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A Different Perspective on Getting Through the Ethanol Blendwall

Submitted by on May 9, 2014 – 12:31 pmNo Comment

by John Kingston (Platts: The Barrel) Anna Temple of WoodMac tried at the annual AFPM meeting to put one aspect of the ethanol issue into a highly consumable number: eight.

The Houston-based downstream consultant, in one part of her presentation, said the Renewable Fuel Standard going forward could still trip up refiners, but she also addressed whether E85 has a part to play in meeting the ever-rising mandates set under RFS2.

Temple makes a few assumptions. First, E15 is a non-starter in terms of growing its market share. Second, US gasoline demand in 2021 will be about 8 million b/d. Third, the fleet for flex fuel vehicles, which can burn E85, will grow from current levels that are believed to be anywhere from 13 million to 16 million up to about 25 million. She also assumes that the average size of the fuel tank on those cars will be about 15 gallons.

With those assumptions, Temple then turns to the preliminary mandate for the RFS that refiners, blenders and other suppliers will need to supply the US with 15 billion gallons of corn-based ethanol in 2021. That 15 billion gallons of corn ethanol would be a little less than 980,000 b/d of ethanol. Against a gasoline consumption level of 8 million b/d, that’s about 12.2%, in excess of the 10% blend wall. (On the margin, that would probably send RINs prices soaring). So that’s a problem, if the only way to get to that level of corn-based ethanol consumption is through E10.

Temple said in her presentation and in remarks on the conference’s sideline that if US drivers poured about 200,000 b/d of E85 into their flex fuel cars in 2021–or 170,000 b/d of actual ethanol–that would be about 17% of the ethanol mandate being taken care of by E85. It’s also about 2.1% of the entire gasoline-ethanol fuel pool. READ MORE

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