EPA WAIVES CERTAIN FUEL REQUIREMENTS IN EAST COAST DUE TO SHORTAGES
May 13, 2021
by Rhonda Brooks, AgWeb.com
In response to the recent ransomware attack on the Colonial Pipeline, U.S. Environmental Protection Agency (EPA) Administrator Michael Regan on Tuesday issued an emergency fuel waiver to help alleviate fuel shortages in states whose supply of reformulated gasoline has been impacted by the pipeline shutdown.
EPA has waived the federal Reid vapor pressure requirements for fuel sold in reformulated Gasoline areas of District of Columbia, Maryland, Pennsylvania, and Virginia to facilitate the supply of gasoline, according to an EPA press release. This waiver will continue through May 18, 2021.
The Clean Air Act allows EPA Administrator Regan, in action with the Department of Energy, to waive certain fuel requirements to address shortages.
As a result of the Colonial Pipeline shutdown, Administrator Regan determined that extreme and unusual fuel supply circumstances exist and has granted a temporary waiver to help ensure that an adequate supply of gasoline is available in the affected areas until normal supply to the region can be restored, according to the press release.
The national average for a gallon of regular gasoline rose 2 cents on Tuesday, with higher prices reported in the Southeast, according to the AAA Motor Club.
The shutdown of the Colonial Pipeline by cyberattack last week has heightened the need for the use of more biofuels in gasoline, says Emily Skor, Growth Energy CEO.
"You're already hearing of shortages with consumers lining up and we don't have to do that. We can make E15 broadly available right now," she says.
E15 is a gasoline blended with 10.5% to 15% ethanol, as defined by the EPA.
However, E15 must be moved by truck and there is a shortage of available drivers - another issue the Biden Administration is working to address.
The Colonial Pipeline provides more than 50% of the fuel used by consumers on the East Coast as well as many in the South.
Its shutdown by ransomware last week exposes infrastructure weaknesses and vulnerability in the U.S. that biofuels could help resolve, says Phil Flynn, an analyst with Price Futures Group.
"It's a very dangerous situation, and we have to figure out a way to defend ourselves from it - in this new era of computer hacking," he says.
RIN prices soar. Along with the increase in gasoline prices, U.S. renewable identification numbers (RINs) have been at their highest level ever in recent weeks, breaking a record of $147.5 set in 2013, according to Jordan Fife, trading manager for BioUrja in Houston.
"We passed that weeks ago; it picked up speed after the Supreme Court heard arguments from small oil refineries in April," he says.
As such, smaller refineries - those with 75,000 barrels and less capacity - had asserted that they should be permitted to extend lapsed waivers from RIN mandates to use biofuels.
Now, Fife says companies bringing "massive amounts" of European gasoline and gasoline components into the Northeast will likely have to purchase RINs which will continue to drive up their cost, at least in the near term.
"(On Tuesday afternoon), we were at between $179 and $180 per RIN," Fife told AgriTalk Host Chip Flory.
Fife says large retailers in the U.S. such as Quik Trip, Casey's and WaWa have an advantage over the oil refineries because they don't import gasoline and, therefore, aren't required to buy RINs.
"So they will be able to sell higher gasoline blends, or even regular blends, at a better margin," he says. The more the large retailers can do that, he says, that will eventually help reduce the cost of RINs.
"But it will take awhile and requires a steady posture by the (Biden) Administration," Fife adds.