In today's Wall Street Journal 6-18-2010

[Dug]

WASHINGTON—The U.S. Environmental Protection Agency said Thursday it would delay until the fall a decision on whether more corn-based ethanol than the current 10% limit can be blended into gasoline.

An EPA statement, provided to Dow Jones Newswires, said more testing still needs to be conducted on cars to see how they run on a 15% ethanol blend, but preliminary results "look good," and U.S. Department of Agriculture officials called that good news for the ethanol industry.

A spokesman for the Renewable Fuels Association said the EPA's delay—the second since the EPA was petitioned about a year ago to push the limit up to 15%—was "disappointing."

But USDA Secretary Tom Vilsack said the EPA statement was a "green light" for the USDA to begin increasing support for the expansion of ethanol production and distribution.

"The EPA is taking a significant step forward by discussing their timeline to expand [gasoline with a 15% ethanol blend] to vehicles," Mr. Vilsack said in a statement. "This provides a roadmap to build a stronger domestic biofuels industry by creating a market to expand the use of ethanol in America."

Lifting the cap to allow a 15% ethanol blend is important to ethanol producers and corn farmers that provide the fuel feedstock, USDA Chief Economist Joe Glauber said recently, because demand is limited under the current 10% cap.

Mr. Glauber said he expects ethanol production this year to reach about 13 billion gallons and there is not much room for expansion beyond that. The "blend wall," or the maximum amount of ethanol that can be produced to meet demand, will be about 15 billion gallons per year.

The U.S. ethanol industry is expected to consume 4.55 billion bushels of corn, or about 35% of the 13.1 billion bushels produced in the U.S. last year, according to the latest USDA estimate.

Although Mr. Vilsack was pleased by the EPA's progress in assessing a 15% ethanol blend, or E15, for gasoline, the Renewable Fuels Association said it was not. The latest delay, the group said is a "dereliction of duty" on the part of the EPA.

An EPA spokesman said Thursday the agency has not decided whether only newer car models or older ones as well would be approved to run on E15, but a Renewable Fuels Association spokesman said the group expects the EPA to exclude many cars from using the higher-ethanol blend.

If the agency were to approve E15 for all cars on the road, that would mean a "potential increase of 6.5 billion gallons of new ethanol demand, displacing more than 200 million additional barrels of imported oil," the Renewable Fuels Association said. But if the EPA restricts consumption and confuses motorists on who can use E15, it "will likely will lead to little if any additional ethanol being sold."

[In Memory Walter K]

And Mercruiser will not guarantee your brand new engine if fuel goes to E-15. Nice to hear when you've just repowered your B-20.

[Rawleigh]

They need to give the user an option. i don't mind if ethanol is a little cheaper, but we ought to still be able to get non-ethanol.