Well, this is awkward …
The auto industry has yet to take a unified stance on E15, but all companies do agree that more extensive testing needs to be performed on engines. Toyota Motor Corporation (ADR) (NYSE:TM) isn’t taking any chances. It began putting stickers on the gas caps of its various car models in 2012 that simply state “Up to E10 gasoline only.” That was seemingly a shot at E15. Ford Motor Company (NYSE:F), General Motors, and Chrysler have yet to place visual warnings on their cars, although each has chosen words carefully when it comes to E15. Cynthia Williams, Ford Motor Company (NYSE:F)’s environmental policy manager, was quoted as saying “Ford Motor Company (NYSE:F) does not support the use of E15 in legacy vehicles,” instead advising drivers to consult their owner’s manual.
A warning to drivers about using E15. Source: Boise Guardian.
Does that mean the Blend Wall is a firm ceiling? While it’s entirely possible that more testing could prove E15 is safe in vehicles produced after 2001 (as the EPA has certified), smaller engines such as off-road vehicles, lawnmowers, motorcycles, and boats are not. It looks as if the fuel market may get much more complicated for consumers.
This could get ugly
The EPA did extend an olive branch of sorts this summer, axing cellulosic ethanol requirements for 2014 because of supply constraints. The problem is summed up by KiOR Inc (NASDAQ:KIOR), which owns 11 million of the nation’s 19 million gallons of cellulosic ethanol capacity that will generate RINs in 2013. It has run into problems hitting internal production targets since its first commercial facility came online. Management admitted that operations could be jeopardized if the company can’t find adequate funding in the next several quarters while the kinks are worked out of its catalytic process.
Other leaders, such as POET and DSM, are looking to make a big splash in cellulosic ethanol in 2014, but the industry has had an embarrassing start out of the gate. Besides, while cellulosic ethanol would provide some relief to the RIN market (corn ethanol and cellulosic ethanol carry their own RINs, but both can be blended to meet obligations), it wouldn’t alleviate fears of exceeding the Blend Wall.
Are consumers doomed? It seems that it’s a real possibility beginning next year, but this is a complicated issue. Be sure to check back in the coming weeks as I dive into the topic in more detail.
The article Refiners, Ethanol, and You. Time to Worry? originally appeared on Fool.com and is written by Maxx Chatsko.
Fool contributor Maxx Chatsko has no position in any stocks mentioned. Check out his personal portfolio or his CAPS page, or follow him on Twitter, @BlacknGoldFool, to keep up with his writing on energy, bioprocessing, and biotechnology.The Motley Fool recommends and owns shares of Ford.
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