The study, conducted by the National Economics Research Associates (NERA) and commissioned by API, comes with some pretty ludicrous conclusions based on scenarios that do not reflect reality (but when has that stopped API?).
Among its laughable conclusions include the fact that the price of gasoline will increase by $90 a gallon (!) while diesel will increase by $103 a gallon (!!) if the EPA sticks to the original targets set by the RFS in 2015.
So how did NERA come to these "conclusions"? Well, for one, it used a dubious methodology.
In the study, NERA claims the "2015 statutory requirement would require 30 percent more RINs to be generated than were generated in 2014." It further ads that to achieve this, gasoline and diesel volumes would have to be reduced by 30 percent and to achieve these reductions, the cost of gasoline and diesel would increase by $90 per gallon and $100 per gallon respectively.
A 30 percent increase in RIN generation for 2015 is based on the original 2015 RFS target of 20.5 billion gallons of ethanol (corn-based and cellulosic) from last year's volume of 15.9 billion gallons of ethanol and biodiesel consumed. However, this is on the assumption the EPA sticks to the cellulolisic ethanol targets in the RFS, which it hasn't.
In terms of corn-based ethanol, sticking to the original 2015 RFS target would represent an increase of 13 percent from 2014.
RFA's Bob Dinneen had this to say about the NERA study : "It foolishly assumes EPA will not ever utilize its cellulosic waiver authority to partially reduce the advanced and total RFS volume requirements. And it also assumes obligated parties would purchase a RIN credit at any price rather than making modest infrastructure investments to expand renewable fuel distribution.
Indeed, the supposed 30 percent reduction in gasoline volume NERA states is based on the assumption ethanol blends are capped at 10 percent although states like Minnesota have broken the oil industry's fictitious blend wall (Minnesota's ethanol consumption comprises 12.2 percent of all gasoline consumed in 2013) while the USDA has announced a grant to increase the number of pumps offering E15 and E85 in the country.
If NERA's methodology and conclusions seemed desperate, it was nothing compared to the API press release on the aforementioned "study."
In the press release, API states that fuel blends with higher than 10 percent ethanol could damage engines and fuel systems in millions of automobiles according to research by the Coordinating Research Council (of which API is a member of). The big problem however is that the research API is referring to was conducted in 2013.
The API then further claimed automakers have said the use of E15 could void warranties and even inserted a link to the original source of the information. We clicked the link (why wouldn't we?) and were led to a statement by Rep. Jim Sensenbrenner of Wisconsin made in 2011! Sensenbrenner, by the way, has had a history of opposing ethanol.
How desperate as API become that it has to rely on old statements and research from dubious sources? Perhaps it was left with little choice when you consider the fact that GM, Ford, Chrysler and Toyota (to name a few) have explicitly approved the use of E15 for their new vehicles.
By the way, this isn't the first time API and NERA have teamed up to make ludicrous announcements on ethanol. In a 2013 study, NERA claimed the RFS would cause the cost of diesel to rise 300 percent and the cost of gasoline to rise 30 percent, decrease the country's GDP by $770 billion and reduce worker pay by $580 billion.
Still, none of this should come as a surprise when you use science fiction as a basis for a "study." Desperate times indeed for the oil industry.