Infrastructure investments drive growth in preblended E15

By Matt Thompson | March 05, 2019

Growth Energy recently announced American motorists have driven over 7 billion miles on E15. That continued demand has had an impact on the market, said Mike O’Brien, Growth Energy’s vice president of market development.

According to O’Brien, Growth Energy’s focus on expanding E15 infrastructure across the country has led to an increased supply of preblended E15, which has allowed more retailers to begin selling the fuel. “All of this market pressure for demand for E15, in particular around competition, is also spurring on terminals to start offering E15,” O’Brien said. “So, there’s pre-blended supply of E15 coming into the marketplace that wasn’t there even 12 to 16 months ago.”

O’Brien said that in 2017, there were five terminals that made preblended E15 available. At the end of 2018, that number had grown to 100. For retailers, pre-blended E15 is an affordable way to add the fuel to their product mix. “The retailers can use their existing infrastructure, so the cost of adding E15 versus the adding E85 type of situation is significantly less, so we believe with that and RVP (Reid vapor pressure), we should see some acceleration of E15 adoption,” O’Brien said. He added that Kwik Trip has successfully added E15 to 350 sites over six months using the pre-blended fuel. “Getting that supply and dropping it into existing sites is something that could populate things very effectively for the retailers,” he said.

According to O’Brien, the number of retail sites selling E15 in the U.S. was recently pegged at 1,756. That was a few weeks ago, and O’Brien said that number has likely increased. “I’ll emphasize that they’re high-volume sites, so we’re talking 2 to 3 million gallons per year of gasoline on average, which is a good doubling of what the national average is,” he said. He also said Growth Energy’s long-term outlook plans for 3,500 sites selling the fuel by the end of 2022. “That’s almost doubling what we did in 2018 and that’s 7 billion gallons of gasoline that flow through those sites, and based on the current sales rates, we think we’ll hit about 350 million annual new ethanol gallons just through these sites alone by 2022,” he said.

That market growth has also spurred more retailers to begin offering the fuel. “There were a couple of retail chains that weren’t offering E15 and they had to start E15 because they were losing out on the competition, they were losing market share,” he said. “The retailers that are in and around sites that have E15 feel the competition from reduced sales and less traffic.”

And while retailers have seen growth in demand for E15, demand for E85 has also gone up. O’Brien said that growth is likely due to many retailers using E85 as blend stock to produce blends like E15. But there are other factors at play, he said. “When we track the flex fuel vehicles out in the market place, yes, there are fewer being manufactured, but there’s still 21 million vehicles on the road that can be targeted and sold fuel to here and now, and so that’s a good market for a retailer,” he said.