Forging Ahead

Enterprising retail operators install E85 pumps despite pricing uncertainties
By Kris Bevill | December 12, 2011

Retailers are concerned about increasing E85 prices as a result of the Volumetric Ethanol Excise Tax Credit’s expiration, says Todd Garner, CEO of Boca Raton, Fla.-based ethanol marketer and distributor Protec Fuel Management LLC. But that’s not stopping some of them from installing E85 pumps. In the past five years, Protec has assisted in the installation of about 30 E85 pumps each year, on average. In the second half of the year, the company had helped install 20 pumps by late November, all located predominantly at retail stations in the Southeast. “I think people are concerned about VEETC, but we keep them informed as  to what’s transpiring,” he says.

In general, E85 prices have been trending about 30 cents less per gallon than unleaded gasoline in the Southeast, according to Garner. Without the benefit of the 45-cent-per-gallon tax credit provided to blenders through VEETC, it’s possible that E85 could become more expensive than gasoline, a scenario that many believe would result in the end of the E85 market. “Customers have gotten used to those discounts, so we’re trying to keep them informed that after Jan. 1 this could drastically change,” Garner says. “I hope it doesn’t end up where E85 in the Southeast ends up being higher than gasoline. But for the new customers coming in, we’re being completely honest with them.”

Protec is a member of the recently formed Coalition for E85, a group of retailers, producers, equipment manufacturers and fuel distributors focused on modifying the tax code to allow E85 to qualify for the 50-cent-per-gallon tax credit allotted to other recognized renewable fuels, such as propane, hydrogen and compressed natural gas. “We must not abandon E85 this close to self-sustainability,” Garner said in a statement announcing the group’s formation. “We hope retailers, producers, automakers and others concerned about the future of E85 will stand up and fight with us.” Garner admits, however, that given the dysfunctional state of politics it is unclear whether any progress can be made on this effort before 2012.

Despite pricing and incentive uncertainty, most of the retailers installing E85 pumps in recent months are confident that the fuel will continue to have a market, Garner says. Protec’s customers tend to be pro-alternative fuel and are eager to do something that will set them apart from their competition in order to drive customers into their stores. “Customers may have requested it or asked about, or the store owner wants to separate himself from the other stores in the area,” he says. “These are the same kind of people who are putting solar panels on their stations to reduce their energy costs. These are very pro-active people.”

Protec’s business model offers turnkey ethanol-related services to its customers, from site selection and grant application assistance to fuel supply and marketing services. It was recently involved in the installation of Raleigh, N.C.’s first dual-fuel E85-B20 pump, located at a Crown Express Mart station. “We are excited to be able to offer alternative fueling options in the Raleigh area,” Kokila Amin, one of the station owners, said in a statement. “Individual and fleet customers now have a choice and convenient place to pump E85 and B20 fuel seven days a week.”  —Kris Bevill