More than 95 percent of all fuel pumped into American vehicles now contains 10 percent ethanol, according to a new report from the Energy Information Administration (EIA), and the next step is a higher ethanol blend.
“Blends of petroleum-based gasoline with 10 percent ethanol, commonly referred to as E10, account for more than 95 percent of the fuel consumed in motor vehicles with gasoline engines. Ethanol-blended fuels are one pathway to compliance with elements of the federal renewable fuel standard (RFS),” the EIA noted.
Related: Why Oil Prices Will Likely Drop Below $40 Soon
“With nearly all U.S. gasoline now being sold as E10, the only way to increase ethanol use in the motor vehicle fleet is to adopt fuel blends containing a higher volume of ethanol, such as E15 and E85. However, not all gasoline-powered vehicles can use these fuels,” the EIA said.
Related: Oil Prices Fall Back as Rally Hits a Ceiling
E85, which contain between 51 percent and 83 percent ethanol by volume, can only be used in flex fuel vehicles.
In the final RFS rules issued in November 2015, the Environmental Protection Agency (EPA) estimated use of 320 million gallons of higher ethanol blends E15 and 200 million gallons of E85 in 2016.
Combined, these values would represent only 0.4 percent of the total 142 billion gallons of fuel use by vehicles and other equipment with gasoline-burning engines expected during 2016, according to EIA's latest Short-Term Energy Outlook.
Related: Another Major Natural Gas Pipeline Project Bites The Dust
Green Plains told Platts it expects U.S. ethanol production to hover between 950,000 and 1 million barrels per day for the rest of this year.
"Even if margins aren't great, they will pump as much as they can," an unnamed source told Platts, as this year has seen steady corn prices against falling ethanol prices, leaving narrow margins for producers.
By Charles Kennedy of Oilprice.com
More Top Reads From Oilprice.com:
Charles is a writer for Oilprice.com