ACE hopes to help grow Mexico’s ethanol market

By Matt Thompson | November 26, 2018

Fresh off a trip to Mexico to tout the benefits of ethanol to retailers, the American Coalition for Ethanol’s Senior Vice President Ron Lamberty said interest in ethanol among the country’s retailers is piqued. Lamberty was in Mexico City presenting at a workshop hosted by the U.S. Grains Council and the Mexican Association of Service Station Suppliers (AMPES), and said that in recent years, AMPES has been fielding more questions from station owners about adding E10 to their offerings.

Lamberty saw that curiosity first-hand. “There were a few more people coming up afterwards and you could tell they were interested in how they could get in on the deal. But I think they’ve (AMPES) accomplished their purpose, which is basically to try to dispel some myths about ethanol and what it does, and how hard it is to handle, and from there to inspire these guys to maybe try it as a point of differentiation, or a place where they can maybe make some more profits that they couldn’t make in the past,” he said.

One reason interest has increased recently is the price of ethanol compared to gasoline in Mexico. “It is clear that there’s a huge financial advantage to using ethanol, specifically in Mexico compared to prices there. There’s been a huge price advantage, so there’s been a lot of interest in ethanol for that reason, too,” he said.

His trip to Mexico City was the last in a series of six workshops Lamberty attended in Mexico during 2018. The hope is that with increased interest from retailers, Mexico becomes a larger export market for U.S. ethanol. He said that currently, if all retailers in Mexico started selling E10, the market would be about 1.2 billion gallons. “It’s not huge, but it’s pretty big,” he said.

Mexican retailers would sell E10, which much of the infrastructure is already set to handle. “I don’t think they have [blender pumps], but their stations look like our stations and their tanks are the same as most of our tanks, and so for the most part, E10 shouldn’t be a problem. Their vehicles are the same as our vehicles, so they should all be E10 compatible. It’s doable, but it’s a change in mindset,” he said, adding that until recently, the petroleum industry in Mexico was controlled by the government.

One of the challenges with selling ethanol in Mexico, Lamberty said, is distributing it throughout the country. Much of the ethanol sold in Mexico is preblended in the U.S. near the border and shipped to Mexican stations, also near the border. “That’s the biggest challenge, is developing infrastructure to redistribute it there,” he said.

Working with distributors will be the next step for ACE, Lamberty said. “We talked a little bit about what we do next year, and I think where we’re going to need to be talking to some of these potential distributors so that we can maybe find people who will bring in a rail car or two or three. Somehow figure out a way to get ethanol into some of these marketplaces. … I think it’s more now in trying to work more on the logistics of being able to get it to people now that we’ve got them familiar with what it is and how they can make money on it.”

Lamberty said that with the first step in growing demand, getting retailers interested in the product, accomplished, the next step will be getting E10 widely available across the country. “The approach we always take with market development is, get somebody in the market selling your products. The competitors will either have to concede or figure out how they can do it too, and they usually do the latter,” he said.