According to Bloomberg the Environmental Protection Agency are anticipated to approve a ruling that might just be the most backward decision that I’ve read about in years. I’ll get to the ruling in a moment but I want to start with the fine print – exactly what the impact of the decision might be (which questionably won’t be the piece that the media focus upon). Gasoline prices as you’ve noticed have been steadily creeping up for many months now with average prices now at their highest in over two years and industry insiders predicting further increases of up to 15 to 20 percent this year. While commercial vehicles will still drive all the miles that are required the expectation is (was) that fuel consumption might reduce slightly for private use as drivers question the value of extra leisure mileage in their vehicles due to cost. I don’t need to explain it to you but perhaps I should write to the EPA – reduced fuel consumption equates to reduce pollution.

Why then would the EPA support a decision that is expected to stabilize and perhaps even lower the price per gallon throughout the United States?

The rule which the agency may be passing would approve the use of E15 for vehicles that were built after the year 2000. E15 fuel is a synthetic blend consisting of 85 percent gasoline with 15 percent ethanol – automakers view it as the enemy citing the fact that increased ethanol is capable of harming components of a vehicle’s engine. Last year a temporary waiver was granted to ‘Growth Energy’ who had campaigned on behalf of ethanol whilst representing various manufacturers and suppliers within the industry. The waiver allowed the normal blend (10% ethanol) to be increased to E15 for vehicles built from 2007 onwards, that initial decision has been met with opposition from manufacturers revisiting the claims of vehicle damage.

Here is the intriguing part which I don’t think is really being looked at and it doesn’t take the most tenuous mathematical theory to prove it. Most environmentalists would of course applaud the increased use of ethanol (grain alcohol) to help power motor vehicles – it is cleaner and is of course not burning a fossil fuel. Increasing that ratio from the typical 8 to 10 percent nationally to 15 percent would see more ethanol on the market, but the seven percent reduction in petroleum is completely misleading. It’s only a winning theorem if drivers curtail the miles they drive annually. Simply in population terms US demand for fuel will increase each year as more drivers take the road – the only significant downturn in gasoline use in recent years was when fuel charges rapidly spiked a few years ago. Depending on which report you read consumer demand for gasoline fell by as much as 18 percent, a trend that is being followed again over the last six months even though prices have not returned to their previous national high just yet. Currently the US averages is $3.10 cents per gallon which seems to be right around the break even point where consumers notice it being too expensive – if the anticipated increases to a four dollar gallon were to take place this summer you can essentially guarantee a lower demand from consumers. If the E15 ruling goes ahead the rapid increase in ethanol use will change prices at the pump even in some cases it will only see them as stabilise at first. The reason being is that refiners receive a 45 cent tax credit for each gallon of ethanol that they use. That tax credit could then most likely would be used by refiners to offset rising fuel prices and in some locations may see a drop in price. Why would refiners pass on their savings? To secure high demand – which in actuality would be ‘normal demand’ which is far too high in the first place.

Another asterisk that you have to place against ethanol usage is the fact that it will often result in a slight but consistent reduction in fuel economy due to the lower energy density, even if it’s only one or two percent it once again slices away any potential gains environmentally if the subsequent demand for petroleum increases by the same amount.

While nothing would please me more to say that most drivers will change their choice of vehicle and fuel due to environmental matters the fact is that nothing changes driving habits in the US is significantly as more expensive gasoline, if we could eliminate that long-term passionate desire for cheap gas (which would be $2.40 a gallon in 2011) we might just see alternate fuel vehicles really take hold. As the cost of oil recovery, refining, transport and marketing continues to increase as will the pump price – trying to manipulate that only slows our transition to better driving habits and hybrid or electric vehicles. The front end of the EPA decision looks logical but the consequences may be just the opposite of what environmental protection means.