Analysis-E15 Seen as Price Relief, Buffer to USWC Gasoline


   
Kristina Davis
DTN Refined Fuels Market Reporter

   MIAMI, FL (DTN) -- The push to expand sales of the E15 gasoline at 20cts 
gallon less than regular gasoline is gaining attention on the West Coast as 
traders weigh how lower prices and higher blending capacity could alleviate the 
region's tight fuel supplies made worse by the war in Iran.

   Global crude markets have remained volatile in recent weeks as the conflict 
continued to raise concerns about disruptions to Middle East oil flows. While 
the U.S. imports limited volumes of crude directly from the region, traders 
said broader risk premium from the war has boosted gasoline prices nationwide. 
The impact has also been felt more acutely on the West Coast -- the destination 
for most Middle East crude shipments to the U.S. and where refinery capacity 
has steadily declined.

   The incentive for nationwide E15 adoption this summer was bolstered by the 
Environmental Protection Agency's (EPA's) issuance of an emergency waiver on 
March 25 that allows the 15% ethanol blend to bypass strict summer vaporization 
standards. The EPA cited the Middle East conflict as reason for the war after 
U.S. pump prices for gasoline rose nearly $1 over the past month. For the week 
ended March 30, the national average stood at just beneath $4 gallon. In 
California, gasoline averaged $5.33 gallon, while in some Los Angeles areas it 
has gone above $8.

   In expanding E15 sales, California could also take a page from Iowa's 
playbook.

   Sales of the ethanol blend surged 60% in Iowa last year, topping 410 million 
gallons. At an average savings of 15cts gallon, drivers in the state reportedly 
saved an estimated total of $61.5 million. California, which consumes up to 
13.5 billion gallons of gasoline per annum, is expecting to save some $2.7 
billion from E15 discounted at 20cts to E15.

   Refining Relief

   Wider availability of the E15 could provide some relief to the West Coast's 
refining system.

   Recent strength in distillate markets shows the region's fragile supply 
balance.

   Pacific Northwest and San Francsico ULSD basis values surged to multi month 
highs on March 31 amid firm demand and tightening supply after the late 2025 
closure of Phillips 66's Wilmington refinery and the impending shutdown of 
Valero's Benicia facility.

   Thinner West Coast refining capacity has reduced system flexibility, leaving 
regional fuel markets more exposed to outages and global supply shocks, market 
observers said.
"The tight supply of fuel in California means the entry of E15 could matter 
more here than in other markets," said Mark Jacobsen, an economist at the 
University of California San Diego. "Not only will E15 be cheaper because of 
the low cost of ethanol, it could also relieve local supply constraints in the 
state and region, putting downward pressure on the price of our existing E10 
blends." E10 is regular gasoline with 10% ethanol.

   Not Painless Gain

   Traders said gasoline prices remain elevated by historical standards, 
underscoring how structurally tighter the West Coast fuel system has become 
since the 2020 Covid-19 pandemic that disrupted global supply chains.

   DTN pricing data show Los Angeles CARBOB regular wholesale gasoline averaged 
roughly $1.70 to $1.80 gallon in 2025, down from about $1.95 to $2.00 gallon in 
2024. This year, as of early March, it was at $3.03 gallon.

   Switching to the E15 will, however, not be a painless gain. Ethanol delivers 
less combustion than gasoline derived entirely of fossil fuels. More ethanol in 
the E15 means less fuel efficiency and more fill-ups for drivers. Paul Ronney, 
a professor at the University of Southern California, says a vehicle that gets 
30 miles/gallon on E10 would average roughly 29.5 miles per gallon on E15.




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