E15 Hits the Marketplace

August 24, 2012 09:21 PM
E15 Hits the Marketplace

Fuel breaks through "blend wall"

On the east Kansas prairie, a long-awaited event finally came to pass this summer. On July 11, 15% ethanol gasoline (E15) was pumped at a retail location, following Environmental Protection Agency (EPA) approval of the fuel several weeks earlier.

The first consumer, fittingly enough, was the executive director of the Kansas Corn Commission, Jere White, who pumped the fuel into his Chevrolet Camaro. White and his organization, which is naturally a strong booster of the first new fuel to hit the marketplace in 20 years, worked with state agencies to make E15 legal.

"As far as the car is concerned, it’s the same as before—it performed perfectly. I didn’t have to do anything different," White says. "I just pulled up to the pump and it was good."

Scott Zaremba, owner of the Zarco 66 stations in Lawrence, Kan., which first offered the new fuel, says he didn’t expect a strong response from non-ag consumers, since there had not been much publicity. However, "E15 sales the first day were 20% of the total," says Zaremba, who is also the incoming president of the Petroleum Marketers and Convenience Store Association of Kansas. He plans to offer E15 at his stations throughout Kansas.

Competitively priced. E15 is cheaper because of the spread between ethanol and gasoline prices. Therefore, as a result, ethanol reduced wholesale gasoline prices by $1.09 per gallon in 2011 and 29¢ per gallon from 2000 to 2011, according to a peer-reviewed study by University of Wisconsin and Iowa State University economists.

"Ultimately, economics will drive E15," says Tom Buis, CEO of Growth Energy, an ethanol trade group. He predicts E15 will be cheaper than E10.

Moreover, in a survey on ethanol taken earlier this year by the Renewable Fuels Association (RFA), 58% of consumers said they were very likely or somewhat likely to purchase E15.

That’s the good news for motorists. The less ebullient news about E15 is that even though EPA has approved the fuel, the states must also approve it. There are also some additional hoops it must jump through, such as approval by state fire marshals and state revenue departments.

At press time, E15 was approved in Iowa, Illinois and Kansas. Ethanol boosters are working with about 15 other states to allow the fuel to be legal, initially with ethanol-friendly states in the Midwest.

Talk to retailers. Will E15 boost corn demand for the additional ethanol produced? "It’s unlikely," Buis says.

The reason, he says, is that ethanol for E15 is most likely to come from second-generation ethanol plants, such as those making ethanol from cellulose. Even so, E15 is still good for farmers because it will create broader markets for agricultural biomass, namely corn stover.

According to Robert White, director of market development for RFA, farmers can play an important role in helping to make E15 a reality.

"The best thing farmers can do is to ask for E15 from local retailers. That may spur them into carrying it."

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