Supreme Court won't block sales of 15% ethanol

Matthew Daly | AP Business Writer

WASHINGTON (AP) — Will drivers nationwide be pulling up to gas station pumps that sell E15 now that the Supreme Court has declined to block sales of the fuel that is a gas blend containing 15% ethanol?

In a word: No. The reasons why are a bit more complex but have to do with the potential damage to older cars and motorcycles that E15 can do and the industry's opposition to making the switch nationwide to the cheaper and cleaner fuel.

Refiners, food producers, restaurants and some environmental groups have fought governments efforts to require increasing amounts of ethanol in gasoline blends the next few years.

The industry has argued that the the damage to motorcycles and aging cars along with the upward prices it will put on food impose an unnecessary economic burden on consumers.

"The ever-increasing ethanol mandate has become unsustainable, causing a looming crisis for gasoline consumers," says Bob Greco, a senior official with the American Petroleum Institute who met with the White House about the issue. "We're at the point where refiners are being pressured to put unsafe levels of ethanol in gasoline, which could damage vehicles, harm consumers and wreak havoc on our economy."

However, the Supreme Court on Monday rejected an effort by the API, the oil industry's chief lobby group, to block sales of E15. The justices left in place a federal appeals court ruling that dismissed challenges by the API and trade associations representing food producers, restaurants and others.

The court's decision confirms that the gas blend can be sold at gas stations nationwide, giving individual businesses and consumers the choice of whether to use it. Currently, most gas blends sold continue about 10% ethanol. The E15 blend is available is only sold in about 20 stations in Midwest states and is unlikely to spread from coast to coast anytime soon.

Tom Buis, CEO of ethanol industry group Growth Energy, hailed the court's decision as a victory for consumers.

"Now that the final word has been issued, I hope that oil companies will begin to work with biofuel producers to help bring new blends into the marketplace that allow for consumer choice and savings," Buis said.

That looks doubtful.

Putting E15 fuel into older cars and trucks "could leave millions of consumers with broken down cars and high repair bills," Greco said.

But ethanol proponents challenged the oil industry to produce documented cases of engine breakdowns caused by the E15.

"This is another example of oil companies unnecessarily scaring people, and it's just flat-out wrong," said Bob Dinneen, president of the Renewable Fuels Association, an ethanol industry group.

The API cites engine problems discovered during a study it commissioned last year, but the Energy Department called the research flawed and said it included engines with-known durability issues.

Still, the American Automobile Association, says the government should halt sales of E15 until additional testing allows ethanol producers and automakers to agree on which vehicles can safely use E15 while ensuring that consumers are adequately informed of risks.

And a spokeswoman for the Alliance of Automobile Manufacturers, which represents 12 major car makers, said E15 gas is more corrosive and the EPA approved it before it could be fully tested.

An official from the Environmental Protection Agency tried to find some middle ground at a congressional hearing in early June.

Christopher Grundler, in the EPA director's office of transportation and air quality, testified that the federal government does not require use of E15, but believes it is safe for cars built since 2001.

"The government is not saying 'go ahead' " and put E15 in all cars, Grundler said. "The government is saying this is legal fuel to sell if the market demands it and there are people who wish to sell it."

Charles Drevna, president of the American Fuel & Petrochemical Manufacturers -- which represents refineries --, accuses the EPA of putting politics ahead of science.

The E15 dispute is the latest flash point in a longstanding battle over the Renewable Fuel Standard, approved by Congress in 2005 and amended in 2007. The law requires refiners to blend increasing amounts of ethanol into gasoline each year as a way to decrease reliance on fossil fuels and lower greenhouse gas emissions that contribute to global warming.

The EPA has proposed a 16.5 billion gallon production requirement for ethanol and other gasoline alternatives this year, up from 15.2 billion gallons last year. By 2022, the law calls for more than double that amount.

Biofuel advocates and supporters in Congress say the law has helped create more than 400,000 jobs, revitalized rural economies and helped lower foreign oil imports by more than 30% while reducing emissions of carbon dioxide and other greenhouse gases.

And Scott Zaremba, who owns a chain of gas stations in Kansas, scoffs at claims that E15 would damage older cars. "In the real world I've had zero problems" with engine breakdowns, said Zaremba, whose station in Lawrence, Kan., was the first in the nation to offer E15 last year.

But Zaremba said he had to stop selling the fuel this spring after his gasoline supplier, Phillips 66, told him he could no longer sell the E15 fuel from his regular black fuel hoses. The company said the aim was to distinguish E15 from other gasoline with less ethanol, but Zaremba said the real goal was to discourage use of E15. New pumps cost more than $100,000.

For now, E15 remains a regional anomaly, sold in fewer than two dozen gas stations in Illinois, Iowa, Kansas, Nebraska, South Dakota and Wisconsin.