Sandwiched between competing gas stations in Nevada, Iowa, Good &amp; Quick station owner Charlie Good started offering E15 and higher ethanol blends to his customers in November, making space for the new selections where only E10 and non-ethanol gas had existed before. As much as investing in blender pumps required vision, installing E15 required patience. Good had to wait through the government shutdown in September to receive his registration to sell E15 from the U.S. EPA.&nbsp;
Sales of E15 started slowly but have been increasing, Good says. After implementing the fuel and upgrading his facility, he says gas sales have been up roughly 8,000 gallons per month. &ldquo;For this time of year, for my sales to be going up, I can attribute probably 2,000 to 3,000 gallons of that each month to E15, E20, E30 and E85,&rdquo; he says.&nbsp;
To put wary consumers at ease, Good offers what he calls an &ldquo;unconditional guarantee,&rdquo; meaning that the station stands behind the quality and suitability of E15 when it is used in model-year 2001 or newer vehicles. In addition, Good &amp; Quick installed new tank and gas line monitoring equipment, giving Good and his customers greater confidence in the accuracy of the station&rsquo;s blends. Those assurances, however loose, are paying off. &ldquo;In the beginning, I would sell 20 or 30 gallons a day, but the last three days have been 150 to 160 gallons a day,&rdquo; Good says.&nbsp;
Funding incentives administered by industry trade groups were a major driver behind upgrading the fuel pumps that blend higher amounts of ethanol. Early on, Good recognized that enhancing his station with renewable fuel access would cost about a quarter of a million dollars. That financial hurdle might have been a show stopper had supports not been available. &ldquo;I found out that Iowa Corn Growers, Renewable Fuels Association of Iowa and the biodiesel people will give you a percentage back to help promote the product,&rdquo; Good says. &ldquo;So I looked into that and found I could get $100,000 back.&rdquo;
An additional government grant also helped fund approximately 25 percent of the unsubsidized portion of the project, which totaled $31,000. Recouping more&nbsp;than $130,000&shy;&mdash;or about half of the total cost of installation&mdash;was enough incentive for Good to forgo his original plan of simply upgrading his pumps with traditional fuel choices&mdash;E10, midgrade, and premium&mdash;and instead install blender pumps. &ldquo;That was a huge factor on whether I would or wouldn&rsquo;t have done it,&rdquo; Good says. &ldquo;I&rsquo;m a little, independent guy. I&rsquo;ve got two of the biggest convenience store companies in the United States [nearby], and I&rsquo;m kicking their butt. But I&rsquo;m doing that because I&rsquo;m offering things they don&rsquo;t offer.&rdquo;&nbsp;
If more independent station owners use E15 as a marketplace tool to compete with larger gas station chains, Good predicts the larger stations will take notice and make the change as well. &ldquo;If I can be the leader&mdash;and the renewable fuels people helped me be the leader by subsidizing me and helping me with equipment costs&mdash;what have I got to lose? Nothing,&rdquo; Good says.&nbsp;
Northern Exposure In the frigid plains of North Dakota, Petro Serve USA began its adventure with E15 in September when it introduced the blend at three stations in Bismarck. The event featured Gov. Jack Dalrymple and was covered by local radio and television stations. The media buzz around the newly available fuel helped ramp up sales and set a precedence for future openings, says Kent Satrang, CEO of Petro Serve USA and a veteran fuel marketer of 35 years.&nbsp;
Within a week, the fuel appeared at a Petro Serve station in Fargo, N.D. A week later, it was available at another station, then another, each week until six stations offered the higher-octane blend.&nbsp;
In addition to providing a diverse consumer fuel choice, the decision to implement E15 was due to market demand. &ldquo;People wanted to get a little bit more ethanol and they wanted to get a little bit lower-priced fuel,&rdquo; says Satrang. &ldquo;We definitely had people asking for it.&rdquo;&nbsp;
Continuing to build the market and infrastructure for E15 by working with station owners is certainly on the minds of ethanol industry leaders. The Renewable Fuels Association is building its new infrastructure program to develop a type of one-stop shop for retailers wanting to know what options are available and how to move forward with higher and midlevel ethanol blend access. &ldquo;That can be connecting the dots on incentives, linking them up with the appropriate equipment manufacturers,&rdquo; says Robert White, director of market development at the RFA.&nbsp;
There are more options currently available for retailers than what was offered in the past, White says. For instance, some companies offer a type of trade-in program that could allow retailers to obtain older dispensers, but those pumps would be compatible with midlevel blends or E85 blends.&nbsp;
Market Growth Variables Predicting the growth of E15 station availability remains difficult. Adoption rates from major station owners can certainly affect how the overall market will respond. White references Murphy USA&rsquo;s opening of the first E15 station in Arkansas as an example. The retailer operates roughly 1,180 stores across 23 states. &ldquo;They&rsquo;re going to do what I call a &lsquo;pilot project&rsquo; first to just test the waters,&rdquo; White says. &ldquo;But it&rsquo;s an example of new people showing interest, because they know E10 worked and people made a lot of money because ethanol was cheaper than gasoline when they introduced E10.&rdquo;
Even if just one major retailer implemented E15 pumps, the number of stations that use the fuel could jump from roughly 60 to 1,200, White says. &ldquo;It&rsquo;s very hard to predict that, but unless something crazy comes along, you are going to see E15 and E85 continue to expand. And the rate of expansion will be determined by EPA&rsquo;s decision in the coming months,&rdquo; he adds.&nbsp;
As of mid-December, one of the largest uncertainties is the U.S. EPA&rsquo;s proposed changes to the renewable fuel standard (RFS). Consternation over the awaited decision affected renewable identification number prices and has hundreds of station owners debating what decisions to make in the coming year, White says. &ldquo;That&rsquo;s the biggest issue,&rdquo; says Ron Lamberty, senior vice president of the American Coalition for Ethanol. If there is no incentive or punishment for the oil industry to comply with the RFS, it will try to control as much of the fuel supply as it can, he adds.
Branded station restrictions and summer Reid vapor pressure (RVP) rulings are two other big variables that affect E15 market growth predictions. Most of the branded oil companies prevent or restrict station owners from offering the higher ethanol blend under their canopies, Lamberty says. It&rsquo;s possible to split away from branded station agreements to sell E15, but usually not without facing monetary challenges, he adds.&nbsp;
Summer RVP rulings additionally affect projections for E15's rollout. As long as E10 gets a 1-pound waiver and E15 does not, it would require station owners to switch between E10 and E15 during the summer months, Lamberty explains. &ldquo;Getting that thing resolved one way or another is another big issue, even for independent stations,&rdquo; he says. &nbsp;
Opaque, Crystal Ball&nbsp; Although a multitude of variables will affect the speed and direction of E15 implementation, experts from ACE, the RFA and Growth Energy agree that the E15 market will gradually continue to improve with more independent implementation and consumer adoption.
&ldquo;I think we&rsquo;re hearing from a lot of the independents that they are going to take different spots and put it in and see how it works,&rdquo; Lamberty says. He predicts independents will first put the fuel in a few pumps to test the waters. Then, more retailers will add E15 as an option, depending on what happens with ethanol and gas prices in later years. &ldquo;The only thing you need in a town to get E15 in there is someone who does it successfully,&rdquo; Lamberty says, adding that one station&rsquo;s success with E15 will spur other local stations to pursue it to stay competitive.
Smaller stations that have been hurt by large chains might see E15 as a marketing tool to pull customers away from bigger competitors. Chains that have multiple stations will respond more slowly than owners with one or two stations, Lamberty says. &ldquo;The independents are going to move first. Then they&rsquo;ll sort of force the hand of larger independents and eventually the branded competitors,&rdquo; he adds.
Once the fuel is in the marketplace, consumers will see E15 as a safe, cost-effective fuel, which will lead to its implementation in other markets, says Michael Frohlich, public affairs associate with Growth Energy. &ldquo;I don&rsquo;t think you&rsquo;ll see an exponential explosion, but I think you will see a steady progression throughout the Midwest,&rdquo; he says. &ldquo;In three years, I think you would see it more on the coasts and other areas and throughout the country, outside of just the Corn Belt.&rdquo;&nbsp;
After getting federal EPA approval of Growth Energy&rsquo;s proposed Green Jobs Waiver in 2012, hurdles at the state government level may also cause pronounced stints of growth in E15 accessibility. &ldquo;As states begin to navigate it, I think you will see some spurts of growth in concentrated areas once states approve it that are regionally close to the Corn Belt, where it is easier to find higher blends of ethanol,&rdquo; Frohlich explains.&nbsp;
Predicting in which states E15 will appear next is also difficult. However, seeing the fuel reach larger metropolitan areas, such as St. Louis or Chicago, might yield faster growth and larger usage, Frohlich says. &ldquo;I think that&rsquo;s where some of the keys are for breaking through the introductory stage where people are just starting to get to know E15,&rdquo; he says.&nbsp;
&ldquo;If the retailers are truly given the option, and the market continues to be favorable to ethanol at a price point, you are going to see continued expansion. The rate of expansion will be determined ultimately by the EPA,&rdquo; White says.&nbsp;
Author: Chris Hanson Staff Writer, Ethanol Producer Magazine 701-738-4970 chanson@bbiinternational.com
&nbsp;

UNDER THE CANOPY: Good & Quick station owner Charlie Good offers an unconditional guarantee on his E15, meaning that the station stands behind the quality and suitability of the fuel when it is used in 2001 or newer vehicles. 

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INDEPENDENT INTROS: Many branded retail stations are still preventing or restricting station owners from offering E15, even though the U.S. EPA has approved the fuel for all 2001 and newer vehicles and nearly every major automaker is rolling out new 

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NOT MUTUALLY EXCLUSIVE: Good & Quick installed E15 in combination with blender pumps that offer E20, E30 and E85, all without sacrificing E10.    

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BIDS FOR THE BLEND: In North Dakota, PetroServe USA made a move to E15 because its customers demanded it.  â€œPeople wanted to get a little bit more ethanol and they wanted to get a little bit lower-priced fuel,â€� says Satrang. â€œWe definitely had 

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U.S. station owners are starting to see the retail allure of gasoline containing a third more ethanol than today's standard blend. E15's early implementation has been steady yet challenging. Now, the pace of adoption appears to be quickening. 

The Curb Appeal of E15

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