US ethanol lobby cites BP oil spill in new call for 15% blend

01 June 2010 23:06  [Source: ICIS news]

HOUSTON (ICIS news)--The peak lobby group for the US fuel ethanol industry on Tuesday cited the ongoing oil spill offshore Louisiana as a further reason why the government should allow higher blends of ethanol in gasoline.

"American ethanol producers continue to answer the call for renewable alternatives to oil in record amounts," said Renewable Fuels Association (RFA) president Bob Dinneen.

"Yet, America's ability to utilise this renewable alternative is artificially capped while millions of gallons of oil spill into the Gulf of Mexico," Dinneen said in a statement. 

"I urge the Obama administration to move swiftly in approving the use of higher level ethanol blends for all vehicles," he said.

The US ethanol industry was running into the so-called blend wall, in which production of fuel ethanol has reached the equivalent of the current limit of 10%, known as E-10.

Automobile manufacturers opposed raising the limit to 15% (E-15), as the RFA wants, because of concerns over potential engine damage and warranty issues. The oil industry also opposed higher blend levels.

The Environmental Protection Agency (EPA) was expected to make an announcement on the blend limit in July. The EPA previously signalled that it was leaning in favour of E-15.

Data issued by the RFA on Tuesday put US ethanol demand at an all-time high of 823,000 bbl/day in March, up from 644,000 bbl/day a year earlier. The figures did not include US exports.

US domestic production was estimated by the RFA at 847,000 bbl/day, illustrating the pressure on the industry to expand its domestic market.

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By: Stephen Burns
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