The U.S. Department of Agriculture (USDA) is finally urging the Environmental Protection Agency (EPA) to consider raising the amount of ethanol that is blended with gasoline before millions of Americans purchase it at the pumps.
Current ethanol-to-gasoline blends are currently set at 10 percent, but ethanol groups have long urged for the number to be raised to 15 or 20 percent, saying it will help the U.S. ethanol industry grow during a time when producers face declining margins and an extremely competitive market.
Although the USDA and other agencies and researchers can request the EPA to raise the limit, it's up to them to persuade the EPA to try and raise the percentage to something a bit higher. Both sides have just started talking, so the exact number of a new blend hasn't been brought up yet, though it's likely both sides have a number they hope to reach.
In an effort to create the blend itself, Valero Energy offered a bid of $280 million for five ethanol plants that are operated by VeraSun, which recently filed for bankruptcy protection. If the deal becomes official, it would mark the biggest ethanol buyout the U.S. has ever seen.
Ethanol maker Archer Daniels Midland recently said around 21 percent of U.S. ethanol production capacity is sitting idle, so the topic of blending ethanol and gasoline will only likely increase in the future.
"I do think it's important for us to look for strategies to make sure the infrastructure of the ethanol industry is preserved, because it is a key component to this new energy future the president's laid out," said Tom Vilsack, former Iowa mayor and U.S. Secretary of Agriculture told Bloomberg. "We have been talking to folks at EPA, as they look at the blend-rate issue. That may be one way in the short term to create new opportunities."