trip, RaceTrac, Thornton's and QuickTrip. However, some retailers remain hesitant to invest in the infrastructure to distribute E15 since it cannot be sold year-round. Green Plains Inc. Chief Executive Officer Todd Becker told DTN in a recent interview that if EPA grants an E15 waiver at least 10,000 more stations would offer the fuel.
The average E15 price as reported by e85prices.com on Monday, was $2.77. The prices is lower than both unleaded gasoline, which averaged $3.33 a gallon nationally and E10, which averaged $2.85 on Monday.
Chris Clayton can be reached at Chris.Clayton@dtn.com
Follow him on Twitter @ChrisClaytonDTN
Copyright 2018 DTN/The Progressive Farmer. All rights reserved.