The fight over the ethanol blend in the U.S.' gasoline continues to wage on, even after yesterday's EPA decision that E15 will be fine in post-2007 vehicles. Last month, a study commissioned by the Renewable Fuels Association (RFA) concluded that E15 would be just fine for older vehicles on the road, but refiners might still be reluctant to sell gasoline blended with higher concentrations of ethanol to the retail market. Who knew that changing the ethanol blend level from 10 to 15 percent would be so difficult?

Here's another issue for refiners to concerned about: liability. Both Valero, the largest U.S. refiner, and Marathon Oil Co. have expressed concerns that selling gasoline with increased ethanol content may leave them liable if long-term engine damage occurs. The EPA's decision on raising the allowable percentage of ethanol in gasoline has come, but without liability protection, refiners may choose to stick with the proven E10. Indeed, refiners have no obligation to blend E15 and may choose never to do so, but we'd bet that the EPA will find some way to entice refineries to make the switch. That is, if it ever grants E15 as an approved blend for more vehicles.

[Source: Bloomberg]