A disaster in the making...do not use 15% ethanol gas

U.S. EPA Permits 15% Ethanol in Gasoline for Newer Vehicles

October 13, 2010, 1:52 PM EDT

Oct. 13 (Bloomberg) -- The Obama administration granted a request from ethanol producers to increase concentrations of the corn-based fuel additive in gasoline for vehicles made in 2007 and later. Ethanol makers rose in New York trading.

The Environmental Protection Agency today agreed to let refiners add as much as 15 percent ethanol into a new fuel blend, up from the current 10 percent. A decision on using more ethanol in fuel for vehicles made from 2001 through 2006 will be made after results of further testing of the blend, known as E15, the EPA said in a statement.

“Thorough testing has now shown that E15 does not harm emissions control equipment in newer cars and light trucks,” EPA Administrator Lisa Jackson said today in a statement.

Archer Daniels Midland Co. is among producers that pressed EPA to raise the limit for an industry that’s had at least a dozen companies seek bankruptcy protection since 2008. Opponents, including oil companies, automakers and environmental groups, say adding more ethanol may damage car engines, boost food prices and worsen air quality.

“There have been unrelenting attacks by big food and big oil companies trying to derail this,” said Chris Thorne, a spokesman for Growth Energy, an industry trade group in Washington that promotes ethanol as a cheaper alternative to pure gasoline and a way to reduce U.S. reliance on foreign oil.

Archer Daniels of Decatur, Illinois, rose 51 cents, or 1.6 percent, to $33.22 at 1:41 p.m. in New York Stock Exchange composite trading. The company is the second-largest U.S. ethanol producer behind closely held Poet LLC, based in Sioux Falls, South Dakota.

No Refiner Requirement

ADM may not see an immediate boost from the EPA decision because refiners won’t be required to sell the new blend, known as E15, according to analyst Robert Moskow of Credit Suisse AG in New York.

“The approval of E15 by the EPA won’t have a positive effect on ADM in the near-term,” Moskow, who has an “outperform” rating on ADM shares, said in an Oct. 6 report. “Blenders remain reluctant to implement E15 because it requires a separate pump and because the EPA has not absolved the blenders of potential legal liability from consumers.”

Valero Energy Corp., the largest U.S. refiner, and Marathon Oil Co., the largest refiner in the Midwest, are concerned the new blend may leave them liable for engine damage, according to company spokesmen.

“Rushing through this new fuel standard without complete research may be good politics but is bad policy,” Bob Greco, director of downstream operations for the American Petroleum Institute, a Washington trade group, said today in an e-mailed statement.

Green Plains

Green Plains Renewable Energy Inc., based in Omaha, Nebraska, rose 57 cents, or 5 percent, to $11.86 on the Nasdaq Stock Market. Pacific Ethanol Inc., a Sacramento, California- based producer of the fuel, rose 8 cents, or 8 percent, to $1.08, after increasing as much as 14 percent earlier.

Biofuel Energy Corp., which counts hedge funds Greenlight Capital LLC and Third Point LLC among its largest shareholders, climbed 13 cents, or 4.6 percent, to $2.93. Aventine Renewable Energy Holdings Inc. rose 50 cents, or 1.9 percent, to $27.50 in the over-the-counter market.

The EPA delayed its ethanol decision in December, saying the agency needed more time to conduct tests on the blend. A decision was again postponed in June, prompting Growth Energy, which sought the E15 approval, to write to President Barack Obama expressing frustration with the process.

AAA, Ford

AAA, the nation’s biggest motoring organization, said in July 2009 the EPA should reject Growth Energy’s request because higher blends may damage exhaust systems, engines and fuel pumps and destroy catalytic converters. General Motors Co., Ford Motor Co. and Chrysler LLC have said the Obama administration should be cautious about increasing the ethanol percentage in gasoline.

The Natural Resources Defense Council, a New York-based environmental group, said the EPA’s approval of the higher ethanol concentrations is risky.

“Though seen as a win for corn-ethanol lobby groups like Growth Energy, the new ethanol blends come with serious risks for our engines, wildlife, water and the air we all breathe,” Nathanael Greene, a renewable-energy policy analyst with the group, said today.

Growth Energy, which is headed by Wesley Clark, a retired Army general and 2004 Democratic presidential candidate, has said ethanol is 59 percent “cleaner” than straight gasoline.

Raising the “blend ratio” will increase demand, according to Growth Energy. By law, the U.S. must use 12 billion gallons of renewable fuels such as ethanol next year, up from 10.5 billion in 2009, and use 15 billion gallons by 2015.

The annual market value for ethanol in the U.S. has risen to $27.1 billion since federal support began under President Jimmy Carter during the 1970s energy crisis.

The U.S. pays a 45-cent tax credit to gasoline refiners that make a blend of as much as 10 percent ethanol, an incentive that is up for renewal at the end of this year.

There are many reasons to not use 15% ethanol:

1. it's hydroscopic and will introduce water into your fuel system and engine

2. It produces 20% less energy then gasoline so your fuel mileage will go down by the same amount. This is a particular problem since the government will continue to increase CAFE standards.

3.Using food as a fuel is plain idiotic as to paraphrase our progressive friends it will affect the poor most.

4. It's harmful to the environment see the comments.

If you have small motors around your yard or garden, absolutely do not use this fuel. There are no chain saw, lawn mower, pressure washer, weed whacker, etc. built for this fuel. One tank full and you can kiss the engine goodbye. At the very least it will wipe out all the rubber fuel lines.