2006 Gasoline Sales to Meet EPA Ethanol Standard
December 28, 2005
• by Staff
– The Environmental Protection Agency (EPA) expects the U.S. oil industry will meet the EPA's new standard that requires 2.78 percent of gasoline sold next year to be renewable fuel, such as ethanol, according to a Reuters report.
Congress passed a broad energy bill which was signed into law in August, requiring ethanol production almost to double to 7.5 billion gallons a year by 2012 to help make gasoline burn cleaner, stretch available U.S. motor fuel supplies and reduce petroleum imports.
The EPA said it expects the renewable fuel standard for 2006 to be met collectively by the oil industry with the pool of gasoline sold to consumers.
Under this method, the agency will not hold an individual oil refinery, blender, or importer responsible for meeting the 2.78 percent standard for the specific gasoline it produces.
The Energy Department forecasts that 141.6 billion gallons of gasoline will be sold next year in the U.S. market, requiring 3.94 billion gallons of renewable fuel to be consumed to meet the 2.78 percent standard, according to the EPA.
The agency pointed out that the Energy Department projects total production of ethanol, which in North America is made mostly from corn, will be above 4 billion gallons next year. Ethanol can also be made from sugar.
The Renewable Fuels Association, the trade group for ethanol producers, has said ethanol production capacity already exceeds 4 billion gallons a year and another 1.2 billion gallons in output capacity is under construction.
"It's clear that capacity in 2006 will be adequate to produce the renewable fuel needed to meet the 2.78 percent default standard," the EPA said.
With increasing ethanol imports, growing biodiesel production and more states banning the water-polluting MTBE fuel additive, the EPA said actual renewable fuel consumption in 2006 could be as high as 4.4 billion gallons.
However, the agency said if the 2.78 percent standard is not met next year, any shortfall will be carried forward and made up with higher required renewable gasoline sales in 2007, according to the Reuters report.
Originally posted on Fleet Financials