Overcoming the Blend Wall With Our Opponents’ Medicine

By Brian Jennings | June 26, 2013

Remember when ethanol opponents hired a Beltway public relations (PR) firm back in 2008 to tarnish ethanol with a misleading food vs. fuel campaign?

Documents written by that PR firm, obtained by Sen. Chuck Grassley and posted on his website at the time, outlined their strategy: “First, we must obliterate whatever intellectual justification might still exist for corn ethanol among policy elites. ... Second, we must demonstrate to policy makers that there is a political price to allowing ethanol policy to drive up the cost of food.”

The deceptive attacks continue today, but the primary focus of our opponents has shifted to renewable identification number (RIN) prices and the impossibility of the E10 blend wall. Instead of being preoccupied with whose idea the blend wall is (Big Oil’s), ACE has been putting our own twist on our opponents’ 2008 strategy to show lawmakers that petroleum marketers are using RINs to overcome the blend wall. 

It goes like this: “First, we must obliterate whatever intellectual justification might still exist for the imaginary E10 blend wall among policy elites. … Second, we must demonstrate to policy makers that there is a political price to helping Big Oil wipe out their competition and allowing them to continue driving up the price of fuel."

ACE is capitalizing on the gnashing of teeth by oil companies over RIN prices to help petroleum marketers “do the math.” Indeed, it helps when Big Oil whines so loudly about RIN prices, because it has resulted in enterprising petroleum marketers paying much closer attention to the economic incentive for those who aren’t obligated parties to blend ethanol and acquire RINs. It requires a bit more cost and paperwork on the part of marketers, but we’re able to help show them that it’s a wise business decision.

A recent example of how we’ve put this strategy to use is through a congressional staff briefing Ron Lamberty, ACE senior vice president, helped organize with the Iowa Renewable Fuels Association in Washington, D.C. Ron worked with a South Dakota petroleum marketer who revealed to a standing-room-only crowd of congressional staffers that since he began offering E15 along with other choices, including straight gasoline, ethanol has comprised, on average, between 18 and 28 percent of his overall sales. Congressional staffers were surprised to learn that this petroleum marketer was able to do what the oil companies suggest cannot be done, and to make money doing it, not to mention passing savings to his customers. Instead of putting the emphasis on the fact that he’s offering E15, Ron and the station owner emphasized that when motorists have a choice, including fill-up on gasoline without ethanol, the real-world experience at his station was an ever-increasing percentage of sales containing ethanol.

As Ron has remarked to me, “We used to get calls all the time from petroleum marketers asking, ‘how do I get my hands on that blenders’ credit (VEETC)?’ Now we’re getting calls from the same marketers asking, ‘how can I get my hands on RINs?”

Petroleum marketers aren’t the only ones taking action. Ethanol producer members of ACE, such as Absolute Energy LLC, recently began blending and directly selling ethanol blends such as E85 and E30. Rick Schwarck, Absolute president and CEO, has pointed out that by taking this step, they’re much more price competitive than other fuel suppliers, saving motorists money and creating additional demand for ethanol.

The bottom line is, we don’t have to play defense about RINs and the blend wall. Instead, ACE is turning tables on Big Oil, using RINs as yet more proof for how the renewable fuel standard is working, and can help drive the expansion of all kinds of ethanol offerings.  The resulting benefits are real. The business case is made to petroleum marketers that blender pumps and higher ethanol blends can make them money and generate customer loyalty. From a policy standpoint, it enables us to show lawmakers we can overcome the blend wall and sell increasing volumes of ethanol to consumers.

Author: Brian Jennings
Executive Vice President
American Coalition for Ethanol