States Backtracking on Ethanol Gas Requirements

As mentioned in our previous blog on different rules for ethanol among different states, there are a number of states that have had to change their rules on ethanol after finding unpleasant consequences. 

Indeed, the issue of ethanol rules state-by-state is an excellent illustration of the Law of Unintended Consequences. Politicians in a state pass a law mandating certain things be done.  Sometimes the laws are passed with the greatest intentions, but problems arise that may or may not have been able to be predicted.

One non-example of this happened in Minnesota a number of years ago when biodiesel blends were becoming popular.  The politicians, perhaps responding to the leanings of their constituents,  decided to be the trend setting state and requirement biodiesel to be blended in all of the state's diesel fuel - no diesel fuel could be sold in Minnesota without some portion of biodiesel mixed in.

On the face of it, it sounds like a great, green plan. But those in the industry know that biodiesel fuel gels up very easily in cold temperatures. And that's exactly what happened in Minnesota that winter - biodiesel problems abounded. Their diesel fuel gelled and caused big problems for lots of people.  And they ended up having to suspend the requirement until they could figure out solutions.

Much of the same thing happened with states trying to figure out what to do with ethanol in gasoline. Politicians and officials in state thought it would be a wonderful idea to jump feet first into the fray with grand proposals for using the popular new green fuel.  But things didn't work out like they planned.

Hawaii is currently a mandatory E10 state, as the Hawaiian legislature thought it would be a boost to their sugar cane industry. The Hawaii mandatory E10 law is a rule signed by the Governor in 2006 for an old unenforced law calling for at least 85% of Hawaii gasoline to contain 10% ethanol by April 2006. Unfortunately the new law had disasterous unintended consequences. The gasoline distributors arbitrarily decided to supply E10 on all of the main islands, and supply the small islands of Molokai and Lanai with clear gasoline, thus meeting the 85 / 15 rule. This caused disaster in the marine industry and public safety. In 2007 they had to pass a new law to correct the problems and make unblended gasoline available in marinas and for aircraft, small engines and public safety uses, such as stationary generators and pumps.

The Oregon law mandating ethanol use in the state was passed in mid 2007 and triggered and began implementation on 1 October 2007. This was the only mandatory E10 law passed by a state with absolutely no exceptions whatsoever and it caused major problems. Now, nobody has ever offered an explanation as to why no legislator knew about the ethanol fuel problems that were in the other three mandatory E10 laws that states had passed before Oregon. Suffice it to say, none of the current six mandatory E10 laws is anything alike. In 2008 the Oregon legislature had to pass an emergency measure, SB-1079, that granted certain users an exemption to buy ethanol free gasoline if they can find a source, i.e. that marine industry, aviation, antique but not classic cars, small engines used in recreation vehicles and portable tools, etc.

Right now there are only 5-6 states that can be considered "mandatory ethanol states".  Oregon and Hawaii are two of them. If others states consider adopting proposals to make ethanol mandatory, we can only hope they learn from the lessons of Oregon and Hawaii instead of erring on the side of simply what makes the politicians look the best.