Although ethanol’s ability to provide immediate and significant greenhouse gas reductions continues to be maddeningly ignored in U.S. vehicle emission reduction policies, there are many positive signs pointing to increased ethanol use—in other nations, as they consider higher blends to meet their carbon reduction goals, and in uses beyond the boundaries of ethanol as a traditional vehicle fuel, from serving as a feedstock for bioplastics to use as a cooking fuel to powering air travel as sustainable aviation fuel.Yet, even with all of those exciting and sophisticated new possibilities on the horizon, the upcoming end of the latest and largest of the U.S. Department of Agriculture’s (USDA) Higher Blends Infrastructure Incentive Program (HBIIP) offerings seems to provide a good opportunity for us to step back, appreciate the successes the program is providing, and remind ourselves not to forget that long-term success in developing new ethanol markets doesn’t come from innovation or infrastructure as much as it comes from showing prospective ethanol retailers how to “do the math.”If we take a break from congratulating ourselves on getting well over a billion dollars’ worth of public and private money deployed to install new higher ethanol blend infrastructure, I wonder how many of us would say we thought that spending would result in E15 and/or E85 being sold in about 5,000 of the nation’s 120,000 retail fuel stations? That’s not to say HBIIP hasn’t done what it’s supposed to do, but where retailers have added E15 with the help of HBIIP, their competitors have not responded by also offering E15.There are multiple reasons retailers haven’t jumped on the E15 bandwagon, not the least of which is the lack of a law making year-round E15 legal, permanently. There’s also the market reality that single store and small chain retailers don’t respond to larger competitors adding new products the way larger chains respond when small competitors offer new products that threaten the big guys’ market share. Small operators are used to not having everything their more well-heeled competitors have, and often assume the big chains have those products because only companies with a lot of money can afford to add them.The most successful E15 and flex fuel retailers are the marketers who “do the math” and understand the retail market advantage and profit potential of higher ethanol blends. They know they might not need to buy any new equipment to sell E15, and they know what we know—ethanol costs less than gasoline (especially when the RIN value is included), competitors who only sell E10 can’t match E15, and even when E15 is offered as the lowest-priced “fighting-grade” fuel at the pump, the retailer can often make better margins on higher ethanol blends than their other fuels. State incentives rewarding retailers that sell higher blends help the math and drive new volume, too.E10 went nationwide in a few years’ time when we taught retailers ethanol math, including the fuel tax credit they got for adding ethanol to gasoline. Assuming we can get its year-round policy problem corrected, E15 could grow just as quickly. While we’d all like retailers and consumers to love ethanol because it helps pay for new equipment, benefits the environment and rural economic development, or any of the other reasons we all love ethanol, we need to be OK with being loved for our money—or, more accurately, the money we can make or save those station owners and customers when higher ethanol blends are sold. In the fuel world, that’s the only kind of love that lasts.Author: Ron Lamberty&nbsp; Chief Marketing Officer&nbsp; American Coalition for Ethanol&nbsp;

2024-07-11 - Profit-Driven Passion: Loving Ethanol for the Money (Ethanol Producer Magazine)

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Long-term success in developing new ethanol markets comes from showing prospective ethanol retailers how to “do the math.”

Profit-Driven Passion: Loving Ethanol for the Money

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