• 3 minutes Could Venezuela become a net oil importer?
  • 7 minutes Reuters: OPEC Ministers Agree In Principle On 1 Million Barrels Per Day Nominal Output Increase
  • 12 minutes Battle for Oil Port: East Libya Forces In Full Control At Ras Lanuf
  • 20 hours Oil prices going Up? NO!
  • 5 hours Reuters: OPEC Ministers Agree In Principle On 1 Million Barrels Per Day Nominal Output Increase
  • 1 min The Tony Seba report
  • 12 hours Renewables to generate 50% of worldwide electricity by 2050 (BNEF report)
  • 8 hours Kenya Eyes 200+ Oil Wells
  • 7 hours Are Electric Vehicles Really Better For The Environment?
  • 2 hours LNG Shortage on the Way
  • 2 days Could oil demand collapse rapidly? Yup, sure could.
  • 1 day China’s Plastic Waste Ban Will Leave 111 Million Tons of Trash With Nowhere To Go
  • 1 day Oil prices going down
  • 16 hours Saudi Arabia turns to solar
  • 2 days Battle for Oil Port: East Libya Forces In Full Control At Ras Lanuf
  • 8 hours OPEC soap opera daily update
  • 4 hours Could Venezuela become a net oil importer?
  • 2 days Russia's Energy Minister says Oil Prices Balanced at $75, so Wants to Increase OPEC + Russia Oil by 1.5 mbpd
  • 2 days Tesla Closing a Dozen Solar Facilities in Nine States
Alt Text

Biofuel Breakthrough Uses Algae To Create Hydrogen

New breakthrough uses solar energy…

Alt Text

Is The U.S. Ethanol Industry Under Siege?

Last week, Iowa Senator Chuck…

Alt Text

Sweden Burns H&M Clothes As Fuel

A power plant in Stockholm…

Charles Kennedy

Charles Kennedy

Charles is a writer for Oilprice.com

More Info

Trending Discussions

Valero Bemoans Ethanol Biofuel Targets

Valero Bemoans Ethanol Biofuel Targets

The largest independent refinery in the world, US-based Valero Energy Corp. (VLO) is lobbying Washington to scrap the ethanol mandate urgently because refiners can’t keep up with the costs of maintaining the stringent biofuels targets.

In a letter to the Environmental Protection Agency (EPA), Valero CEO Bill Klesse said called for an immediate waiver, noting that the EPA has the “flexibility to waiver volumes which will lower the price of RINS [renewable identification numbers], will lower the cost to the consumer and make the marketplace fair”.

The plea has resonance because not only is Valero the largest independent refining company in the world, it is also the third-largest ethanol producer in the US. Even with its position as both refiner and ethanol producer, the company can’t align costs with targets under a mandate which requires refiners to use 13.8 billion gallons of ethanol this year alone.

Related Article: UK Biomass: Savoir or Destroyer?

The trade in RINs, renewable identification numbers attached to each gallon of ethanol to track compliance, isn’t helping, either. It works like this: Once ethanol is blended into gasoline, refiners can keep the certification to show compliance, or they can trade it someone who has blended enough to comply with the mandate. The result is that RINs have become some of the most valuable “commodities” out there, with their prices rising more than eight-fold in 2013 thanks to the fact that it is becoming nearly impossible to blend enough ethanol with gas.

Next year, the situation will intensify as the new mandate for 2014 call for 14.4 billion gallons of ethanol to be blended with gasoline—a 4.3% increase over 2013.  

The EPA has about two months to consider a petition from the American Petroleum Institute and the American Fuel and Petrochemical Manufacturers, who want to see the ethanol mandate dip below 10% for 2014.

Naturally, the Renewable Fuel Standard means different things for different sectors. While the oil industry is losing out, producers of ethanol and growers of crops for biofuels are enjoying a bit of a boom.

For the oil industry, the problem is that the RFS was devised back in 2005, when gas demand predictions were expected to be different. Now we have better fuel economy and demand for gas that is increasing slower than expected. But it’s not the oil industry alone that is suffering under the ethanol mandate. Poultry companies are going bankrupt due to rising prices of feedstock as crops are diverted to ethanol. The state of Minnesota is said to be having a tough time because its revenue relies strongly on chicken farming and egg production, which is getting more and more expensive.

Related Article: Switchgrass Fuel: Bush Wanted It, Obama Gets It

The state of Iowa shows us the reverse of this equation. Here, corn ethanol plants are making money and providing jobs—and times are good.

There are two sides to every story, and we need a renewable fuel standard that is progressive. From the prospective of biofuels companies, the standard keeps the oil industry from monopolizing the fuel market. The problem with the ethanol mandate is a simple one—it’s based on predictions that were short of the mark, and it should be lowered, but not drastically.

The EPA has already conceded that the standard’s targets aren’t ideal. At issue is the “blend wall”—the wall the market will hit when it has more biofuels than can be blended with gas. To this end, the EPA has already hinted that it may lower the volumes for 2014, though by how much remains undecided.  

The EPA is talking about introducing more “flexibility” in the process to allow it to reduce total renewable volume requirements for 2014. It is also prepared to allow for more flexibility in terms of compliance deadlines.

By. Charles Kennedy of Oilprice.com




Back to homepage

Trending Discussions


Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News