| WASHINGTON, June 11
WASHINGTON, June 11 The U.S. ethanol mandate
could boost domestic gasoline prices as refiners get around the
requirement by exporting more gasoline, the CEO of oil major
Chevron Corp said on Tuesday.
The Environmental Protection Agency has certified the use of
E15, gasoline containing a higher blend of ethanol, for cars
made since the 2001 model year - or about two-thirds of the
vehicles currently on the road in the United States.
Ethanol backers say E15 is a good way for refiners to meet
the Renewable Fuel Standard (RFS), which requires blenders to
mix more ethanol, made mostly from corn, into gasoline each
year. The RFS mandate will level off in 2015.
But many refiners say E15 adds to their costs, and cite a
AAA automobile club report from November that said only about 12
million of 240 million cars on U.S. roads have warranties that
would cover their engines burning higher blends of ethanol.
"If you were me, would you sell a product that engine
manufacturers won't certify?" John Watson, the head of Chevron,
one of the country's largest refiners, said during a talk at the
Center for Strategic and International Studies on Tuesday. "I'm
not going to do that."
Watson said refiners will likely export more gasoline to get
around the RFS, which could make gasoline more scarce and raise
prices for U.S. consumers. He did not say when prices might rise
or by how much. The national average for regular retail gasoline
on Tuesday was more than $3.63 a gallon, about 9 cents higher
than the same time last year.
The United States fuel market is close to the so-called
"blend wall," or the point where the RFS requires more use of
ethanol than can be blended into the fuel supply at the most
common level of 10 percent ethanol per gallon of gasoline.
That has helped push up prices for renewable energy credits
known as RINs, which refiners can buy to meet their RFS
requirements on gasoline they sell domestically.
Refiners on the East Coast could also limit their imports of
gasoline from Europe if RINs prices are too high, which could be
another factor in reducing U.S. fuel supplies, said Charles
Drevna, the head of the industry group American Fuel and
Watson added that Chevron is long on RINs, so exporting
gasoline is not a strategy for his company.
Prices for RINs hit about $1.04 a gallon in March, up from
only a few cents four months earlier, and are currently near 90
Tom Bius, the head of the ethanol industry group Growth
Energy, said on Tuesday that many oil companies "have done
everything in their power to prevent the blending and sale of
renewable fuels," which prevents market competition.
The Environmental Protection Agency has the authority to
lower RFS targets or waive them completely. It is expected to
release targets for 2013 and 2014 this summer, an EPA official
told lawmakers earlier this month.
Many analysts expect the EPA to reaffirm its earlier 2013
target, but possibly lower the 2014 standard announced earlier