By SUSAN BLOWER

Indiana Correspondent

WASHINGTON D.C. — Along with rising gasoline and diesel prices, the debate heated up last week over a U.S. EPA regulation restricting use of E15 gasoline in the summer, beginning June 1.

Ethanol proponents say using E15 year-round will drive down prices at the pump and reduce the global surplus of corn. President Trump promised in April to lift the current restriction on summer sales of higher blends of biofuels, and there is pressure from the ag community to do so this year.

(On May 16, Farm World reported that officials said the change won’t take effect until 2019 as the decision works its way through the federal rulemaking process, and it will take time for refiners to get E15 to the pumps to meet next summer’s goal.)

The current restriction on E15 is effective from June 1-Sept. 30, when use is limited to flex-fuel vehicles only. A meeting between EPA and USDA took place last Thursday to discuss Trump’s biofuel plans, but as of Friday, no further action was reported.

“We’re pleased the USDA is taking up the President’s call to action and pressing for an immediate E15 fix before the start of the summer driving season,” said Emily Skor, CEO of Growth Energy, an ethanol lobby.

Despite inaction and opposition from oil interests, ethanol proponents and commodity groups remained hopeful. “If the President follows through, it will be a big win for the ethanol industry,” said Matt Merritt, director of public relations for POET, the world’s largest biofuel producer.

A world record of 20 billion bushels of stockpiled grain is depressing prices and farm incomes. If the restriction on year-round E15 is lifted, POET leaders claim it could raise corn demand by as much as 2 billion bushels per year.

“Our commodities are out of balance, as the price has shown for the last four years. Biofuels act as a balance. We should take advantage of the surplus of corn,” Merritt told Farm World last week.

Purdue University ag economist Chris Hurt said the small number of E15 fuel pumps would limit the economic impact to farmers. Currently, E15 pumps are available in 1,300 locations in 29 states.

“I don’t have any estimates of the impacts of the E15 waiver, but nationally there are currently not a large number of pumps that go beyond E10. That would have to grow over time, if retailers are willing to put in more E15, or blend pumps,” Hurt said. “But it is a positive for agriculture to work on.”

However, he said the rising cost of farm diesel will impact corn and soybean farmer inputs. Farm diesel has seen a 30 percent increase since this time last year (see table).

Ethanol support

Sen. Joe Donnelly (D-Ind.) also urged Trump in a letter last Monday to follow through on his promise to remove the problems with the regulation. He also introduced legislation in 2017 to give higher blends of biofuel a waiver.

“I’m concerned about the significant strain that rising gas prices place on Hoosier families and businesses … American-made biofuels are better for the environment, improve our energy security, benefit rural economies and lower prices for consumers,” Donnelly said.

Current prices for E15 are lower than other mixes. As of May 24, the average price for E15 was $2.67 per gallon, for E10 was $2.82 and for gasoline, $3.19. Some critics of ethanol believe that engines run better on gasoline without higher mixes of ethanol.

National gas prices have risen 58 cents since last year, 45 cents of that in the last few months, according to Gas Buddy, an online price tracker. Assuming annual consumption at 650 gallons per year, the average consumer will spend an extra $350 to drive – with no further price increase.

A poll by Gas Buddy shows that fewer people are planning summer trips due to the cost of gas.

The Trump administration has received dozens of letters from commodity groups and the ethanol industry.

“Indiana farmers and consumers alike benefit from E15 the majority of the year, but an outdated Washington regulation takes this more affordable fuel option off the table during the busy summer driving season,” said Todd Becker, CEO of Green Plains, Inc. “Providing access to E15 year-round is a common-sense step to save consumers money and drive investment in our rural communities like Bluffton and Mount Vernon.”

“Farmers have worked hard to build value-added markets,” said Roger Johnson, president of National Farmers Union. “EPA must provide appropriate signals to the market, and this administration must follow through on its promises.”

The restriction on selling E15 in the summer is based on the Reid vapor pressure regulation that measures evaporative emissions from fuel. Summer heat creates more evaporation; however, everyone agrees the high-octane fuel does not pose an environmental hazard, Merritt said.

Fuel prices

Gas prices have made a steady climb since February to a national average of $2.92 as of May 21, an increase of 56.8 cents per gallon from May 21, 2017. In Indiana, the average price was $2.94 on May 21. That is still less than a high of $3.85 in Indiana in 2013, according to Gas Buddy.

Farm diesel in Illinois cost an average of $2.66, an increase of 30 percent since May 2017, according to the latest USDA statistics. The biweekly report for Illinois is an indicator of Midwest price trends for farm diesel. That is the highest average since Dec. 11, 2014, but still lower than Sept. 4, 2008, when farm diesel rose to an average of $4.02 per gallon.

Hurt said the rising cost of fuel will add to the cost of inputs on the farm. For example, he estimates that fertilizer has increased $13 per acre since last year, to $121. Dryer fuel has expanded from $27 to $35 per acre this year.

“Fuel prices tend to be strongly related to fertilizer prices for two reasons. One, it takes a lot of energy to mine and/or produce fertilizers; second, fertilizer is bulky and expensive to transport,” he said.

Crude oil prices have rallied to $70 per barrel, from $50 last year and $25 two years ago, said Harry Cooney, head of market analysis for Growmark, a regional ag co-op that sells fuel, seed and other farm products, based in Bloomington, Ill. A barrel contains 42 gallons.

“Prices bottomed out last summer and that previous winter. Since the market collapsed, the prices are clawing their way back up. Crude has rallied more than I anticipated,” he said. “It’s impossible to predict where it’s going.”

Some analysts for Gas Buddy have indicated energy prices could continue to rise due to “sanctions against a million barrels of Iranian oil, a collapsing Venezuelan oil outlook and years of reduced capital expenditures in future oil development.”