Ethanol Blend Rate Shatters Record, as Cost Advantage Soars During Iran War

by Scott Richman (Renewable Fuels Association) The average ethanol content of gasoline sold in the U.S. surged to a record 11.29% in May, as petroleum prices hit their highest monthly averages of the Iran war, according to data released Friday by the Energy Information Administration. Moreover, for the 12 months through May, the ethanol blend rate in gasoline rose to 10.57%, the highest annual share ever.

The increase was spurred by compelling ethanol blending economics. Ethanol was priced at a discount to gasoline blendstock of nearly $1.50 per gallon on average in May, based on futures contracts. Additionally, the price of renewable identification numbers (RINs), credits which are used for compliance with the Renewable Fuel Standard, strengthened this spring and surpassed the price of ethanol for the first time ever. That is, since each gallon of denatured ethanol is sold with a RIN attached, the net price of the physical ethanol has effectively been negative.

The vast majority of gasoline sold in the U.S. contains 10% ethanol, a blend known as E10. During May, the ethanol content in E10 provided a fuel cost savings of $0.14 per gallon of finished gasoline, along with $0.21 of RIN value to the blender. In gasoline containing 15% ethanol, known as E15, the fuel cost savings was $0.21 per gallon, and the RIN value was $0.31.

The presence of ethanol has mitigated the increase in gasoline prices for all drivers. Those who have access to E15 in their areas have saved even more, as pump prices of E15 have typically been $0.20 to $0.40 per gallon lower than regular unleaded gasoline. It is clear from the increase in the national average blend rate to 11.29% that blenders, retailers, and consumers have responded to these compelling economics.

If the blend rate achieved in May were sustained for a full year, ethanol consumption would be 15.4 billion gallons, assuming gasoline usage equal to the 2025 level. This is over a billion gallons more than actual ethanol consumption last year. It also exceeds the 15-billion-gallon implied conventional renewable fuel requirement that EPA has set for the RFS during the last few years, and it is close to the implied requirements the agency set for 2026 and 2027 that included reallocation of volumes lost to 2023-2025 small refinery exemptions. Robust RFS volume obligations are the primary reason RIN prices have risen in 2026, and a significant increase in ethanol consumption would be expected to result in a substantial easing of prices of so-called D6 RINs, the category of RINs associated with corn ethanol. Refiners who have complained about high RIN prices should welcome this prospect.

Unfortunately, an anachronistic legal provision limits the ability of retailers to offer E15 in the summertime in conventional gasoline areas, which account for roughly two-thirds of U.S. gasoline consumption. Over the last few years, retailers have had to rely on EPA to provide a series of waivers allowing continued sales. This has kept them from offering E15 more widely.

This can be solved by the passage of commonsense legislation permanently allowing year-round sales of E15. On May 13, the House of Representatives passed the Nationwide Consumer and Fuel Retailer Choice Act (H.R. 1346), which would accomplish this. Separate legislation that would allow year-round E15 sales is currently being considered as part of the Senate version of the farm bill.

From a market perspective, there has never been a better time for E15 legislation. While the media have focused on disruptions in flows of crude oil through the Strait of Hormuz, the more acute tightness in world markets is for refined products. And it’s not just a problem for other countries; as of last week, U.S. gasoline stocks were 7.5% below year-ago levels. This is likely to cause high retail gasoline prices to persist. On the other hand, ethanol prices remain at a discount of more than $1 per gallon to gasoline blendstock, and RINs continue to bolster blending economics. For both American consumers and fuel suppliers, now is the time for Congress to pass legislation unleashing E15. READ MORE