E15, E85 at retail gas stations highlighted at ACE conference

By Holly Jessen | August 21, 2015

The argument that consumers don’t want E15 because they aren’t asking for it doesn’t ring true with Ron Lamberty, senior vice president for the American Coalition for Ethanol. At the ACE conference, held Aug. 19-21 in Omaha, Lamberty brought up a Steve Jobs quote while speaking on Aug. 20, saying “A lot of times, people don’t know what they want until you show it to them.”

That jives with the experience of retail gas station owners who have added E15 and other higher blends to their fuel offerings. Lamberty brought up Charlie Good, a Nevada, Iowa gas station owner, who sells 18 percent ethanol by total volume, blasting through the so-called blend wall. He also has premium fuel with no ethanol content, which is only 2 percent of his total sales, even though it is sold at twice the number of fueling positions as ethanol blended fuels.

Lamberty also gave audience members updated numbers from Bruce Vollan, a South Dakota gas station owner who has talked multiple times about his success selling ethanol blended fuels. In the last few months, 23 percent of sales have been E85, 21 percent E15, 9 percent E30 and 2 percent E50. The final 45 percent of sales is E10. Looking at these and other numbers from retailers offering ethanol blended fuels, it’s clear that what people don’t want is premium gasoline, Lamberty said.

Jim Pirolli, vice president of fuels for Kum & Go, and Todd Garner, CEO of Protec, spoke as part of a presentation titled “Flex Fuel Forward.” Pirolli revealed that Kum & Go has a long history of selling alternative fuels. In the 70s the company started the tradition by offering E10, or gasohol, as it was called at the time.

 In 1997, the company started selling E85, and currently offers it at 170 locations. In fact, 95 percent of Kum & Go’s customers buying E85 are there because they know the company offers that E85, he said. Another tidbit of information offered at the meeting was that, about six months ago, Kum & Go began purchasing E85 directly from Iowa ethanol plant Absolute Energy LLC. It cuts the middleman out and allows it to offer E85 to its customers in that area for a lower price, Pirolli said.

This year, the company has started adding E15. The fuel is now offered at seven sites and will be at 60 more by the end of the year. “We are already associated with E85, we feel like E15 is going to be a great step for us,” he said.

Garner gave a brief overview of what the company does, including, among other things, offering small to midsize gas retailers help with fuel logistics, E85 and E15 blending and supply plus station infrastructure conversion or construction. About eight months ago, the company started work to roll out E15 at multiple gas stations outside the Midwest with Prime the Pump funding, an initiative of the ethanol industry.

Lamberty pointed to the way Protec works with gas station retailers as being similar to the model retailers are used to from the oil industry. The way the oil industry has done it is to tell retailers what equipment upgrades would be required, the cost and then say they would pay for those upgrades in return for a contract that the retailer would purchase fuel from that supplier for a period of time, such as 10 years. “That’s the model the oil companies had used to get brands,” he said, adding later that “We as the ethanol industry need to do something similar.”

Another presenter was Kristi Moriarty, senior analyst at the National Renewable Energy Laboratory, who spoke about work NREL did that concluded that many refueling equipment products are compatible with E15, meaning retailers can sell E15 out of existing equipment with minimal cost. “We hope that this report helps [retail gas] stations get there,” she said.

She also pointed to an upcoming opportunity for retailers to upgrade to refueling equipment compatible with higher ethanol blends. Retailers face a requirement targeted for October 2017 to upgrade fuel dispensers to accept new credit cards, which contain chips, rather than the magnetic strips common today. Although some will simply upgrade their existing pumps, some retailers will put in new dispensers.  “Hopefully that will lead to a lot more compatible equipment,” she said.

Garner expanded on this point by saying that many older retail stations will have no choice but to put in new dispensers. He added that yes, choosing a blender pump, compatible with higher ethanol blends will cost more, but it will also set that retail station apart from the competition.

A related topic of importance at the conference was the renewable fuel standard (RFS) renewable obligation volume (RVO) numbers. Brian Jennings, executive vice president of ACE, pointed out that of the 200 people that testified at a Kansas City U.S. EPA hearing on the proposed rule for the 2014, 2015 and 2016 RFS RVO numbers, more than 100 of them were from ACE member companies. The question now is, “What if the EPA drives the RFS in the ditch?” he said. “Do we take them to court? Maybe. We’ll see.” In the meantime, the industry needs to keep building momentum on other demand drivers for ethanol.

On Aug. 21, the last day of the event, Chris Novak, CEO of the National Corn Growers Association, touched on the same topic. NCGA believes the EPA has violated the law and used incorrect methodology to calculate the RVO numbers. “We are looking at what legal options we have to challenge that rule,” he says.

Also presenting on Aug. 21 were Delayne Johnson, CEO of Quad County Corn Processors, Jeff Oeastmann, president and CEO of East Kansas Agri-Energy, and Ray Defenbaugh, president, CEO and chairman of Big River Recourses LLC. They were on a panel titled “Quiet Ingenuity, Bold Advance,” which was also the theme of the conference. Johnson spoke about producing cellulosic ethanol from corn fiber while Oeastman and Defenbaugh spoke about the projects currently under construction by their companies, a bolt-on renewable diesel and zein production facilities, respectively.