ACE’s Lamberty discusses the benefits of E15 for retailers

By Matt Thompson | December 03, 2018

With the U.S. EPA expected to amend rules allowing year-round E15 sales next year, retailers don’t have a lot of time to decide whether to begin offering E15 prior to the 2019 summer driving season.

American Coalition for Ethanol’s Senior Vice President Ron Lamberty, discusses some of the myths surrounding E15, as well as its benefits for retailers, consumers and the environment.

Q: Let’s start by talking about ethanol’s emissions. We often hear that ethanol and E15 are better for the environment. Can you talk a little bit about why that is and compare it to petroleum gasoline?

A: The biggest difference is if you add 5 percent more ethanol to a gallon of E10, you do a couple of things. One, you actually lower the Reid vapor pressure (RVP), and lower Reid vapor pressure has generally been the thing that EPA has done that has reduced pollution the most. E15 has a slightly lower Reid vapor pressure than E10, and that would be a positive. And number two would be, you’re replacing 5 percent more of gasoline, which is the more polluting fuel than ethanol is.

… When you hear people just sort of matter-of-factly saying, “Yeah, but E15 pollutes more than E10,” there is only one way that they could say such a thing, and that would be if they’re taking results of a fuel study that basically changed the fuel that the ethanol was blended with. Although the ethanol was the same, when the test was done on E15, they assumed that the oil industry would put in more junk … and then that would mean that the emissions would be worse. So essentially what they’re saying is, “If we do 5 percent more, then the oil companies will just take that opportunity to pollute even more.” … When … station owners hear that little nugget of information tossed out, that’s what it’s about.

Q: What vehicles can use E15?

A: According to EPA, any vehicle that was manufactured 2001 model year or later. So, the numbers, the last time we got it updated, … I think it’s about 90 percent of the cars on the road can use it.

Q: Some people believe that most vehicles can’t run on E15. Do you know where that belief comes from?

A: What [the oil industry says] is, “Most of the cars out there were not designed with E15 in mind, or their warranties did not cover E15.” … The reason that’s disingenuous is the average warranty on cars in the United States is either three or four years … and of cars that still have warranties, around three-fourths to 80 percent of them are covered for E15.

… The bottom line is, if somebody had had a warranty voided by [E15], we don’t know that person, because the oil industry and anybody else who’s trying to get rid of ethanol would have made them their poster child. They’d be on every bus and every billboard and every commercial, talking about how ethanol destroyed their car, and there’s just no such thing.

Q: Can you talk a little bit about E15’s octane rating and what it means for consumers?

A: About five to seven years ago, most of the terminals in the U.S. went to handling what’s called a V-grade, and it’s a sub-octane. It’s an 84 octane gasoline. …The fuel that’s blended with ethanol is not a fuel that you could use by itself. … So, if we take 84 octane gas and add 10 percent ethanol, it’s an 87 octane unleaded. If we add 15 percent ethanol it’s a little above 88, but it’s definitely 88. So, it’s a higher octane.

… Most people see octane as a power rating. That’s the way the oil the industry has sold it all these years. They’ve sold premium as a you know, cleaner burning, better power fuel. What an octane rating is just an index of how unlikely you are to have knock in your engine. …

The way that we’re hoping the automakers will eventually use [ethanol], is that because it is a higher octane and because it does resist knock longer, then they could make higher compression, more efficient engines. … That’s where it’s an advantage to automakers. If they’re going to make more and more efficient vehicles, they need more and more efficient fuel. And you go all the way back to your first question, the fuel that will burn more completely and leave less stuff behind is going to be the one that’s going to be more efficient.

Q: It’s often said ethanol is the cheapest form of octane that you and it’s better for the environment. So, based on those positives, plus the fact we’re hoping the RVP waiver will come through next year so E15 can be sold year-round, is adding E15 going to be something that you see retailers eventually having to do to remain competitive?

A: I think eventually. So, the question is, “How long is eventually?” … We had a situation, I think it was about 2009, where gas prices went way up. Ethanol didn’t go up as fast and there was this big gap. Ethanol was super cheap compared to gas, and some people in the southeast stared buying ethanol and they …  were selling 89 octane E10 for the same price as 87 and making between 8 and 12 cents a gallon more on it. …And when people stared lowering prices on the street, the ones who had ethanol were easily keeping up with them, and so I think they eventually figured out they better learn how to do the math. … Eventually they figured out they could make a little more money if they were one of the first ones to do it, and then the ones that were left over had to do it to compete, and I think we’ll probably see similar things with the situation we have now.

… The other thing these station owners have thrown at them is that there’s this huge expense [to add E15], and that’s just not true. … They’re being told $300,000, $400,000 for E15 and frankly, it’s $3,000 or $4,000 for some. Some wouldn’t have much of an expense at all, other than changing decals.

… The guys that are selling E15 right now are doing very well with it. They like it. It brings them more business to their pumps, but it also means more business in their stations. That’s where they’re making a lot more money.

Q: What other benefits does E15 offer to retailers?

A: I think the number one is … the point of differentiation. You’ve got a product that you can market it any way you want. You can market it as high octane, you can market it as clean fuel, you can market it as domestic, all-American fuel. … In certain markets it’s fuel your neighbors make, farm fresh fuel. There’s all kinds of opportunities you have with it if you’re the people selling it and others aren’t. And no matter what happens, if the other people start buying E15, you’re still the person who did it first. You’re still the one that they’re having to follow.

… The simplest answer to it is … they should do it is because it’s a better fuel that actually costs less, and it can give them an advantage. It can give them a price advantage in the marketplace because that’s the advantage that most of the time works.