California Governor Puts E15 in the Fast Lane

October 28, 2024

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by Cindy Zimmerman (Energy.AgWired.com) California Governor Gavin Newsom on Friday gave a surprise boost to the ethanol industry by issuing a directive to the California Air Resources Board (CARB) to accelerate studying how California could increase ethanol blending in gasoline to allow the sales of E15.

“There’s massive potential for this to be a win-win for Californians: lowering gas prices by up to twenty cents per gallon while keeping our air clean. It builds on our efforts to keep gas prices low by holding Big Oil accountable and helping prevent price spikes at the pump,” said Newsom.

The Renewable Fuels Association immediately praised Gov. Newsom for taking this action since California is the only state in the country that bans the sale of lower-cost, lower-carbon E15. “Not only does E15 reduce greenhouse gas emissions and harmful tailpipe pollution, but it also delivers significant savings at the pump,” said RFA President and CEO Geoff Cooper. “Allowing the sale of E15 would provide economic relief to California families, while at the same time providing important environmental benefits.”

Gov. Newson cited a recent study conducted by the University of California, Berkeley and the United States Naval Academy, showing that just allowing the sale of E15 could lower gas prices in California by up to $0.20 per gallon and save Californians as much as $2.7 billion annually. That study was sponsored by the Renewable Fuel Association. “Consumers would save about $200 per household there,” said RFA Chief Economist Scott Richman who contributed to the study. “And it would be low income households that would benefit the most from this.”

Listen to an interview with Richman about the study: RFA Chief Economist Scott Richman 6:38 READ MORE; includes AUDIO

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Excerpt from Renewable Fuels Association: The Renewable Fuels Association today applauded California Gov. Gavin Newsom for directing the state’s Air Resources Board (CARB) to expedite the approval of E15, gasoline containing 15 percent ethanol. California is the only state in the country that doesn’t currently allow the sale of lower-cost, lower-carbon E15.

In a letter to CARB Chair Liane Randolph today, Gov. Newsom wrote, “Given the potential for allowing E15 gasoline to increase fuel supply and reduce gasoline prices, with little to no environmental harm, it is prudent for CARB to prioritize resources that would allow for the expeditious completion of this process. Therefore, I am directing CARB to accelerate its action on this critical issue.”

In a related news release, Newsom stated, “There’s massive potential for this to be a win-win for Californians: lowering gas prices by up to twenty cents per gallon while keeping our air clean. It builds on our efforts to keep gas prices low by holding Big Oil accountable and helping prevent price spikes at the pump.”

Gov. Newsom’s letter cited a recent study by economists at the University of California, Berkeley and United States Naval Academy that showed E15 could result in a $0.20 per gallon price decrease for the state’s drivers, saving California families up to $2.7 billion per year.

“We sincerely appreciate Gov. Newsom’s efforts to accelerate the approval of the cleaner, greener E15 fuel blend in California,” said RFA President and CEO Geoff Cooper. “Not only does E15 reduce greenhouse gas emissions and harmful tailpipe pollution, but it also delivers significant savings at the pump. Allowing the sale of E15 would provide economic relief to California families, while at the same time providing important environmental benefits.”

Newsom’s news release also highlights recent vehicle testing from the University of California, Riverside showing that “blending in gasoline would not affect NOx emissions and would reduce particulate emissions.” READ MORE

Excerpt from Office of Governor Gavin Newsom: Governor Newsom urged CARB to more quickly study the implementation of increased ethanol blending in gasoline, which could help to lower prices by up to $0.20 per gallon and save Californians as much as $2.7 billion every year — with little to no impact on the environment.

SACRAMENTO – Governor Gavin Newsom today issued a directive to the California Air Resources Board (CARB) to expedite measures that could lead to lower gas prices without compromising environmental protections.

Building on legislation passed in 2023 and 2024 to prevent price spikes and increase transparency in the oil industry, the Governor’s order directs CARB to accelerate studying how California could increase ethanol blending in gasoline (E15), which studies have shown could reduce prices while maintaining environmental protections.

How it works

According to a study conducted by the University of California, Berkeley and the United States Naval Academy, this could lower gas prices by up to $0.20 per gallon and save Californians as much as $2.7 billion annually, but also would require strategic considerations regarding market structure and infrastructure modifications.

E15 fuel, which contains 15% ethanol, has been widely adopted in other states and could significantly reduce prices without adding environmental harm. As of 2023, E15 was sold at more than 3,000 stations in 31 states.

Another study from the University of California, Riverside found that increasing ethanol blending in gasoline would not affect NOx emissions and would reduce particulate emissions.

Keeping gas prices low & holding Big Oil accountable

Last week, Governor Newsom signed legislation that allows the state to require oil refiners to maintain a minimum inventory of fuel to avoid supply shortages that create higher gasoline prices for consumers and higher profits for the industry. It also authorizes the California Energy Commission to require refiners to plan for resupply during refiner maintenance outages. It will help prevent price spikes that cost Californians upwards of $2 billion last year.

Following gasoline price spikes in 2022, Governor Newsom called for a special session and worked in partnership with the Legislature to sign into law a package of reforms holding Big Oil accountable.

California’s new watchdog found that higher gasoline prices were caused by a suspicious market transaction, refinery maintenance without properly preparing for it, and more.

In January of this year, the watchdog sent Governor Newsom and the legislature a letter outlining specific proposals to reform California’s gasoline spot market, which included a minimum inventory requirement to prevent price spikes due to lack of stable supply.

The state’s gasoline price watchdog also found that, in 2023, gasoline prices spiked largely due to refineries going offline without adequately planning to backfill supplies, which caused refining margins to spike as spot and retail prices jumped — indicating that refinery margins made up the largest proportion of the price spikes between July and September 2023. READ MORE

Excerpt from MidValley Times: Consumer Reports writes that “the EPA says E15 can be used in flexible-fuel vehicles, as well as 2001 and newer cars, light-duty trucks and medium-duty SUVs. Don’t use E15 in motorcycles or other small engines, heavy-duty trucks, or nonroad vehicles such as boats and snowmobiles.”

Oil analyst Tom Kloza has written that it “looks like CA governor Newsom will look to accelerate car approval of E15 gasoline blends. OPIS (Oil Price Information Service) data shows ethanol to be about $.40 per gallon beneath CARBOB (California Reformulated Gasoline Blendstock for Oxygenate Blending) so the move makes economic sense.” CARBOB gas from the refineries for use in California is mixed with ethanol at the terminal racks before the finished blend shows up at your local station. READ MORE