As ethanol boosters celebrate sales restriction end, skeptics doubt it will help farmers

A tractor drives through a corn field.
A tractor moves through a partially harvested corn field on a family farm in Murdock, Minn. the morning of Wednesday, Oct. 25, 2017.
Evan Frost | MPR News 2017

The ethanol industry applauded President Trump's announcement this week allowing summertime sales of E15. Currently, the ethanol-gasoline blend can only be sold from September through May. Yet skeptics doubt the announcement will have much impact on the industry or farmers, since E15 sales are fairly small.

The ethanol industry boosters pushed for expanded E15 sales for years. So it was a happy moment for them when the President approved the idea this week at a rally in Iowa.

The president's announcement means the 15 percent ethanol gasoline blend can be sold during the summer months. In the past, the EPA banned warm weather sales because of air pollution concerns, mainly that E15 might vaporize and add to ozone problems.

The ethanol industry pushed to remove the restriction, arguing there was little chance of that happening. Mick Miller, who manages the Denco ethanol plant in Morris in west central Minnesota, said removing the sales restriction will boost E15 sales.

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"This is a big win and we're very, very thankful for the president's leadership and making this happen," said Miller.

He says the E15 change will lead to more ethanol production, boosting the price of the fuel's main ingredient, corn. That will help farmers, many who are suffering losses because the trade war has hurt grain and livestock prices.

One of ethanol's biggest trade groups, Growth Energy, also sees good things in the change. The group's CEO Emily Skor says year-round E15 sales will encourage more gas stations to add pumps to sell the fuel.

"There's a market incentive for them," said Skor. "Because the cost of ethanol is so much lower than the cost of gasoline, retailers will make money off of this change."

But not everyone agrees with that assessment. Iowa State University economics professor Sebastien Pouliot says it's not clear if gas stations will want to spend the money required to install new equipment to sell E15.

"In some cases, it can be quite a significant investment and it's not an easy decision for sure," said Pouliot.

He says it can mean not only new pumps but in some cases new storage tanks as well. That can cost thousands of dollars. Right now the amount of ethanol used in E15 is fairly small. A federal estimate says less than one percent of all U.S. ethanol production goes into the fuel. So even if sales increase, it's going to take lots of new pumps to really change sales levels. Pouliot thinks the president's E15 announcement will have limited impact.

"In the short run the significance is going to be pretty small," said Pouliot.

For President Trump though, the impact may be immediate. The E15 change could boost farm state votes for Republicans in next month's election.