A recent drone attack on Saudi oil facilities is raising new questions about American energy independence at a time when economic headwinds have forced at least 17 ethanol plants to close or idle production across the U.S.
After the shale boom of recent decades, which was widely seen as a revolutionary shift in American oil and gas production capabilities, the spike in global prices that followed the drone attack took many by surprise.
"What people don't realize is that shale provides a particular very light type of oil, and we can't use that exclusively with the way our refineries are configured," explains Scott Richman, chief economist for the Renewable Fuels Association. "Total imports of oil into U.S. have gone down somewhat, but they are still very significant."
In fact, the oil industry still imports the equivalent of 45 percent of all oil processed by U.S. refineries. In California, which has some of the highest fuel costs in the country, the level is closer to 60 percent.
Even before the most recent incident, an analysis by independent energy economist Philip K. Verleger, Jr., concluded that grain-based ethanol fuel plays a big role in minimizing price disruptions when market shocks occur.
"The presence of ethanol in the fuel supply works everyday, but especially in situations like this, to moderate price impacts that occur from any sort of shock that's out there," Richman said in a follow-up to the report. "As fuel marketers are able to blend more ethanol into the fuel supply, it acts as a bit of shock absorber. And now that we have year-round approval of E-15, and as we get more stations delivering it, that shock absorber effect will expand."
Verleger's research showed that from 2015 to 2018 blending ethanol into gas lowered prices at the pump by 22 cents per gallon on average, saving the typical American family around $250 a year.
According to that analysis, in the wake of the Saudi attack, which disrupted the flow of foreign oil supplies, without ethanol to fall back on the gas price would currently be a dollar higher than it is, representing "a big shock to people's wallets," Richman said.
The 20 percent price spike immediately following the drone attack in mid-September was the largest one-day jump in crude oil prices in recent memory.
New concerns about Middle East security vulnerabilities and the need to diversify the fuel supply come as the U.S. ethanol industry is struggling through a sustained period of low profitability.
Between mid-June and mid-August alone, the price of ethanol fell more than 30 percent.
In some ways, the growth in ethanol production has been similar to the shale oil boom. According to Richman, U.S. ethanol production went from 2 or 3 billion gallons in the early 2000s to around 16 billion gallons today.
But while Colorado Corn and other industry groups hailed the Environmental Protection Agency's decision to allow year-round sales of E15 ethanol blends earlier this year, they also expressed concern about policies that are undermining the industry, in particular the granting of federal waivers that allow certain refineries to get out of blending obligations established by the decades-old Renewable Fuel Standard.
In some cases, these small refineries are actually owned and operated by the world's largest petroleum companies.
EPA has dramatically increased the number of blending waivers handed out on President Trump's watch, cutting demand at a time when corn prices were rising and exports slumping.
Kansas Representative Roger Marshall, of Great Bend, who has eight of the state's ten ethanol plants in his district and serves as co-chairman of the House Biofuels Caucus, is among those in Congress calling for a formal investigation into the upsurge in blending exemptions.
"We must, at the very least, understand how these exemption determinations were reached and the economic impact they will have on communities and producers in Kansas and across the country," he said recently.
The waivers, coupled with Trump's China trade war, which shut down an important export market for American ethanol, are being blamed for putting the industry in an untenable position.
"Until we get to harvest (and the new crop is available), we're seeing a little bit higher priced corn, and with a decent amount of stocks on hand for ethanol, due to the disruptions in international trade, we're seeing a lot of facilities slowing or idling production," Richman said.
In recent days, Trump announced plans to put in place a new ethanol deal that could potentially force refineries with blending exemptions to make up the difference at other facilities.
The most recent round of small-refinery exemptions are roughly equivalent to 1.6 billion gallons of lost demand.
Meanwhile, motorists are seeing the availability of E15 increase, but more stations also seem to be promoting the option of "ethanol-free" gasoline.
In Colorado alone, more than 100 stations now sell ethanol-free gas.
While one website, GetBioFuel.com, provides information on E15 and E85 availability around the state, another website, BuyRealGas.com, tells motorists where they can find ethanol-free pumps.
RFA's Richman said one benefit of ethanol that sometimes gets overlooked is its role in creating a more competitive fuel sector.
"It does provide a countermeasure to the rising consolidation and market power of refiners," he said.