Higher ethanol blends are coming soon to a gas pump near you

Source: By Russell Hubbard, Omaha World-Herald staff writer • Posted: Tuesday, May 3, 2016

Like it or not, here it comes: Convenience store operator Kum & Go says it is making a massive commitment to higher gasoline-ethanol blends, planning to sell E15 at about 100 more locations this year.

The 430-store chain based in West Des Moines, with about a dozen stores in eastern Nebraska and western Iowa, plans to equip about 30 new stores with E15 apparatuses and retrofit 70 others, company executive Jim Pirolli told attendees of the Nebraska Ethanol Board’s Emerging Issue Conference late last week.

The decision illustrates what motorists might find more common in coming years: Gasoline retailers, beguiled by the lower per-gallon price of higher ethanol blends, increasingly view cheaper fuel as a lure designed to get customers to the soda fountain and cigarette rack.

The higher the blend, the lower the gas mileage, as ethanol has a lower energy content than clear gas. But retailers such as Kum & Go appear to be betting on the appeal of less cash out-of-pocket at the moment of sale. Already, Kum & Go says it has had good success with an even higher ethanol blend, E85, though it is usable by a smaller number of vehicles than are said to be able to use E15.

E15 refers to the percentage of ethanol blended with clear gasoline — in the case of E15, 15 percent; E85 is mostly ethanol with 15 percent clear gas.

“We sell more E85 in Nebraska than any other state, and we expect to sell more E15,” Pirolli told the industry conference Thursday at the Embassy Suites La Vista Conference Center. “People want cheap gas, they want the option.”

It seems to be catching on nationwide. Mapco, Murphy USA Inc., Thorntons Inc., Cenex and Protec are among the U.S. convenience store chains now offering E15, according to trade journal Convenience Store News.

For some in Nebraska, any expansion of corn-derived ethanol is a big plus. (Ethanol for blending with gasoline can be made with other substances, but corn accounts for almost all of it in the United States.) Nebraska is the nation’s second-largest producer, behind Iowa, of ethanol with 25 plants. Nebraska ranks third in corn production behind Iowa and Illinois. The University of Nebraska said last year that the industry has a $5 billion annual economic impact.

Still, not everyone is convinced. A broad lobby consisting of the American Petroleum Institute, the National Chicken Council and the National Marine Manufacturers Association are just some of the anti-ethanol groups. Arguments against ethanol include the belief that the government shouldn’t have a quota for how much ethanol must be blended into gas; competition for corn; and possible damage to small engines.

Then there are classic car owners. John Nikodym is president of the Nebraska chapter of the Antique Automobile Club of America, and he likes to drive cars made before 1930. They don’t have pressurized fuel systems, he said, and alcohol-heavy fuels such as E15 don’t work well in the gravity-based systems. At temperatures above 80, it gets dicey.

“It’s virtually impossible to drive,” Nikodym said. “It’s like you have run out of gas.”

E10 is troublesome, he said, and with E15, classic car owners will be out of luck. Nikodym said he does use ethanol blends in his modern vehicles, because it is cheaper.

“It is fine for cars designed to run on it,” Nikodym said.

The oil industry is a little less conciliatory. The American Petroleum Institute says high ethanol blends like E15 are not compatible with most cars on the road today.

“They could potentially put American consumers and their vehicles at risk,” spokesman Carlton Carroll said.

Carroll said testing by the auto and oil industries shows that ethanol blends higher than E10 can damage engines and fuel systems and that automakers have warned that unauthorized use of E15 could void new car warranties.

The ethanol industry says the EPA has approved E15 for use in vehicle model years 2001 and newer. That covers about 60 percent of the vehicles on the road, according to the U.S. Department of Energy.

The Nebraska ethanol industry is counting on additional retailers embracing higher ethanol blends. The EPA issued regulations this year that mean about 14.5 billion gallons of ethanol will be blended into the nation’s fuel supply. If that total is to grow, ethanol needs to snare a larger share of the gas tank, and that takes retailers willing to stake their claim to the lowest prices on the corner, said Todd Sneller, administrator of the Nebraska Ethanol Board, a state agency.

“By offering fuels that cost less than conventional gasoline while providing higher octane and lower emissions, the retailer stakes out a position of leadership in the market,” Sneller said.

Kum & Go, with 21 Nebraska stores, is undaunted by ethanol opponents. Pirolli, the chain’s vice president of fuels, told the ethanol industry attendees last week that the company’s latest new store design is a for a 6,000-square-foot market-type concept emphasizing fresh food and other amenities.

“A several million-dollar asset” apiece, Pirolli said, the stores are designed to last 25 years. Tellingly, he said, they will include infrastructure such as underground tanks and pumping gear designed to accommodate all biofuel blends, including high ones such as E30 and E85.

“There are a lot of misconceptions about ethanol,” Pirolli said. “As a fuel, it is fine for cars.”

Kum & Go, privately held, began offering E15 in 2015 and since then has sold enough of it to send motorists on 72 million miles of car trips, Pirolli said, and there have been no complaints about engine damage or about someone being confused at the pump and putting the wrong fuel in the tank.

Omaha’s Jerry McMurphy is sold on higher blends. He was filling up his E85-compliant Dodge at the Kum & Go on 72nd Street near Maple Street last week.

“You don’t get quite the mileage,” but it is less expensive, McMurphy said. This week in Omaha, E85 was selling at a discount of almost 50 cents a gallon to E10; E15 is not yet widely available in Nebraska but is typically cheaper than E10 by between 5 cents to 10 cents a gallon.