OPINION: At NEC panel discussion, fuel retailers bearish on EVs

By Robert White, vice president of industry relations, Renewable Fuels Association | March 01, 2022

I had the privilege of leading a panel discussion on the future of fuel retailing at the recent National Ethanol Conference. The panel included Eric Fobes, head ethanol trader for Pilot; Glenn Hasken, chief operating officer of Molo Petroleum; and Doug Kantor, general counsel for the National Association of Convenience Stores. These three represent the four major trade associations on the retail side: NACS, NATSO, SIGMA and Energy Marketers of America.

One of the key take-aways from the panel is the challenge retailers face as they need to balance current driver demand with future regulatory and consumer trends, especially when it comes to electric vehicles.

The panel overall met the EV trend with a little skepticism. “We're just providing fuel that our consumer wants,” Fobes said. “If our consumer wants electricity, we will provide them electricity. If they want clean hydrogen or CNG or banana peels, whatever the fuel source is, we will provide it to them if they ask us for it. Yes, we think there will be continued EV penetration into the market, but we think it's potentially much smaller than some of the more aggressive pundits would suggest.”

Hasken agreed about current problems with electric vehicles. “There are some real market problems in electricity. Nobody is making money doing this today because of the way electric utilities work and the fact that they hit folks with these huge demand charges if they're putting in fast chargers. They also are able to subsidize their own operations by getting all of their ratepayers—businesses, our members and residential ratepayers—to pay for their operations with respect to electricity. So there's a lot of problems with that market.”

“I don't see EVs taking over next week,” he added. “Even in 2035, with the state of California and the state of Oregon implementing you know, a ban on combustible engines, that doesn't mean they can't be driven in the state, it just means they can't be sold in the state. You're going to see dealerships being set up across border lines. The average American drives a vehicle for 12 years. So, even if you go on the outline of 2035, take 12 years from that, you know you're out to 2047.”

Fobes argued that Pilot, as a travel center, needs  to focus on what their current customers need, even beyond fuel. “If we install rapid chargers at a bunch of our travel centers, we are taking spots away from professional drivers that are staying the night in our parking lot, and until somebody tells us that they're less important than a Tesla driver, I think that real estate is going to be very important.”

Kantor from NACS pointed out that, even as electric vehicles become more common on urban and suburban roadways, it will not mean a commensurate reduction in liquid fuel use, because EVs are often purchased as second vehicles.

“They might commute day to day, but when they take the weekend trip to grandma’s, they're going in an internal combustion engine vehicle and driving many more miles on those vehicles than they do on electric cars,” he said. “With all of those assumptions, the McKinsey number is that a decade from now., with 50 percent of new car sales being electric, the reduction in gasoline demand due to that will be four percent. Liquid fuels are going to be here for an awfully long time.”

After listening to the panelists last week, it reenforced what we have been saying since real conversations about EVs began, that the internal combustion engine and liquid fuels will be needed for decades. We know that retailers are making decisions today that will need to provide a return on investment for more than just a few years. Underground storage tanks, as just one example, should be a profitable decision for decades. Ethanol is—and will remain—an excellent option to extend the life of liquid fuels by raising octane while lowering carbon and overall greenhouse gas emissions. In the end, ethanol is a great investment today and for the future.

I will report more on this panel in future columns. If you were unable to attend the National Ethanol Conference, you can gain access to the session videos on demand at your leisure, as well as presentation slides and network with attendees. The deadline for registering for on-demand is March 11, and content will be accessible until May 20.