EIA Report Spotlights Increased Ethanol Blend Rate, Lower Cost to Drivers

  • Thursday, 17 November 2022 09:11

Renewable Fuels Association

Nov 16, 2022

A report released today by the U.S. Energy Information Administration demonstrates clearly that higher blends of ethanol helped moderate fuel prices  in the wake of the Ukraine invasion. The report noted that the U.S. ethanol blend rate hit a record summer average of 10.5% in 2022 and averaged 10.6% in June and August. “Fuel ethanol’s price discount to gasoline was one factor that led to the higher summer blend rate in 2022,” the report stated. “Although ethanol prices have been high in 2022, they have been low relative to gasoline prices, which were at their highest since 2014 this summer because of low domestic inventories and constraints on refining capacity.”

“This new analysis from EIA confirms that American drivers gravitated toward lower-cost E15 and E85 this summer as war in Ukraine drove pump prices to record heights,” said RFA President and CEO Geoff Cooper. “The report also demonstrates that President Biden made the right call by issuing emergency waivers to allow the continued sales of E15 through the summer months. The Biden administration’s emergency waivers helped stave off fuel shortages and ensured consumers had uninterrupted access to E15, which was typically priced 20-40 cents per gallon lower than regular gasoline. EIA’s analysis also shows that consumption of lower-carbon renewable fuels increases, as expected, when the Renewable Fuel Standard and its RIN market mechanism are allowed to work as intended. This report comes at a critical time and underscores the importance of permanently removing the summertime barrier to E15 sales and implementing robust RFS volume requirements for 2023 and beyond.”

The report matches  a recent ananlysis  by RFA Chief Economist Scott Richman, which found that an additional 194 million gallons of E15 were sold during the summer as a result of the Biden administration’s RVP waivers, saving American consumers $57 million. In a column in the August issue  of Ethanol Producer magazine, Cooper reflected that “At gas stations across the country, the cure for high prices isn’t more high prices—it’s ethanol. Refiners and blenders can lower gas prices for consumers simply by adding more ethanol, which has been $1–$1.50 per gallon cheaper than gasoline for much of the summer.”

EIA in its report stated that it raised its forecast for the average 2022 fuel ethanol blend rate to a record 10.4%. “This year’s annual average blend rate has been higher so far than in prior years, averaging 10.3% from March through July, compared with 10.1% for the same months in 2020 and 2019—the most recent year that EPA set RFS targets for ethanol at the current maximum. Following August’s average blend rate of 10.6%, the 2022 annual average blend rate increased to 10.4%. We forecast the annual average fuel ethanol blend rate to remain near current levels and end the year at 10.4%.”

EIA also noted that E85 sales have been on the rise. “From June–August 2022, U.S. production of E85 conventional gasoline was at record levels, averaging 21,000 b/d over those three months. In comparison, conventional E85 production averaged 15,000 b/d from June–August 2021 and was generally lower in all prior months. … In addition, E85 is becoming increasingly available. According to the U.S. Department of Energy’s Alternative Fuels Data Center, the United States had 4,331 E85 fueling stations as of January 2022, a 10% increase (385 stations) from the prior year.”

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