American Coalition for Ethanol conference wraps in Minneapolis

By Tim Portz | August 10, 2016

On Aug. 10, the American Coalition for Ethanol Annual Conference adjourned, bringing to a close an event marked most notably by its focus on fuel ethanol’s high octane value. ACE Executive Vice President Brian Jennings opened the event Tuesday morning by noting that it was vitally important for the industry to understand and embrace the “importance of ethanol’s octane value proposition.” Octane is a fuel’s ability to resist premature ignition and is a critical quality fuel’s need to protect engine from damage.

The conference’s breakout sessions ranged far beyond simply a discussion about octane, but the event’s general session panels made a strong statement about the ability of ethanol’s octane value to solidify existing and potentially open new markets for the producers in the room.

Wednesday morning’s opening panel discussion, “Octane’s Value Proposition and Regulatory Path Forward,” walked attendees through the basics of what octane is, where refiners typically get it and how ethanol’s high octane value could be better leveraged by the industry.

The panel began with a presentation by Dave Hackett, president of Stillwater Associates. Hackett spent nearly 30 years in the downstream oil business and walked attendees through the basics of how refineries run and why they need octane for their fuel mixes. Hackett stressed that it is more costly for refiners to produce fuel blends with higher octane and so choose to blend ethanol, which has a high octane number with lower octane blend stock. “Refiners don’t want to give away octane,” he said. “If refiners can turn down their reformers and produce an 84 octane blend stock and use the addition of ethanol to raise the overall octane rating to the 87 fuel retailers expect for regular unleaded gasoline.”

Hackett went on to note that data shows that fuel buyers are increasingly opting for higher octane fuels. Hackett presented a chart that showed premium (higher octane) fuel sales as a percentage of total fuel sales since 1998. In 1998, premium fuels accounted for nearly 20 percent of fuel purchased. The percentage fell to under 10 percent in the 2000s, but are once again climbing and now account for roughly 15 percent of all fuel purchased. Hackett theorized that this was a reflection of the run of low-cost gasoline available to consumers and that when prices were low for extended periods of time, consumers were choosing to invest some of their savings in higher octane fuels.

Kristy Moore, one of the industry’s longtime technical voices, followed Hackett and reiterated many of Hackett’s points, but offered some words of caution relative to octane. Moore began by noting that octane is not currently regulated by any entity. “The Environmental Protection Agency regulates just three parameters in transportation fuels; summer vapor pressure, sulfur and benzene,” she said. Moore continued by noting that only 19 states have a minimum octane requirement on the books. “It is a little strange that the one measurable metric that really differentiates our fuel is largely unregulated,” she said.

Despite all of this, Moore insisted that the value that ethanol can take to the global market is octane and the demand for this value is likely to go up. In a question and answer session that followed their presentations, both Moore and Hackett offered that higher octane fuels, running in higher compression engine’s optimized for higher octane could well deliver the efficiency the federal government is aiming for.