Oil Industry And Others Cheer EPA's Ethanol Proposal

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The EPA's decision not to force oil companies to replace E10, gasoline mixed with 10 percent ethanol, with E15, had a big impact on a lot of businesses. For manufacturers of motorcycles, motor boats and outdoor power equipment, it was good news. But for gas station owners who invested in expensive blender pumps, the decision hurt.

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Here in the United States, oil refiners are happy about last week's federal proposal to cap the amount of ethanol in a gallon of gasoline at 10 percent. Other industries cheered, too, those including small engine manufacturers, chicken farmers, and others who opposed upping ethanol content.

Michigan Radio's Tracy Samilton explains.

(SOUNDBITE OF MOTORCYCLE)

TRACY SAMILTON, BYLINE: Outside Nicholson's motorcycle dealership in Ann Arbor, general manager Chip Terrill starts up one of the bikes for sale.

CHIP TERRILL: Yeah this is a 2013 Yamaha Bolt - fuel injected - kind of the latest and greatest that Yamaha offers for a nice street bike.

SAMILTON: The bike can run on E-10. That's gas mixed with 10 percent ethanol, a fuel made from corn. E-10 is sold pretty much everywhere in the U.S., thanks to a federal law known as the Renewable Fuel Standard. It calls for blending more ethanol into every gallon of gasoline over time; gasoline with 15 percent ethanol would be the next step up. That's a problem for motorcycles.

TERRILL: Definitely they're not compatible - not the particular vehicles that we sell in the motorcycle or power sports industry.

SAMILTON: Boat engines? Also not compatible. Lawn mowers, nope. What about cars? The EPA says the higher ratio of ethanol would have been safe for any car newer than model year 2001. But lots of people disagree. AAA president Bob Darbelnet says auto company CEOS have told him it's not true.

BOB DARBELNET: Roughly 90 to 95 percent of vehicles on the road today in this country are not designed to consume E-15.

SAMILTON: There are other groups that don't want more ethanol. Restaurants and chicken farmers say they have to compete with the ethanol industry for corn, and that raises the price of food.

Even so, Senator Chuck Grassley of Iowa says the EPA made a mistake. He doesn't believe those auto company CEOs.

SENATOR CHUCK GRASSLEY: The car industry is a patsy for big oil.

SAMILTON: And Grassley says, don't forget, we turned to ethanol to reduce our dependence on foreign oil, and it's working. And ethanol creates jobs in rural America. He's even put E-15 in a 1998 Oldsmobile.

GRASSLEY: So what in the heck is wrong with ethanol, it doesn't matter what you mention - everything about ethanol is good, good, good.

SAMILTON: But the restaurant lobby says everything about ethanol is bad, bad, bad, so we should repeal the law once and for all.

Meanwhile, the EPA's stance has a defender in Nathanael Greene. He's with the Natural Resources Defense Council. Green says the EPA probably struck the best balance it could, in the face of so many signals that the country's not yet ready for more ethanol.

NATHANAEL GREENE: It is a perfect law? Absolutely not.

SAMILTON: But he says, the law does help move the country away from oil - and it does strongly encourage refiners to find ethanol that's made from things other than corn. For example, grasses, corn stalks or weeds. So getting rid of any federal ethanol requirement could be throwing the baby out with the bathwater.

GREENE: I think this Congress, would not replace the renewable fuels standard with something better.

SAMILTON: The EPA says a reduction in the renewable fuel standard should put it on a manageable trajectory, and give stakeholders time to figure out how to use more ethanol and overcome obstacles. Right now, with people on all sides digging in, it's just not clear how that's going to happen.

For NPR News, I'm Tracy Samilton.

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