Arkansans are feeling the pain at the pump, wondering when prices will ease and looking for any solution that will bring them back down. One proposal receiving some attention involves new legislation pushing for year-round E15 gasoline which contains 15 percent ethanol. But what may appear to save consumers a few pennies per gallon at the gas station has several hidden costs behind the scenes. E15 expansion will have negative impacts which will further strain household budgets, put jobs at risk, and inflict environmental harm.
Consumers are paying for biofuels (such as E15) twice, once at the pump and once through government programs funded by their tax dollars.
Ethanol has been propped up for decades through billions in taxpayer money. A myriad of tax credits subsidize biofuels, with the latest expansion expected to cost $53.1 billion over the next decade. More than $800 million has been or will be spent on biofuel infrastructure projects, and the industry receives other handouts such as crop insurance, loan guarantees, grants, and commodity programs.
Perhaps its biggest perk involves the Renewable Fuel Standard (RFS) which legally requires a set volume of biofuels to be mixed into conventional gasoline. The federal government has created a guaranteed market through ethanol blending mandates.
These blend requirements have already raised gas prices by roughly 30 cents a gallon, partly due to compliance costs. Because of ethanol’s corrosive properties, it must be transported by truck and blended at distribution terminals. The independent refiners, which own few, if any, of these terminals, must purchase the necessary RFS compliance credits (RINs). This extra expense is incorporated into each gallon of gas before it even reaches the pump.
Consumers who manage to locate one of the few (39) Arkansas gas stations that sell E15 might be disappointed with the promise of savings. Vehicles lose fuel economy as more ethanol is blended with gasoline since ethanol has 33 percent less energy content. E10 already reduces fuel economy by three or four percent; E15 reduces it by an additional one to two percent. Furthermore, several automakers actually advise against putting E15 in their cars due to its corrosive nature.
E15 expansion has other rippling effects across the economy.
Under current law, small refiners can seek 100 percent exemption from blending requirements on account of the severe economic hardship that RFS compliance often disproportionally inflicts on them; they face higher costs. The proposed legislation reduces that to 75 percent. The bill also seeks to redefine “small refiner,” dramatically reducing the number of operations that will qualify. Arkansas’ two refineries are at risk.
Steven Jones, president and CEO of the Chamber of Commerce in El Dorado-Union County, Arkansas warns of the catastrophic consequences that could befall the small region of 40,000 residents were the refinery to close its doors because of expanded biofuels. Hundreds of thousands of jobs tied directly or indirectly to the facility would dry up, leaving communities without good-paying employment, reduced local tax revenue that funds critical infrastructure, and decreased economic activity to local businesses.
El Dorado has consistently faced prolonged delays and hurdles to qualify for exemptions. The refinery will encounter more and/or lose its small refinery status, significantly increasing its operating costs.
Cross Oil Refining & Marketing has also experienced difficulties with the small refinery exemption process, having had past petitions ruled ineligible. Tougher guidelines could prove fatal, economically harming the small, rural town of Smackover, Arkansas and its surrounding communities.
Additionally, diverting more corn into the fuel supply leaves less for food and livestock feed, escalating costs which work their way into basic food products and animal agriculture. At a time when Arkansas households are still grappling with inflation on everyday essentials, higher grocery bills will only increase financial burdens.
And despite assurances of emissions reductions and other environmental benefits, biofuels have “caused environmental degradation greater than the fossil fuels they were purported to replace.” Deforestation, water contamination, and air pollution have resulted because of the upsurge in corn and soy cultivation and production. Higher ethanol content in gasoline will only amplify these negative impacts.
The economic strain on consumers, the threats to Arkansas’s small refineries, the ripple effects on food and agriculture, and the documented environmental harms make clear that expanding E15 is not a harmless tweak to fuel policy. It is a costly shift that would burden households, jeopardize local jobs, and deepen ecological damage—all for marginal savings at the pump.
Arkansas families deserve real, lasting relief from high fuel prices, not policies that create more problems than they solve.
Kristen Walker is Senior Policy Analyst and Manager for Energy and Transportation with the American Consumer Institute, a nonprofit education and research organization. For more information about the Institute, visit www.theamericanconsumer.org or follow us on X @ConsumerPal.