Hitting "The Blend Wall"

Ethanol regs push us into “the blend wall”

The “blend wall,” as it’s known in industry circles, is the point where there is more gas to be blended than ethanol to use. They’ve known this day was coming for some time, but most analysts thought it would take a few years longer. The drought, as mentioned above, has accelerated the timetable. This leaves refiners with only a few choices, and none of them are good for you.

If RIN prices move too high, refiners will be left with three options that won’t be “popular,” said Jason Bordoff, Professor of Professional Practice in International and Public Affairs Director, Center on Global Energy Policy, at Columbia University, at the IHS CERAWeek conference. The options include passing the cost of RINs to consumers through higher retail prices, exporting products, or lowering refinery utilization rates.

Bloomberg has more on this, charitably translated into normal English for the layman. The key figure to watch here is the fact that we are currently projected to only have an available supply of 12.3 billion gallons of ethanol available for blending in 2013. To keep up with government mandates under the Renewable Fuel Standard, 13.8 billion gallons would be needed.

The long and the short of it is that they can either sell their fuel elsewhere, charge more for it to cover the cost of the RINs or produce less. (Which also drives up prices.) Either way, you lose and the EPA wins.

The long and short of it is that Congress, in a bipartisan clusterf*ck, has decreed that gasoline should contain a certain amount of ethanol, or "oil comapnies" (ie. the rest of us) will be forced to pay extra for the gas.  There is no longer ethanol capacity to keep up with gasoline usage, so we're going to pay one way or another.

Ethanol is bad for machines, bad for the environment, and a waste of good food. The only things it's good for are politicians and farmers.  The ethanol requirement must go.