Oil lobby wants Kim Reynolds, other governors to drop E15 push, saying it will hike gas prices

A national oil lobbying group wants Iowa Gov. Kim Reynolds and seven other Midwestern governors to back off their efforts to make gasoline with a higher ethanol blend available over the summer.

The increased costs for gas producers would likely be passed onto consumers at the pump.

The bipartisan group of governors petitioned the U.S. Environmental Protection Agency last year to allow year-round sales of gasoline with 15% ethanol, called E15, which normally are curtailed during the summer in most states because of concerns it adds to smog in warm weather.

The strategy for opening the door to year-round E15 involves removing a waiver that's now available for summer sales of gasoline with 10% ethanol, or E10 ― a move that the bipartisan governors say would put the two blends on equal footing and encourage use of the less expensive E15. It's the only move available to the farm-state governors, ethanol supporters say, following the oil industry's opposition to giving E15 the same waiver as E10.

But the American Fuel & Petrochemical Manufacturers, a Washington, D.C., trade group, said Thursday that removing the waiver would force refiners to make costly changes to gasoline that's blended with ethanol in order to meet federal clean air standards for the summer.

Reformulating the fuel would hike summer fuel costs by $700 million to $800 million, the AFPM said. The higher production costs equate to 8 to 12 cents a gallon more, according to a report funded by the group. And the cost could climb as high as $1 billion if there are supply shortages.

Some of those costs likely would be passed onto consumers.

"We know that these governors signed onto these petitions because they thought it was a low-cost way to get more E15 into the market," said Patrick Kelly, senior director of the American Fuel & Petrochemical Manufacturer's fuel and vehicle policy. But removing the waiver for E10 "is very different and much more costly than extending the E10 waiver to E15."

Ethanol makers: Oil lobbyists trying to scare consumers

Reynolds didn't immediate comment on the petroleum group's report. Iowa is the nation's largest producer of ethanol and the corn that is its primary ingredient, processing about half of the state's annual crop for use in the renewable fuel.

Last year, amid soaring fuel prices, President Joe Biden traveled to an Iowa ethanol plant to announce he was granting an emergency E15 waiver for summer sales. Iowa and the other farm states are pushing the EPA to allow E15 again this summer, but the agency's proposed rule would delay the shift to April 2024. Thursday was the last day for public comments on the proposed rule.

"Leaving these petitions in place amounts to playing chicken with the Midwest gasoline supply in the years to come," Kelly said in a call with reporters. "We believe this new cost information ... should persuade states to rescind their request to EPA."

The ethanol industry maintains oil lobbyists are overstating the costs to scare consumers and the governors into backing off their push for lower-cost summer fuel. Studies for the renewable fuel industry show removing the waiver would equate to just a 2-cent-a-gallon production increase, which would still save consumers money.

A Renewable Fuels Association analysis shows that E15 averages $3.41 a gallon nationally, 27 cents less than E10. The Washington, D.C., ethanol lobbying group's report only looked at E15 and E10 prices. Gasoline without ethanol typically costs more.

The AFPM's claims are "untrue, pure and simple," said Emily Skor, CEO of Growth Energy, a Washington, D.C. ethanol lobbying group.

Refiners already provide the blend-stock that Iowa and other states want to some large cities to help address summer air pollution problems. It's about a quarter of U.S. sales.

"The opt-out would require refiners to offer a lower-volatility blend stock for gasoline, which is something they already do in all reformulated gas markets," Skor said in an email Thursday. That has "no impact whatsoever on the availability of E10.

"If the requests are granted, then Iowans and residents of the other petitioning states would enjoy the fuel choices that drivers in places like Houston and Chicago already have year-round" of both E15 and E10, "not one or the other."

Skor and Monte Shaw, the Iowa Renewable Fuels Association executive director, said the AFPM pushed farm state governors to take action after the petroleum group won a court challenge in 2021 that ended an E15 waiver the Trump administration's EPA had provided.

The AFPM "created the problem. And now they're opposing the easy federal solution that doesn't require them to change anything," Shaw said.

Kelly said federal legislation supported by Iowa's congressional delegation that would grant a waiver for E15 would nullify the states' efforts and the refiners' added infrastructure would be unneeded and likely abandoned.

"It's a better path forward," Kelly said. "But it needs some work. We're not able to support it yet, but it's a good starting point for good faith discussion."

Kelly said the group would like to discuss the oil industry's costs to meet the Renewable Fuel Standard, the mandate that outlines how much ethanol, biodiesel and other renewable fuel must be blended into the nation's fuel supply.

In addition to Iowa, Illinois, Minnesota, Missouri, Nebraska, Ohio, South Dakota and Wisconsin are petitioning the EPA for year-round access to E15, saying consumers need relief from high fuel costs.

Donnelle Eller covers agriculture, the environment and energy for the Register. Reach her at deller@registermedia.com or 515-284-8457. 

This article originally appeared on Des Moines Register: Oil lobby: Kim Reynolds, other governors should drop summer E15 push