Valero Calls for Immediate Waiver of Ethanol Mandate

SAN ANTONIO -- Valero Energy Corp. sent a letter to Environmental Protection Agency (EPA) Administrator Gina McCarthy, calling on the agency to immediately waive the ethanol mandate under the Renewable Fuel Standard (RFS).

The RFS requires refiners to use 13.8 billion gallons of ethanol this year and 15 billion by 2015. Ethanol is typically combined with gasoline in a formula of up to 10 percent, which is referred to as the blend wall.

Renewable identification numbers (RINs) are attached to each gallon of ethanol to ensure compliance. However, in his letter, Valero CEO Bill Klesse wrote that RIN prices have risen more than eightfold this year.

"You have the flexibility to waiver volumes [that] will lower the price of RINs now, will lower the price to the consumer and make the marketplace fair," Klesse wrote in his letter this week, Bloomberg reported.

According to the news source, corn-based ethanol RINs sold at 67 cents each yesterday, compared to 7 cents apiece in January. Advanced RINs, which incorporate biodiesel and Brazilian sugarcane-based ethanol, sold for 74 cents each yesterday, double what they sold for in January.

San Antonio-based Valero is not the only company or organization to pressure the EPA to waive the ethanol mandate of the RFS. Marathon Petroleum Corp. CEO Gary Heminger previously asked Congress for a "workable" RFS.

In addition, NACS, the Association for Convenience & Fuel Retailing, and the Society of Independent Gasoline Marketers Association of America (SIGMA) testified in July that adjustments to the RFS must be made because the United States is on the verge of hitting the blend wall, when the RFS' annual volume obligations exceed the volume of renewable fuel the market can reasonably absorb. Once this occurs, it could cause an increase in gasoline and diesel prices, causing severe economic harm to the country, the trade groups stated.