By Jeffrey Bair and Jacquelyn Melinek
Donald Trump’s effort to boost corn demand by allowing year-round sales of ethanol-blended gasoline has run into a logistical problem. Few stations offer it.
In corn country, gasoline with a 15% blend of ethanol is now pretty accessible year-round. But in large population states including California, New York and Texas it remains limited, and individual station owners are hesitating to put up the money to retrofit their pumps.
In a nod to the president’s Midwest voter base, U.S. officials in May allowed summertime sales of E15 gasoline containing up to 15% ethanol, a fuel made from corn and other crops. That move offered the promise of a surge in year-round sales, potentially stealing market share from the E10 mix. But while 30 states now have stations selling E15 year-round, the number offering it nationally is below 2,000, mostly located in Minnesota and Iowa. according to the Growth Energy trade association.
In oil-mad Texas, for instance, gas made with no ethanol whatsoever is getting more of a boost, with the number of stations offering it rising to 283 in two years.
“The largest challenge for E15 is getting more states to change their laws to allow it,” Corey Lavinsky, a biofuels analyst at S&P Global Platts, said in an interview. “Demand should not be an issue. E15 can be sold at a lower price than the competitor across the street selling E10.”
But to get there, stations need to spend as much as a quarter-million dollars to retrofit their pumps and do a better job marketing E15 as a less expensive, higher-octane alternative for consumers at the pump.
“The market is going to drive this. If there is demand for a product, our guys are going to be the ones to sell it,” said Paige Anderson, government relations director at the National Association of Convenience Stores.
A new Trump administration plan outlined on Oct. 4 aims to stoke U.S. demand for ethanol, in part by seeking greater funding for infrastructure projects to get higher biofuel blends to consumers. Under that deal, the Environmental Protection Agency also will pursue streamlining requirements for labels meant to prevent motorists from dispensing E15 into automobiles not authorized to use the fuel, amid criticism from ethanol producers the warnings scare off consumers.
Boaters, bikers and recreational vehicle owners complain that it negatively affects gasoline that’s unused over time, and older cars can’t handle it. That’s led to some general skepticism by all carmakers.
There is some progress. In Midwest corn belt states, more stations are offering E15 and more motorists are buying it. In Minnesota, for instance, 50.6 million gallons of E15 had been sold by the end of August, according to the state’s Commerce Department. By the end of this month, the amount sold is expected top the 59.4 million gallons sold in all of 2018.
New York Savings
And in New York state, regulators are taking public comment on how to sell it and could become the 31st state to approve its sale. New York’s commissioner of agriculture and markets’ office, which said that 90% of New York vehicles can take E15, estimates savings of 4 to 10 cents a gallon because of the larger share of ethanol.
Meanwhile, buyers of 0% ethanol covet purity, with ethanol-blended fuel having 60 to 80 components when compared with 16 for E0, said Andy Deel, division manager of consumer products at retail seller VP Racing Fuels in San Antonio, Texas. “It’s like a small-batch whiskey,” he said. “We only put what we think should be in the product.”
Retailer Buc-ee’s will add E0 pumps at a store in Ennis near Dallas in the first quarter of 2020 to give it 14 such outlets. Racetrac, Murphy USA and QuikTrip also added the grade in the state.
“Texas is going a little bit retro,” said Tony Castro, fuel director at Circle K in San Antonio.
To be sure, ethanol-free gasoline is more of a curiosity than a market mover and is hard to find in big cities lacking boaters and hunters.
New York leads the nation with about 1,000 E0 stations with the recent additions of E0 at Stewart’s Shops. Stewart’s added the grade at 275 upstate stores to fill demand for boats, ATVs and lawn-care equipment, spokeswoman Erica Komoroske said.
Adding ethanol is certain to boost octane, which could woo some drivers. The 750-store Racetrac chain brands its E15 as Unleaded 88, higher than the typical 87-octane for regular gasoline, and sells it at about 200 stores.
“What the consumer has told us is they like more affordable fuel,” said Michael O’Brien, vice president for market development at Growth Energy. “They like that the octane is higher with E15, so that’s better for the engine, and they like that they are doing something for the environment.”