Oil and corn “mix” it up!

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The farmers and the oilmen are definitely mixing things up in a lobbying battle since the Trump Administration has announced a new initiative to expand the use of ethanol, and that is not good news for our boating customers and many others.

Specifically, the farmers want the amount of ethanol used in gasoline raised, claiming they’re being hurt by the U.S. trade war with China. So, it’s not that more ethanol is good for the environment, which it is not . . . nor is it to reduce dependency on foreign oil, which we are not.

It’s just about the money.

The famers are backing the administration’s idea to make more gasoline with 15 percent ethanol (E15), thereby increasing the likelihood of misfuelling for our boating customers and millions of others. Farmers are also decrying the exemptions already given by the EPA to some small oil refiners that claim the ethanol mandates are too burdensome.

The exemptions lowered ethanol usage and farmers who raise corn say that hurt them. But the oil refiners contend the claim is false and government statistics support that position. The refiners point out that ethanol production and consumption nationwide is at record highs while gasoline sales have actually leveled off.

Moreover, the refiners maintain that raising the EPA-mandated amount of ethanol for 2020 would impose financial hardships on them without helping the farmers. So, in an effort to offset possible lost ethanol production because of the small refinery waivers, EPA has floated the idea of a 5 percent increase in its ethanol mandate next year. That would amount to 1 billion more gallons of ethanol to be blended.

Under a convoluted system, refiners that blend ethanol into gas get “credits” for doing so. But refiners that produce only the gas and ship it to another to blend in the ethanol have to buy “credits” on a trading market. In the past, as the federal mandate for the amount of ethanol increased, the cost of those credits rose on that trading market. Some refiners have to spend more than $100 million for them!

All this goes back to Congressional action in 2005 that created a Renewable Fuel Standard (RFS) contending that: (1) the U.S. was too dependent on foreign oil; (2) gas with ethanol blended in was better for the environment; and (3) gasoline consumption in the U.S. would continue to rise. Since then, all three justifications have proven false. Under the law, the EPA is to annually set a mandated amount of ethanol for refiners to mix with gasoline.

Our fight to help our boating customers avoid the problems inherent in using any ethanol/gas blend above 10 percent (E10) has been an uphill battle. Boaters misfuelling isn’t a theory, it’s a fact. The damage it causes to marine engines is clearly documented.

Ignoring these facts, an in-your-face decision earlier this year by EPA to lift the summertime ban on E15 sales, an action the boating industry and owner groups loudly opposed, blatantly put the nation’s 141 million boaters in jeopardy.

Led by the National Marine Manufacturers Association, efforts continue to present the industry’s position to protect America’s boating families to lawmakers and administrators. In addition to EPA’s current proposal that could call for a total of 15 billion gallons of ethanol in the nation’s fuel supply next year, the administration is also reportedly considering allowing gas stations to use the same fuel tanks to store E10 and E15 – right now they must be separate - a move that will create more challenges and confusion for America’s 141 million boaters, says NMMA.

Clearly in today’s political climate, President Trump is struggling to satisfy both the farming and oil interests. It goes without saying these are key constituencies that helped elect him in 2016 and he will need to retain in 2020. Right now, the administration is trying to get both sides to go for the 5 percent hike to blending mandates in 2020.

But that’s over and above the proposed increased volumes under the Renewable Fuel Standard. The increase is meant to compensate ethanol producers and corn farmers for the administration’s decision to exempt 31 oil refineries from requirements to blend ethanol under the RFS. That is something boating can clearly never support and we must continue to make that known to all who will listen.

Ironically, a recent Department of Energy report found that sales of higher ethanol blends “remain very limited because of a variety of economic, environmental, and distribution-system challenges.” But this battle won’t go on much longer. It must be settled by the end of November, when the EPA must set next year’s mandates according to the RFS. 

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