Map reference:

by Patrick DeHaan on Apr 28, 2011 12:42 PM

With warmer weather just around the corner (thank goodness!) Many of you have been asking what exactly is summer gasoline, is it real, and who gets what. Let's try to shed some light on summer gasoline!

The EPA mandates gasoline burn cleaner in the summer months, and so there are many different types of gasoline in use across the U.S. to meet local standards. The significant difference between summer and winter gasoline is the specifications it must meet. Summer gasoline is commonly called "summer spec gasoline". It was then called summer gasoline to avoid confusion. The only difference between seasonal gasoline is it meets seasonal emission requirements and has different blending components or ingredients.

Check out the map included with this post to see if your area simply uses a lower RVP gasoline (white areas), or if they use a reformulated gasoline or exactly what is in use.

Summer gasoline is required to be the only fuel sold at terminals or racks, where stations buy their gas by May 1. Then a month later (June 1), stations most only sell gasoline that meets these specifications, aka summer gas.

The more exclusive type of gasoline, the more it costs to produce. You'll notice some entire states use different types of gasoline than other areas. It's important to note that all these types of gasoline will run your car just fine. Some just have lower emissions when burned or don't evaporate as easy.

How Does Ethanol Affect Gas Mileage?

You don’t have to go far to hear folks complaining about how the current level of ethanol content in unleaded gasoline has affected the gas mileage in their vehicles. Today’s gasoline contains approximately ten percent ethanol, for the most part, and is referred to as E10. Finding “ethanol-free” gasoline at a common service station has become increasingly rare, at best.

Ethanol contains approximately 33 percent less energy than gasoline. If you were to run 100 percent ethanol (E100) in your vehicle, you’d expect to take a 33% hit to gas mileage.* (Theoretically, since you can’t legally run 100% ethanol.) With E10, it’s a 3.33% penalty. Seeing that you can’t buy E0, there’s not much you can do about it.

At some point, we hope to perform dyno and real-world tests to document the drop in gas mileage. With “pure” pump gas nearly impossible to find, we’ll likely have to buy expensive street-legal racing fuel.

The game is changing with E85 (85% ethanol) in FlexFuel-capable vehicles. While older FlexFuel vehicles show significantly lower gas mileage with E85, some newer engines are optimized to run on E85. We tested E85 vs E10 in a FlexFuel Buick Regal Turbo and experienced a 12% drop in gas mileage.

Ethanol is an excellent fuel in the right applications. While it contains less energy, it packs more octane, which allows for higher horsepower output. This makes it an excellent choice for high-performance engines. In addition, it also burns at a cooler temperature and does away with carbon deposits.

Racers are taking the lead with ethanol, as they seek to extract more horsepower at a lower cost per gallon than conventional racing gas. At X Games 17, at least two Rallycross cars ran ethanol race fuel, with Stephan Verdier and Jimmy Keeney both running ethanol in their AWD Subaru STis against conventionally-fueled competition. Andrew Comrie-Picard won two bronze medals at X Games 16, running ethanol in his Mitsubishi EVO.

The development of high-output ethanol-fueled engines isn’t restricted to the race track. The Ricardo Ethanol Boost Direct Injection (EBDI) engine produces 900 NM of Torque from a twin-turbo V6.

* Source: U.S. Energy Information Administration: How much ethanol is in gasoline and how does it affect fuel economy?

- by Daniel Gray

August 11th, 2011

What States require it and what is it?

The ethanol mandate is laid out in EISA 2007, a 310 page Federal act. The applicable sections for the Renewable Fuel Standards (RFS) is Sections 201 - 248, a very small part of the act. You should be very suspicious, for it gives bounteous incentives to the oil and ethanol industry and penalizes them if they do not deliver, using something called RINS. The law is being implemented by the EPA.

By the end of 2008 the EPA has required that 9 billion gallons of ethanol be blended into gasoline across the nation. EISA is not a mandatory E10 law; in fact it is an E85 and flex-fuel car corporate welfare act. It has no requirement for the blending level percentage, only the requirement that certain amounts of ethanol be blended in every area of the country by all of the "large" oil companies in ever increasing amounts, every year until 2022, when 36 billion gallons must be blended. The economic dislocations are growing rapidly. Since E85 infrastructure and vehicle production can't be ramped up overnight, E10 is spreading rapidly everywhere.

The insidious parts of the act are the economic incentives, which are generous and will cause massive economic dislocations, and the economic penalties which are subtle but effective and potentially profitable to commodities brokers.

The economic incentives don't make it clear, to the casual observer, why the act will cause economic dislocations. Perhaps what is happening in the Northwest is a good illustration though. Remember, EISA 2007 is primarily an E85 law. One state, Oregon has implemented a mandatory E10 law, another state, Washington, is implementing a bizarre sort of mandatory ethanol law and two states, Montana and Idaho have no mandatory ethanol laws as of right now. Montana has a mandatory E10 law on the books, but it has not triggered and probably never will now. However, all four states will probably be completely E10 by the end of 2011.

Ethanol is blended into gasoline at the distribution terminal. It is not blended during the refining process. So far blended gasoline is not shipped through gasoline pipelines because of corrosion problems. That is the excuse given by the pipeline owners; I don't know if it is true, but they own the pipelines and they make the rules. In order to induce terminals to install new infrastructure to blend ethanol, i.e. tanks and injection equipment, the federal government gives the blender a $0.45 / gallon of ethanol blended federal gasoline excise tax credit, as of today. That amounts to about a $5.7 billion tax break this year, way more than any other environmental tax break.

Once a terminal has installed the infrastructure, it behooves the terminal economically to make as much E10 as possible and take all of the gasoline stations that they serve E10 as soon as possible. It is also economically attractive right now to blend as much ethanol as possible, because ethanol is cheaper than gasoline, but there is no guarantee that that will be the case in the future. Don't ever forget that gasoline is an international commodity that is subject to the whims of the commodities futures market, but ethanol is an agricultural commodity, subject to all the whims of mother nature and the commodities futures markets.

So far there has been no obvious economic incentive for the refinery. But it is built in, if hidden. Once all of the terminals in the geographic area served by a refinery go E10, the refinery can retune the production process to make "suboctane" blending gasoline with a lower AKI rating which costs less to refine. For 87 AKI regular gasoline, the refinery can make 84 AKI blending product, usually referred to as 84 cBOB (conventional Blendstock for Oxygenated Blending). This is already happening in Oregon. Similarly the refineries in the Northwest will eventually make 89 AKI cBOB for premium unleaded blending. I doubt that the refineries pass along the savings, at least we haven't seen it in Oregon. So far our gasoline is more expensive than Montana's gasoline which isn't E10 ... yet.

Because of the blenders incentive and the requirement of EISA 2007 to blend ethanol into all gasoline everywhere, terminals are being forced into adding ethanol injection infrastructure. Once they do that they have a tremendous incentive to blend as much ethanol, up to 10% as they can, and the refineries are pressuring them to do it so they can change to suboctane BOB production. Also, I'll bet that the refineries have figured out that a large proportion of cars take a mileage hit greater than 10% when they have to use E10, and now the gasoline companies are actually selling more gasoline than before E10 was implemented. So much for energy independence.

So you can figure out why Oregon, Washington, Montana and Idaho will probably be all E10 by the end of 2011. The economic dislocation comes when all of the terminals serving the Northwest have to compete for ethanol with all of the other terminals across the nation. At present there is about 300 million gallons / yr. of ethanol production planned in the four NW states, an area that will need at least 550 million gallons / yr. to take all of the gasoline E10. Keep in mind that none of the corn needed by the ethanol plants that are in production or being planned is grown in the region and the shortfall in ethanol will have to be purchased on the open market in competition with all of the other terminals and gasoline producers in the country that are trying to meet, or even exceed, EISA 2007 quotas. If they don't get enough ethanol or they don't have the distribution infrastructure then they are penalized and must try to buy RINS from those areas that are above their EISA quota for that period, another "cap and trade" system, the darling of energy commodities marketing ... and commodity traders are already trying to figure out how they can make a commodities futures market in RINS. After what they did in the financial derivatives market, this should scare the crap out of you.

There are six mandatory ethanol states, Minnesota, Missouri, Hawaii, Oregon, Washington and Florida. Montana has an untriggered mandatory E10 law. The ethanol law in Washington is not an E10 law, it is a volumetric law, 2% of the total gallons pumped must be ethanol, this is similar to the federal RFS mandate. The Florida mandate goes into effect 31 December 2010.