* More than half of vehicles on the road can use E15
* E15 to help reduce U.S. oil imports, create jobs
* Some service stations reluctant to sell E15
(Releads, adds comments from ethanol groups, oil refiners)
By Tom Doggett
WASHINGTON, Jan 21 U.S. regulators on Friday backed a request that would sharply boost the use of corn-based ethanol in more than half the nation's cars, elevating the stakes in a contentious debate over the safety and cost of converting more corn into fuel.
The U.S. Environmental Protection Agency's announcement boosting the ethanol blend rate in gasoline to 15 percent from 10 percent in vehicles built from 2001 to 2006 was not a surprise, coming just months after it allowed so-called E15 in cars and trucks built in 2007 or later.
But it is still likely to fire heated rhetoric over the increased use of ethanol at a time of rising food and fuel costs, though it may be years yet before the fuel clears the legal and logistical hurdles that effectively prevent its sale today.
Already some 40 percent of the U.S. corn crop goes to make ethanol, and the fuel has helped spur prices on commodity markets. Corn futures Cc1 were only slightly higher on Friday, up 3 cents to $6.57 a bushel.
With world food prices soaring, livestock feeders and food makers believe that E15 gasoline will further push up corn prices because of the increased demand from ethanol makers for the grain.
Service station owners, however, are worried that putting higher ethanol blends in older cars could lead to lawsuits if the fuel damages their engines.
EPA Administrator Lisa Jackson maintained the fuel was safe.
"Recently completed testing and data analysis show that E15 does not harm emissions control equipment in newer cars and light trucks," she said in a statement.
The industry will also have to pay for for new blender pumps and storage tanks to sell E15, which could slow adoption of the fuel.
The EPA said it is still reviewing public comment for an E15 label that would be put on gasoline pumps to make sure consumers don't use the wrong fuel. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Graphic of corn-for-ethanol use: link.reuters.com/tyc67r SCENARIOS-Higher US ethanol face road blocks [ID:nN30204734] TAKE A LOOK: [ID:nN21247364] ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Growth Energy, the trade group that petitioned the EPA back in March 2009 to allow E15, said the agency's decision was a bold move that would change America's energy future.
"Increased use of ethanol will strengthen our energy security, create U.S. jobs, and improve the environment by displacing conventional gasoline with a low-carbon fuel," said Tom Buis, chief executive of Growth Energy.
"Today's decision greenlights the use of E15 for nearly two out of every three cars on the road today and furthers proves ethanol is a safe, effective fuel choice for American drivers," said Renewable Fuels Association President Bob Dinneen.
Both Dinneen and Buis urged the EPA to allow E15 for all cars and pickups.
The trade group for oil refiners criticized the EPA's decision, saying the agency acted without adequate scientific evidence that E15 was safe.
"Widespread use of 15 percent ethanol in gasoline could cause engine failures that could leave consumers stranded, injured or worse, and hit consumers with costly engine repairs," said Charles Drevna, President of the National Petrochemical & Refiners Association.
The group has sued EPA to keep E15 off the market. (Reporting by Tom Doggett; additional reporting by Ayesha Rascoe, Editing by Marguerita Choy)
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