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Page added on July 22, 2010

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The Barrel: Ethanol or not to ethanol – that is the question

Business

by Alison Ciaccio

Retail gasoline marketers are taking on a new mantra these days, “to ethanol or not to ethanol,” as consumers decide whether the renewable fuel is best for anything from a Mini Cooper to a tractor.

While the US government mandates ethanol blending requirements up to 10%, some retailers – who can still get non-blended gasoline – are giving their customers options.

“We wanted to make ourselves different in this [region],” said one Pennsylvania-based gasoline distributor/marketer, who for more than a year has been increasing his advertising of ethanol-free gasoline.

Although the federal guidelines mandate overall ethanol use, there is no specific requirement for each batch of gasoline.

The quest for differentiation and meeting the needs of customers is a high priority for some retailers who say that despite being in a business of pennies, they are willing to be different.

“Everyday we cannot be the lowest price on the street….but that is fine as long as the consumer is educated,” said the distributor who added that ethanol blended gasoline lacks the fuel efficiency of conventional or “clear” ethanol-free gasoline.

Matt Hartwig, a spokesman from the Renewable Fuels Association – the ethanol trade organization — rejected those claims and stated: “At a 10% blend, ethanol has a negligible impact on mileage, as the American Petroleum Institute will tell you. And, all vehicle manufacturers warranty the use of 10% blends for all their vehicles,” he said. “It is time for these myths to end and for people to get the facts correct.”

At Growth Energy, also a pro-ethanol lobbying group, spokeswoman Stephanie Dreyer said her group has found no difference in the driveability and durability of using gasoline with 10% ethanol blended. In fact, Growth Energy is pushing a move to 15% ethanol and it is under consideration in Washington.

Still, states across the US sell ethanol-free gasoline; said John Eichberger, vice president of government relations at the National Association of Convenience Stores (NACS). (Oklahoma is the largest market).

“It’s the largest but it’s not much of a big [growing] trend,” Eichberger said of the use of non-ethanol gasoline. “There is more of a trend toward renewable fuel because it is politically sensitive.”

Some reetailers are sticking firmly to their offer of non-ethanol gasoline for their customers. And websites are sending consumers to those places.

The website www.pure-gas.org, started by a man named Sam Hokin, is dedicated to listing gas stations in the US and Canada that serve ethanol-free gasoline. The site, which sells no advertising and has no paid sponsors, was launched in the summer of 2009.

Hokin states on this site: “Many cars, motorcycles, boats, aircraft and tools have engines that…have parts that deteriorate, when run on gasoline that contains ethanol. In addition, ethanol leaves residue on valves and other parts that can hinder performance.”

The Pennsylvania-based gasoline distributor agreed: “In ethanol gasoline, water doesn’t separate and can create issues,” he said. “With conventional gas the water goes to the bottom. With ethanol it creates problems with smaller engines like lawnmowers.”

But even for distributors and marketers who want the choice for their consumers, it is getting harder to find supplies of ethanol-free gasoline. “Refiners are not offering clear gasoline to customers and that has led to litigation in South Carolina and Tennessee,” said Eichberger.

In the US Northeast, the Buckeye Pipeline, which supplies gasoline to that region as well as the US Midwest, is examining the possibility of ending its shipment of conventional gasoline via its pipeline.

“We get Valero products with no ethanol now, but that is going to change,” the distributor said, adding that although he is not aware of a drop-dead date for the change to the pipeline, he has made changes to his service stations already. “I’ve taken down the signage. I will sell [ethanol-free gasoline] until it’s not available to me anymore,” he said.

Valero spokesman Bill Day said his company has made statements in the past that “it’s best to leave the decision up to the marketplace” on whether retailers sell non-ethanol gasoline. Valero is now a leading producer of ethanol and owns 10 plants in the Midwest that produce 1.1 billion gallons/year of ethanol.

Whether service stations and their customers are anti-ethanol, options in certain states appear to be slimming down. How long ethanol-free options are available, market experts say, is the question.

Platts



2 Comments on "The Barrel: Ethanol or not to ethanol – that is the question"

  1. indigoboy on Fri, 23rd Jul 2010 12:36 am 

    It’s also worth noting that:

    Straight Gasoline has about 111,000 BTU per gallon.

    Ethanol blended fuel like E85 has about 81,000 BTU per gallon

    So it has less energy density per gallon. Hence a vehicle that does 25mpg on straight gasoline would probably be lucky to get 20mpg on an E85 (85/15) blend.

  2. KenZ300 on Fri, 23rd Jul 2010 11:31 am 

    We need to diversify our energy supplies. Ethanol is one way to diversify. Our economic security and national security depend on our ability to provide energy to our economy.

    The faster we ramp up second generation ethanol made from cellulose, algae or other materials the better.

    We need to end the oil monopoly on transportation fuels. Consumers needs a choice at the fueling station. Gasoline, ethanol, diesel, biodiesel, electric charging, hydrogen and CNG — bring them all on and give consumers a choice.

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