Retailers Say Now is the Time to Move to Higher Ethanol Blends

January 30, 2019

In its 2019 Annual Energy Outlook issued this month, the DOE’s Energy Information Administration offers projections that make clear the importance of significantly increasing ethanol blends into the nation’s transportation fuel over the next several decades.

The report predicts that gasoline and diesel fuel retail prices will increase by 76 cents per gallon and 82 cents per gallon, respectively, from 2018 to 2050, largely because of increasing crude oil prices. Furthermore, rising incomes and growing population will hike light-duty vehicle miles traveled by 20 percent, growing from 2.9 trillion miles in 2018 to 3.5 trillion miles in 2050.

Given the economic and environmental impacts that come with increased fuel prices and travel mileage, a critical effort is underway to bring to the market less expensive and cleaner ethanol blends. Research from DOE’s National Labs shows that higher-octane, midlevel ethanol blends of 25 to 30 percent, paired with optimized engines, “will improve engine efficiency and reduce greenhouse gas emissions, yet cost less than today’s regular gasoline.”

As automakers and fuel providers get ready to meet new standards, gasoline retailers are asking how they can be ready to satisfy future demand? As it turns out, many retailers are well on their way to meeting the new demand with infrastructure that is currently being widely adopted. Many stations are selling 15 percent ethanol blends under names like Unleaded 88 and E15. Their owners are gaining an early advantage with dispensers, tanks and interconnected equipment that can be approved for fuels up to 40 percent ethanol or more.

Those in the industry say that updating stations today to carry tomorrow’s fuels may be easier and more affordable than ever. They note that more ethanol now will increase current sales volumes and pave the way to selling the higher-octane fuels needed for the vehicles of tomorrow.

Well-known convenience store chains such as Sheetz, Thorntons and Kum & Go, as well as small chains and individual stores, have started on the path of selling higher ethanol blend fuels. These businesses know that they can increase their margins without difficult, expensive changes, all while insuring their stations move volume years down the road.

Mike Lorenz, executive vice president at Sheets, says his chains move to E15 has been driven by customer demand, noting that the higher ethanol blend offers “a great value proposition: it’s cleaner-burning, higher-octane, better-performing, typically lower priced than E10, creates American jobs, and reduces our dependence on foreign oil.” He added that E15 prepares the chain “for future possibilities. Ethanol is the cheapest source of octane, so if there was a move to E25 or higher-ethanol blends in the future, we’d be well positioned at our stores to easily transition to midlevel blends.”

Adding a higher-ethanol product completely changed their operation, said Randy Gard, chief operations officer at Bosserman Enterprises, which operates Pump & Pantry, a growing 45-store chain in Nebraska and Kansas. “If you’re a small retailer, the faster you go to [higher-ethanol blends], the better off you’re going to be,” he added, noting that the lower price of E15 is tripling sales volumes and allowing many stations to recoup the cost of transition to higher ethanol blends within one or two years.

Mike Ackerman, the owner of Ackerman Oil, which runs 10 gas stations in Indiana, says two of the stations sell E15 and plans are underway to add more. “I don’t think the world as a whole can discount the need for biofuels as part of the total energy mix to meet world demand,” he said. “Being shortsighted and saying ‘let it be’ will never gain you knowledge and customer base. You will play from behind. We want to play from ahead and be the innovator in our market. We feel there’s value in that.”

Glenn Badenhop, the owner of American Freedom Energy and operator of a single convenience store/gasoline retailer in northwest Ohio, said that while adding more ethanol at his pumps “is just the service cost for changing things around,” it also reflects an approach that all retailers should take: “Look outside the box and [ask], ‘Can this help my constituents, my customers, and my community?'”

Retailers agree that cars will stop at E15 stations and add to their volume if customers see a lower price on the sign. Higher ethanol blends are unique products that will expand options – and future business – through customer loyalty, price and results. Furthermore, upgrades to sell midlevel ethanol blends can be inexpensive, easy and profitable. For more information on higher ethanol blends, check out DOE’s Ethanol Handbook. For more on storing and dispensing higher ethanol blends, read the UL87A Dispenser Standards Update. The Renewable Fuels Association also has available an E15 Retailers Handbook.

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