Valero balks at E-15 blend gasoline without regulatory protection

26 January 2011 21:04  [Source: ICIS news]

HOUSTON (ICIS)--Valero will not blend its gasoline with 15% ethanol until it is sure it is legally protected in case of motor problems, the refiner’s chief executive said on Wednesday.

The US government authorised on 21 January the use of 15% ethanol fuel blend (E-15) in older model passenger cars and light trucks.

The National Petrochemical and Refiners Association (NPRA) said that the administration “has rushed to judgment to put protection of the ethanol industry ahead of protection of the American people”.

US refiners had warned that fuelling mistakes would inevitably be made, resulting in damage to vehicles and gasoline-powered equipment that are not capable of using E-15 blends. For this reason, the company wants regulator protection in place before blending 15% ethanol into gasoline.

Valero chairman and chief executive Bill Klesse said during the company’s earnings conference call that the company does not expect to blend 15% ethanol into gasoline until there are more expansive car warranties.

“Frankly, we want some regulatory protection on that,” Klesse said.

Valero currently sells gasoline with up to a 10% ethanol blend.

The Environmental Protection Agency (EPA) approved E-15 fuel blends in response to a petition filed by US corn-ethanol producers. The group said the industry needed the E-15 authorisation to ensure enough ethanol demand to sustain their operations and economic viability.

Valero had its highest rate of ethanol production in the fourth quarter of 2010 at 3.25m gal/day.

Valero announced the acquisition of seven ethanol plants in March 2009 for $477m (€348m) and three more plants in 2010.

Valero’s ethanol business has made $373m in operating income and $427m in earnings before interest, taxes, depreciation and amortisation.

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By: Sheena Martin
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