IRFA, E15 retailers fight for blendstock needed for E15 in summer

By Holly Jessen | June 05, 2013

Linn Co-op Oil Co. and Iowa’s other E15 retailers were recently forced to stop selling E15 because oil refiners won’t supply the gasoline blendstock required for the summer months. “Consumers who want a higher grade ethanol blend, in this case E15, are being denied that choice,” said U.S.  Rep. Bruce Braley, D-Iowa. Braley was part of a June 3 conference call hosted by the Iowa Renewable Fuels Association that was held to discuss the petroleum distribution monopoly, one of the tools Big Oil is using to block the sale of higher ethanol blends, said Monte Shaw, executive director of IRFA.

In the summer months the U.S. EPA allows E10 to exceed the 9.0 pounds per-square-inch Reid Vapor Pressure requirement by 1 pound from June 1 to Sept. 15 but did not give E15 the same waiver. In order to offer E15 to vehicles model year 2001 and newer, the renewable fuel must be blended with low-volatility gasoline, which is used in markets that require reformulated gasoline. The catch is, although that fuel travels through Iowa via pipeline, E15 retailers are being denied access and therefore must only sell E15 to flex-fuel vehicle drivers or shut down their E15 pumps, as Linn Co-op did. “One of the key things about this is, we’re not asking for something that doesn’t exist,” Shaw said. “The gasoline blendstock we need to make E15 in the summer is available, it flows through the very pipeline system that services Iowa, but they will not let us take it out of the pipeline here.”

Earlier this year, a group of Iowa’s E15 retailers sent a letter, asking oil refiners supplying Iowa to provide the summer gas blendstock required for E15, IRFA said. However, as of June 1, no oil refiner has done so. In the meantime, the necessary blendstock travels through Iowa, on its way to Kansas City and Chicago, where reformulated gas is required due to high smog levels. Retailers in the vicinity of a market that requires reformulated gas can continue to offer E15 by trucking in the blendstock but transportation costs to Iowa make that cost prohibitive, Shaw said.

Oil refiners are using RVP seasonality to block retailers from selling E15 because they don’t want to give up the 5 percent market share, Shaw added. In the meantime, the petroleum industry is attacking the renewable fuels standard (RFS), claiming it can’t scale the 10 percent blend wall because retailers don’t want to sell E15 and consumers don’t want to buy E15. “And that’s simply not true,” he said, adding that recent events actually demonstrate the need for the RFS. “The high profit scenario for Big Oil is almost always not the low cost fuel scenario for consumers,” he said.

Jim Becthold, service manager for Linn Co-op, the first retailer to sell E15 in Iowa, said customers started asking why the station couldn’t sell E15 right after the pumps were bagged. The fuel is more economical, cleaner and higher performing. “Consumers are starting to really demand that, I’m seeing it in my sales,” he said, adding that he hopes the situation will be resolved so the station can again sell E15 in the summer months, at least by next summer.