Oil industry launches new offensive against ethanol mandate

NEW YORK, July 15 Mon Jul 15, 2013 8:52pm BST

NEW YORK, July 15 (Reuters) - The oil industry's top lobby group in Washington has launched an aggressive new ad campaign urging the repeal of the Renewable Fuel Standard, a 2007 law mandating the blending of gasoline with increasing volumes of ethanol.

The American Petroleum Institute's print, TV, radio and online ad campaign features a mechanic explaining all the reasons why the oil group believes the mandate is "bad news": higher food prices, lower gasoline mileage and potential for engine damage not covered by car warranties.

The group launched the ads as part of an effort to convince Congress to repeal the 2007 law as early as this year, Bob Greco, API downstream group director, said on a conference call with reporters. The debate over the RFS has pitted the oil lobby against the ethanol lobby, two powerful groups in Washington.

Greco declined to say how much money the API is spending but said the group is devoting "significant resources" to the ad campaign. It is targeting the Washington market as well as Arkansas, Louisiana, Montana, Michigan, North Carolina, South Dakota and West Virginia, a spokesperson said.

The API's ad campaign launch coincides with an all-time high in prices for renewable energy credits known as RINs, which are meant to ensure compliance with the 2007 Renewable Fuel Standard. Ethanol RIN credits traded at a fresh high of $1.29 each, a broker said on Monday, up from around 5 cents at the end of last year.

The oil industry has said the higher RIN prices could force refiners to export more gasoline to avoid the costs associated with the credits, which jumped in price because of concerns about availability.

Refiners, who have seen their market share eroded by the introduction of ethanol into the gasoline pool, have also said every 10-cent rise in RINs prices tacks on roughly 1 cent to each gallon of gasoline purchased at the pump.

The Renewable Fuels Association (RFA), the ethanol industry's lobbying arm, said in a statement the API's new ads are "nothing more than an oil slick of misleading scare tactics" meant to confuse consumers.

The RFA said gasoline with higher blends of ethanol, such as the 15 percent ethanol "E15" gasoline, can save consumers money at the pump and reduce U.S. dependence on imported foreign oil. (Reporting By Cezary Podkul; editing by Jim Marshall)