Regulation of Fuels and Fuel Additives: Renewable Fuel Standard ...

Table VII.C.4-2
Estimated 2012 Volumes (million gallons)
7.2 Bil Gals, Max 7.2 Bil Gals, Min 9.6 Bil Gals, Max 9.6 Bil Gals, Min
RFG
RFG
RFG
RFG
Total Ethanol
7,200
7,200
9,600
9,600
Increase in Ethanol 3,302
3,302
5,702
5,702
Change in MTBE -2091 -2091 -2091 -2091
New Alkylate 1,763 1,764 1,764 1,764
Butane Removed in
Winter
Yes No Yes No Yes No Yes No
Change in Butane -456 -140 -297 164 -690 -140 -535 164
Gasoline
143,486 143,228 143,357 142,980 142,092 141,642 141,965 141,394
Change in Gasoline -1,873 -2,131 -2,002 -2,379 -3,267 -3,716 -3,394 -3,965
Change in Gasoline
(%)
-1.3 -1.5 -1.4 -1.6 -2.2 -2.6 -2.3 -2.7
Based on our estimated impacts on volumes shown in table VII.C.4-2, refinery
produced gasoline demand will be reduced by a range of 1.3 percent to 2.7 percent
compared to the reference case, which would result in less imported finished petroleum
products and/or less crude oil use. The projected impacts on refinery-produced gasoline
demand depend on the volume of new ethanol blended into gasoline, on the volume of
ethanol blended into summertime RFG and on whether butane blending into wintertime
gasoline will be affected or not. To put this reduction in refinery-produced gasoline
volume in perspective, the yearly annual growth in gasoline demand in this country is
about 1.7 percent.
The cost for changes to refinery produced gasoline volume is assumed to be
represented by the bulk price of gasoline in each PADD from EIA’s 2004 Petroleum
Marketing Annual. The 2004 gasoline cost is adjusted to 2012 using the ratio of the
projected crude oil price in 2012 of $47 per barrel to that in the 2004 base case of $41 per
barrel. The cost for distributing the gasoline to terminals is added on, which is estimated
to be 4 cents per gallon. The estimated cost for producing and distributing gasoline to
terminals (wholesale price at the terminal rack) ranges from $1.30 per gallon in the Gulf
Coast, to $1.53 per gallon in California.
Crude oil prices are much higher today which decreases the relative cost of
producing and blending in more ethanol into gasoline. For this reason, we conducted a
sensitivity analysis assuming that crude oil is priced at around $70 per barrel. Since this
is only a sensitivity analysis, we simply ratioed the gasoline production costs, MTBE and
alkylate feedstock costs and butane value upwards by the same ratio. The ratio is
determined by the projected increase in the wholesale gasoline price relative to the
increase in crude oil price. We extrapolated this relationship to crude oil priced at $70
per barrel compared to the price in 2004 which was $41 per barrel, which results in about
a 1.4 ratio factor. We did not adjust other costs and assumptions which are much less
sensitive to the price of crude oil and therefore not likely to change much (e.g.,
distribution costs, refinery utility costs, incremental octane costs, and ethanol production
- 148 -