HOUSTON (Dow Jones)
Several major U.S. refiners said Tuesday that they won't sell gasoline containing 15% ethanol despite the fact that government recently allowed fuel makers to start distributing the blend as part of its aim to reduce oil consumption.
Valero Energy Corp. (VLO), Marathon Oil Corp. (MRO) and Tesoro Corp. (TSO) said they would refuse to sell E15, a mix of 85% gasoline and 15% ethanol, at their retail gas stations, because it could allegedly harm older automobiles or void their warranties. These companies' stance might crimp the ethanol lobby's success in convincing the U.S. Environmental Protection Agency's (EPA) Oct. 13 approval of the fuel blend for vehicles made since 2007. The EPA is currently weighing whether to expand its E15 approval to older cars and light trucks despite opposition from automakers and some environmentalists.
"While some government agencies may believe differently, Tesoro isn't convinced that E15 is ready for prime time," Tesoro spokesman Mike Marcy said.
The three companies own or license their names to a combined 12,700 gas stations in the U.S., about 7.8% of the total as of 2008, the latest figure available. Other refiners, including Exxon Mobil Corp. (XOM) and BP PLC (BP) referred E15-related questions to industry group American Petroleum Institute, which said it wasn't aware of where member companies stood on the issue.
None of Valero's 1,000 wholly owned retail gas stations will sell the fuel blend, while the 4,800 stations that license the Valero brand name could sell E15 only if they market the fuel under a name other than Valero's, said company spokesman Bill Day. Valero is the largest independent U.S. refiner. Selling E15 is "not practically possible" because of the danger of drivers putting E15 into nonapproved vehicles, Day said.
Although ethanol advocates cite research saying E15 won't damage vehicles, automakers hold that E15 could harm car and light truck engines and void their warranties. The Alliance of Automobile Manufacturers, representing Ford Motor Co. (F), General Motors Co. (GM), Toyota Motor Corp. (TYO) and other auto companies, filed a petition with a U.S. appellate court in Washington on Monday challenging the EPA's approval for the sale of gasoline containing 15% ethanol.
"There's no warranty protection from engine and equipment manufacturers for E15," Day said. "We're not going to sell a product we can't guarantee."
To help meet the EPA's goal of having 12.6 billion gallons of ethanol blended into the U.S. fuel supply in 2011, Valero will instead install more E85 pumps to serve "flexible fuel" vehicles specifically designed to use fuel containing 85% ethanol, Day said.
Marathon Oil Corp. said it won't sell E15 at the 6,000 gas stations it either owns or licenses its name to until the company feels sure that the fuel won't harm engines, said company spokeswoman Angelia Graves.
"Before a new product like this is brought onto the market, the research needs to be complete," Graves said.
The Renewable Fuel Association, an industry group representing ethanol makers, said that despite the EPA's approval of E15 its final arrival at gas stations nationwide is still "a bit of waiting game."
"There is that concern for sure," RFA spokesman Matt Hartwig said in an e-mail. "I don't know of any (refiners) that have said no, but I don't know many that have said yes, either."
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