Retailer roundtable: Giving people the choice of higher blends

By Katie Fletcher | August 07, 2014

Much discussion of the E10 blend wall was to be found at the 2014 American Coalition of Ethanol conference. The last day of events began with retailers who were able to get over the wall and install equipment to sell E15 and E85 in response to the renewable fuel stanard (RFS). Bruce Vollan offers the blends at Midway Services in Baltic, South Dakota, and Kent Satrang offers the choice at six Petro Serve USA stations located nearFargo, North Dakota, and Bismarck, North Dakota

Ron Lamberty of ACE lead the discussion between the two retailers, and asked questions from the perspective of someone who would potentially want to install the equipment to sell higher blends at their stations. The first question was simply, “why the hell would I want to do that?”

“We definitely needed the change,” Vollan said. “We needed to set ourselves apart from the competition, so we made the decision to embrace ethanol—it has grown our business exponentially.”

Petro Serve USA, as a Farmers Union oil company, also embraced ethanol. “We are owned by farmers,” Satrang said. “We wanted to sell a product our consumers grow.”

Petro Serve USA has more biofuel blender pumps than any company in the world, which goes along with their registered tagline “Helping America Fuel Better,” by reducing America’s dependence on foreign oil. “We’ve taken our business from $7 million in 1998 to now $175 million,” Satrang said. “I attribute that to giving people a choice at the blender pump.”

After “why” was answered from the retailers the question, “can I?” was asked. “In most cases existing piping and tanks will work,” Satrang said. “Some fiberglass piping doesn’t work, but in 98 percent of the cases it’s not going to cost more than a couple thousand [dollars] per blender pump.”

Midway Services, started from humble beginnings in rural South Dakota and built its way up to success. “We got a micro loan to get blender pumps,” Vollan said. “Within two years we’re knocking on a million gallons.”

Giving the customers a choice at the pump, Vollan said, sets his station apart from the competition. “These people love to stop in and make the choice,” Vollan said. “As soon as you realize you can do it financially with infrastructure the thing sells itself once its in place.”

Now that how and why were answered the question to the retailers was how do you do it? “Putting in E15 was easy,” Satrang said.

Satrang outlined the steps he took to incorporate the blend at his stations. The steps he highlighted included registering with the EPA, sending in a federal registration letter, filing the misfuel file mitigation plan, agreeing to participate in a survey, properly labeling and using EPA approved labels and ensuring the product transfer documents provided from the ethanol plants contain the correct information. He also added that researching local, state and federal regulations with storage blends is important.

Vollan echoed Satrang’s views on the simplicity of adding the blends. “It’s pretty simple stuff, if a small family business can figure out how to manage and make money at it there is no reason any retailer can’t do this.”

The retailers also shared how adding E15 and E85 was working for them. “Our results was immediate, ethanol sale is 20 to 25 percent on a daily gross sale, Vollan said. “With every load of ethanol we get from the plant, you get your RIN per gallon and that’s what I like to sell on a pretty consistent basis—just active sales, accumulate enough RINs to make it marketable.”

Vollan expressed coming from just being another one in the crowd, to knowing how to market and trade renewable identification numbers (RINS) and put it back in the customer’s pocket was pretty gratifying.

Satrang doesn’t deal with the RINS. “We buy right from the ethanol plants and try to sell gasoline and ethanol at the same margin,” Satrang said.

In the end questioning, the audience expressed concern over the capacity for higher blends to corrode, which were quickly laid to rest. “I haven’t had one problem yet, and I’ve been selling since 1982,” Satrang said.

“I’ve had zero experience with ethanol related repair,” Vollan said. “I’m in my seventh year on the same set of hoses that dispense E30, E50, E85.”

These two retailers’ success stories began from believing people wanted the choice at the pump, and finding out how to market to those who may still be wary. “Any time selling something out of the ordinary, its one person at a time,” Vollan said.