E15 retailers visiting D.C. insist there is no blend wall

Source: Amanda Peterka, E&E reporter • Posted: Friday, March 28, 2014

A handful of gas station owners this week traveled to Washington, D.C., in an attempt to convince policymakers that there is no “blend wall” preventing more ethanol from entering the market.
The retailers said they met with members of Congress and U.S. EPA officials over the past couple of days to dispute the notion of the blend wall, or the term used for the 10 percent ethanol saturation point in the fuel market. The retailers all own gas stations that sell gasoline containing 15 percent ethanol, or E15.”A wall is something you can’t go through. We’re already beyond that,” said Charlie Good, owner of Good & Quick, a gas station in Nevada, Iowa. “We’re way beyond that.”The visit, which was organized by the American Coalition for Ethanol, comes as EPA is weighing a proposal to reduce the amount of ethanol and advanced biofuels that refiners are required to use this year. The agency cited the blend wall in issuing the proposal, arguing that there is a limit to the amount of ethanol that can be used in today’s fueling infrastructure.

EPA has approved E15 for use in cars of model years 2001 and newer, but the vast majority of gasoline sold at gas stations today still contains 10 percent ethanol. Refiners have long warned that adding more ethanol into the mix will mean high costs for gas stations in new equipment and put cars in danger of engine and fuel system damage.

Boat and motorcycle trade organizations have also raised concerns that E15 will cause engines to corrode if their members accidentally fill up with the fuel. Several pieces of legislation were introduced this year to roll back EPA’s approval of E15.

But the E15 retailers in town this week, all of whom started selling E15 within the last two years, said that they are proof there are no issues with adding more ethanol into the fuel mix.

“I’ve had zero complaints, zero problems,” said Good, who started selling E15 last August. “I know what this can do to a motor and fuel system, and it’s no different than any other fuel.”

The blend wall, they told lawmakers and EPA, was made up by the oil industry to prevent more ethanol from taking away market share from refiners.

One retailer, Bruce Vollan, owner of Vollan Oil in Baltic, S.D., said he hadn’t even heard the term until he started getting more involved recently in ethanol issues on the national level.

“It’s convenient to say, ‘There’s a blend wall. Everything will be destroyed. Nobody can do more than E10. Nobody wants to buy it,'” said Ron Lamberty, a gas station owner in South Dakota and senior vice president at the American Coalition for Ethanol. “And then prove it by never offering anybody any of it and by making rules against it.”

Most E15 retailers say their ethanol sales hover in the 20 to 25 percent range in the stations where the fuel is being sold.

But though the few gas station owners who sell E15 say it’s been a success, the fuel has been slow to penetrate the E10-dominated market. Fewer than 100 stations in 14 states currently sell E15. Most petroleum marketers have not seen enough benefit to switch over their operations, especially when faced with potential liability issues raised by oil companies and car manufacturers.

The small cadre of about seven E15 retailers said they wanted to visit D.C. to highlight some of the issues that are inhibiting growth of the fuel. They met with EPA officials Tuesday to urge the agency to address a pressure requirement that means E15 cannot be sold during summer months in many parts of the country.

They also said they wanted to shed light on how contracting issues with oil companies are halting the introduction of more E15 into the market at branded gas stations. Three of the gas station owners told stories about back-and-forth battles with an oil company when they attempted to sell the new fuel.

Good said he had to wait until his contract with Phillips 66 expired to sell E15. Otherwise, he would have had to pay a $30,000 penalty in order to sell fuel that contained more than 10 percent ethanol. Scott Zaremba, the owner of Zarco USA and the first retailer to begin selling E15 in the nation, said he also ended his contract with Phillips 66 after it said it would block the sale of the fuel.

“The majors have all decided to block it and do everything they can,” he said.

Glenn Badenhop, president and CEO of American Freedom Energy in Liberty Center, Ohio, said the biggest issue going forward will be raising public awareness of the fuel. Badenhop began selling E15 in January and remains the only E15 retailer in Ohio.

“The education process with the general public is huge,” he said. “It’s amazing to me how many people don’t even know there’s a 10 percent blend.”

Brian Jennings, executive director of the American Coalition for Ethanol, said that education process has been hampered by a patchwork of state regulations and the unarguable fact that “no one really genuinely enjoys going to fill up their car.”

“It’s a little complicated to try to get people to get excited about that,” he said. “I think our industry has struggled a bit with that.”