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Dear PEI Member: On Nov. 23, the
U.S. Environmental Protection Agency (EPA) released its 2017 volume
requirements for advanced biofuel and other renewable fuels, including
ethanol. This most recent update of the Renewable Fuel Standard (RFS) marks
a big step forward in the agency’s mission under the Energy Independence and
Security Act of 2007 to “increase the production of clean renewable fuels.”
The volume requirements contained in the new 131-page rule
are at record levels, exceeding both the 2016 requirements and the numbers
proposed by EPA earlier this year:
| |
2016 |
2017 |
2017 |
| |
Final |
Proposed |
Final |
| Advanced Biofuel |
3.61 |
4.00 |
4.28 |
| Ethanol |
14.50 |
14.80 |
15.00 |
| * All
figures in billions of gallons |
The 2017 requirements, which EPA dubs “reasonably
attainable and appropriate,” raise ethanol to 10.7 percent of the nation’s
fuel supply—as compared to 10.1 percent in 2016. EPA expects most of the
increase to come from E15 and E85, thanks to the growing availability of
these higher blends and more favorable retail pricing.
E15 and E85 Availability
EPA forecasts that the number of retail fueling facilities selling E15
will more than quadruple in 2017—from 400 to 1,650 locations. The number of
stations selling E85 is expected to rise from 3,200 to 4,300.
The primary reason for the growth in station counts is the
extensive system of public and private grants retailers can tap to help
offset the costs of upgrading their fueling system infrastructure. At the
top of the grant list are the $210 million U.S. Department of Agriculture
(USDA) Biofuels Infrastructure Partnership (BIP) and the Prime the Pump
program funded by the ethanol industry. |
EPA Finalizes 2017 Renewable Fuel Standard
Proposed Overtime Rule Halted
Colorado Tests New Road Tax System
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Attractive Retail Prices
As E15 becomes more widely available, EPA expects the blend’s 5- to
10-cent per gallon price advantage over E10 will prove increasingly
attractive to consumers.
EPA’s pricing analysis on E85 is a little more
complicated. From 2012 to 2016, E85 has been 16 to 20 percent less expensive
per gallon than E10. However, the 21 million motorists who own flex fuel
vehicles have so far had little financial incentive to make the switch from
E10 because E85’s energy content is 22 percent less than that of E10. In
2017, EPA expects increased retailer competition to push the price
differential to an unprecedented 22 percent, making E85 just as efficient as
E10 and much more appealing at the pump.
Looking Ahead
Though not factored into its official RFS calculations, EPA also
mentioned another proposed rulemaking that could push the use of ethanol
even higher than the 2017 requirement: the Renewables Enhancement and Growth
Support (REGS) Rule. Released for public comment on Nov. 16, the REGS Rule
would classify ethanol blends from E16 to E83
as flex fuels not subject to all gasoline quality standards. According to
EPA, this rule could lower the cost and increase the production of these
blends, thereby further contributing to the growth of ethanol. A public
hearing on the REGS Rule will be held Dec. 6 in Chicago (see Nov. 14, 2016
TL), and the public comment period is open until Jan. 17, 2017.
Outlook for the Industry
Even if EPA’s estimates prove accurate, the number of stations selling E15
and/or E85 in 2017 will represent a small fraction of the 150,000+ U.S.
retail fueling locations. As a result, we do not expect the 2017 RFS to
dramatically impact members’ workload. However, two areas of opportunity
deserve mention:
- New Construction. In recent months, several major marketers
have announced plans to move more deeply into E15. The new RFS ethanol
requirements, the BIP program and Prime the Pump grants will accelerate
that trend, especially when it comes to new store construction. With most
new underground storage tanks (USTs) warranted for ethanol blends up to
E100 and many new dispensers warranted up to E15, the additional costs to
make new stations fully E15-ready are relatively minor in most cases. So,
construction-oriented distributors should expect an increasing percentage
of their new builds to be designed to store, meter and dispense E15.
- Blender Pumps. If EPA is right that favorable 2017 pricing will
make E85 more appealing to consumers who own flex fuel vehicles, blender
pumps will become a viable option for marketers seeking to better serve
those customers — especially at locations with limited tank capacities.
Some commentators have
speculated that the incoming Congress may attempt to roll back the new
volume requirements. Under the Congressional Review Act (CRA), any such
attempt would have to occur within the first 60 days of the new legislative
session. However, President-elect Trump spoke often during the campaign of
his support for the RFS (see Nov. 14, 2016 TL). So he almost certainly would
be unlikely to approve any attempted rollback.
FEDERAL COURT SUSPENDS OVERTIME REGULATION
On Nov. 22, a federal district court in Texas issued a
nationwide injunction halting a new U.S. Department of Labor (DOL)
regulation which would have classified employees earning less than $47,476
as exempt workers entitled to overtime protection. The regulation was set to
take effect Dec. 1. The federal lawsuit was brought by 21 state attorneys
general and a broad collection of business groups. Following issuance of the
injunction, a DOL spokesman said the department is now “considering all of
[its] legal options.”
PENNSYLVANIA LOOSENS STAGE II VAPOR RECOVERY
REQUIREMENTS
Effective Nov. 12, the Pennsylvania Department of Environmental
Protection (DEP) suspended enforcement of its Stage II vapor recovery
requirements for new and replacement gasoline dispensers at 1,600 existing
gasoline dispensing facilities (GDFs) in 12 counties in the southeastern
part of the state. The DEP based its action on a recently-completed analysis
that suggests the environmental benefits of Stage II vapor recovery systems
in the state will approach zero sometime in 2018. The department’s action
supplements its 2012 decision to suspend enforcement of Stage II
requirements for new GDFs put into service after July 31, 2012.
COLORADO TO TEST VEHICLE MILES TRAVELED TAX
In December, the Colorado Department of Transportation (CDOT)
will begin testing a tax based on vehicle miles traveled as a possible
alternative to the state’s longstanding 22-cent per gallon gasoline tax. In
the pilot program, 100 volunteers will track and report their miles by
sending CDOT their odometer readings each month or using a CDOT-supplied
device that will automatically track the mileage for them. CDOT then will
calculate each driver’s tax based on a rate of 1.2 cents per mile. No money
will be exchanged in the pilot program. Rather, CDOT will use the results to
gauge how a future miles-traveled tax would work in practice. In fiscal year
2015, Colorado’s gasoline tax generated revenues of $475.7 million, up only
slightly from the $446.7 million generated in 2014 and down from the $480.2
million collected in 2007.
PEI MEMBER UPDATES REQUESTED
All PEI members are encouraged to update the company
information you currently have on file with PEI because two critical
association deadlines are just around the corner.
Compilation of data for the 2017 PEI Directory begins in
December. Each member’s Directory listing includes contact information,
personnel, product lines and a short, descriptive paragraph. Your company’s
Official Representative to PEI is responsible for making necessary edits or
additions to your company’s listing. If you’re unsure who your Official
Representative is, refer to PEI’s
online directory, and look for the
underlined name. Members will receive more details on the 2017 PEI Directory
production process soon.
The exhibit booth application process for the 2017 NACS
Show also will kick off soon. As a part of that process, NACS will send
booth selection information to the Official Representatives of PEI
manufacturer members and other exhibitors unless the company has
designated a different exhibit contact. To ensure prompt receipt of the
booth selection procedures, make any changes to your Official
Representative’s name or contact information by Dec. 2, 2016. For more
details contact Bob Young at byoung@pei.org or (918) 236-3966.
BP SETTLES CALIFORNIA UST COMPLAINT FOR $14 MILLION
On Nov. 17, California’s attorney general and BP reached a settlement
related to BP’s alleged failure to inspect and maintain underground storage
tanks (USTs) at approximately 780 retail gasoline stations in the state.
Under the terms of the settlement, which must be approved by the Alameda
County Superior Court, BP will pay $14 million in civil penalties. In
agreeing to the settlement, BP, which today owns or operates only 73 retail
fueling facilities in California, does not admit any liability or
wrongdoing. The California attorney general reached similar settlements with
Chevron in 2011 ($24.5 million) and Phillips 66 and ConocoPhilllips in 2015
($11.5 million).
MEMBERSHIP APPLICATIONS
Texas environmental testing firm. FDR & CP Services, LLC, 2503 Tabor
Road, Bryan, Texas 77803, has applied for service and construction division
membership. Mike Leggett is operations manager for the firm, which was
established in 1992. The company provides environmental testing and
compliance. Sponsored for PEI membership by Lydia L. Cowie, WhiteTuckr,
Houston, Texas.
www.fdrservices.com
ADMITTED TO PEI
- Katharine Adamson, Aloha Petroleum Inc., Honolulu, HI (O&E)
- Devin Seals, Circle K Inc., Efland, NC (O&E)
- Alejandro Balcarcel, Global Tech, Guatemala City, Guatemala (O&E)
- Rene Castaneda, Global Tech, Guatemala City, Guatemala (O&E)
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