The Trump administration is seeking permanent authorization for year-round sales of E15 gasoline, a move that could modestly boost US ethanol demand and support biofuel producers, TPH Energy strategists said in a Thursday note.
Matthew Blair, an analyst at TPH Energy, said that the White House Office of Management and Budget has requested legislation to allow the higher-ethanol fuel blend to be sold year-round as part of a supplemental budget proposal.
The measure follows the passage of a similar bill in the House of Representatives in May, though its prospects in the Senate remain uncertain.
TPH analysts said E15, a gasoline blend containing 15% ethanol, is currently restricted during the summer months in much of the US due to concerns that its higher volatility could contribute to smog formation in hot weather.
Federal regulators have routinely issued temporary waivers to allow summertime sales, but the latest proposal would make those permissions permanent.
The move marks the latest step by the administration to support the US biofuels industry, a key constituency in agricultural states across the Midwest.
Though the potential increase in demand may be limited initially, analysts say even incremental gains in ethanol blending rates could benefit major producers, including Green Plains (GPRE), Archer-Daniels-Midland (ADM) and Valero Energy (VLO).
There are fewer than 5,000 E15 pumps across the US, representing less than 2% market share, Blair said, adding that even with approval for year-round E15, actual volumes would likely remain quite small at first.
However, TPH said ethanol's current pricing advantage over gasoline could encourage wider adoption. Midwest ethanol is trading at about $1.85 per gallon, compared with about $2.92 per gallon for Midwest gasoline.
The US consumed about 13.6 billion gallons of ethanol last year, largely unchanged from the previous year and below pre-pandemic levels.
TPH said a permanent shift to year-round E15 sales would likely provide a gradual increase in domestic ethanol demand rather than an immediate surge, analysts said. However, at a time when US biofuel consumption has stagnated, even modest growth could improve margins and utilization rates for ethanol producers.
The proposal now faces the more difficult challenge of securing Senate approval, where bipartisan support for biofuel legislation has historically been uneven despite backing from farm-state lawmakers and the ethanol industry.
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