Ethanol Fuels Show Promise

Fuel sales have been the backbone of gas station operations since rumble seats were considered extreme in the 1930s.

Today, that fact still remains as 80.1% of convenience stores (123,807) sell motor fuels, according to the “2017 NACS/Nielsen Convenience Industry Store Count Study.”

Of course, in some 90 years of fuel trends, one of the most significant is happening now with the evolution of ethanol-blended fuels, which are becoming more accessible in states such as New York. In 2016, the New York Department of Agriculture and Markets proposed a rule to update the state’s fuel regulations to allow the sale of E15—fuel mixed with 15% ethanol—for all vehicles model year 2001 and newer.

The Renewable Fuel Standard, creates a strong incentive for fuel marketers to blend renewable fuels into the fuel supply while lowering the price at the pump for consumers. Credits called Renewable Identification Numbers (RINs) are the mechanism for insuring that the prescribed levels of blending are reached.

However, this also is creating an uneven playing field for traditional fuel marketers.

The U.S. Environmental Protection Agency (EPA) is responsible for overseeing and enforcing blending mandates and developing regulations for RINs. With a new president and a new administration reviewing many regulatory policies, it’s unknown how RIN procedures will be affected, or the future of bio-fuels.

STEADY GROWTH
“The political climate has had little bearing on the expansion of E15 the past several years. E15 is typically a lower cost fuel that offers retailers a price advantage on the street,” said Mike O’Brien, vice president of market development for Growth Energy. “The adoption of E15 has more to do with market demand than political atmosphere.”

That expansion can be identified in growing U.S. regions. According to Growth Energy data, E15 blend is currently offered by approximately 330 fuel retail locations in 26 states.

“Actually, demand and growth for E15 is fairly consistent in the Midwest, across the South and East Coast,” O’Brien said. “We anticipate more growth in these markets, and new entry into the western part of the U.S.”

According to Growth Energy, a nonprofit that promotes the ethanol industry, there are nearly 3,000 stations selling E85 nationwide. A blend of 85% ethanol and 15% gasoline, E85 is suitable only for flex-fuel vehicles.

He said as brands such as Sheetz, Thorntons, Kum & Go, MAPCO, RaceTrac, Minnoco and Protec “have started promoting E15 and E85 more aggressively, the rest of the industry has taken a stronger interest in higher ethanol blends.”

Thorntons Inc. and Kum & Go LC this past February joined Growth Energy’s ranks of associate members. A purveyor of bio-fuels, Kum & Go has been progressive in introducing both E85 and E15 blends. Kum & Go carries E85 at 205 stores, and E15 at 105 stores in such states as Colorado, Iowa, Oklahoma, Nebraska and South Dakota

Jim Pirolli, vice president of fuels for Kum & Go, said the triumph of the c-store’s ethanol program can be viewed on many fronts, and is only expected to grow.

“The success in this program is measured through our learnings regarding consumer purchase behavior, the collaborative efforts that have improved the relationships we have with suppliers, and, most importantly, an improved fuel product offering for our customers,” Pirolli said.

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