by Chris Black
Biden just mandated that gasoline sold in the US gets bumped from 10% ethanol to 15% ethanol.
First issue. – Raising the amount of ethanol required in gasoline will result in the need for more biofuel (corn). With farming costs and outputs already under pressure this could be problematic.
Second issue – The EPA enforces the biofuel standard by requiring refineries to submit purchase credits (known as Renewable Identification Numbers, or RINs) to EPA proving the purchases.
This enforcement requirement sets up a system where the RIN credits are bought and sold by small refineries who do not have the infrastructure to do the blending process.
They purchase second-hand RIN credits from parties that blended or imported biofuels directly.
This sets up a secondary income stream, a trading market for the larger oil companies, refineries and importers.
The RIN credit trading platform is similar to what we might expect to see if the ‘Carbon Trading’ scheme was ever put into place.
However, now that summer biofuel requirements for blended gasoline have gone from 10% to 15%, the price of the RIN credits will likely jump.
This will cost refineries billions in additional expenses,…. which will mean the cost of the gasoline from the refineries will increase,….. which will mean the cost of the gasoline at the pump will go higher.
Third Issue – “Ethanol is a valuable source of octane in finished gasoline, but it is chemically different than petroleum gasoline and cannot be used in concentrations above 10 percent in small engines — like outboard boat motors, motorcycles, lawnmowers, generators or chain saws — or in any cars made before 2001.
Complicating matters further, most cars on the road today still aren’t warrantied to run on gasoline with more than 10 percent ethanol.
Retail stations also must have compatible infrastructure in order to sell gasoline with higher ethanol blends.” This issue is known within the industry as “The Blend Wall.”
Engines made before 2001 are going to get destroyed because of this.
With the world facing food shortages thanks to Russian aggression, the US mandates additional inefficient conversion of food into fuel. ☹t.co/amhqaisJTg
— Michael K Johnson (@mcdanlj) June 9, 2022