Is Kansas ready to bump to E15 at the pump?

Source: BY STEVE EVERLY, The Kansas City Star • Posted: Wednesday, March 28, 2012

Ready or not, Kansas is one of three states in line for more ethanol in its gasoline.

The Environmental Protection Agency last year allowed E15 — gasoline with 15 percent ethanol — for model year 2001 and newer vehicles. Now the agency is ready to take the next step — approve applications to sell E15, making it legal to use in roughly 60 percent of the country’s cars and light trucks.

E10 will still be available, and selling E15 won’t be mandatory, but there are concerns that E10 could be harder to find if the new blend becomes popular.

Promoters hope to have the fuel in some Kansas gas stations this summer or later this year to help meet the federal energy policy’s call for more use of biofuels. But congressional intervention or a lawsuit filed by critics of E15, including automakers, could delay its introduction.

Critics say more study is needed to ensure E15 won’t harm the newer engines it’s approved for, and automakers say warranties could be voided if the new fuel blend is used. In addition, misuse could damage older vehicle engines, boat motors and small engines such as those in lawnmowers.

The Renewable Fuels Association, a major ethanol trade group, has placed an official in the Kansas City area to push E15. He is initially focusing on Kansas, Iowa and Illinois for a quick start when — and if — E15 is legal.

The three states were picked because the association says they’re “very pro-ethanol” and don’t have regulations that would slow its introduction. Missouri has a law capping ethanol content at 10 percent, so that will have to be changed before E15 can be sold.

“We have to get those first gallons out into the market and show that consumers want this,” said Matt Hartwig, a spokesman for the Renewable Fuels Association. “We can’t afford to wait.”

A couple of fuel stations in Kansas are already selling E15, although for now it can be used only in “flexfuel” vehicles, which are equipped to run on E85 — the blend of 85 percent ethanol and only 15 percent regular gas, which is less readily available.

Scott Zaremba, who has been selling E15 at his Zarco 66 station in Lawrence for about a month, is getting ready for wider use of the blend. He has seven other retail fuel stations in the state, including two in Olathe, and plans on selling E15 in them once the EPA gives its final OK.

“I’m ready when it becomes legal,” he said. “It’s going to be interesting in how this plays out.”

The new fuel blend comes as gasoline prices continue to rise amid renewed attention to curbing oil imports. Ethanol has had a controversial role in the country’s energy picture — keeping fuel prices lower than if there had been none of the biofuel available, but also providing less energy per gallon than straight gasoline

According to AAA, while a gallon of E85 is now 60 cents cheaper than a gallon of regular gasoline, it actually “costs” 40 cents more when adjusted for its lower energy content.

There are also questions about how gas blends containing more ethanol will mesh with environmental rules meant to reduce summer smog. The Kansas City area has to use a special summer gasoline blend under those rules.

Ethanol blends can release more vapors and cause more smog. But E10 had an exemption allowing it to exceed federal vapor standards. E15 doesn’t have that exemption, though, which would require more refining for summer use, and that could raise its cost. The ethanol industry says it is examining options to avoid the problem.

But there’s no doubt that ethanol has been successful in reducing oil imports. E10 has replaced 5 percent of the country’s gasoline supply, and ethanol production could triple over the next decade if the federal mandate for more ethanol use succeeds. E15 will be crucial in meeting the mandate, although eventually blends with even more ethanol will be necessary.

Up in the air

That is, if E15 happens at all. Critics are vowing to try to stop it or at least stall its introduction until further study of its effect on engines.

The EPA has said that sound science shows it will perform well in the vehicles approved to use it. Ethanol advocates say their tests and those by the U.S. Department of Energy confirm there will be no problems.

But critics have joined a lawsuit seeking to send E15 back to the EPA for reconsideration. They’ve also asked Congress to have the National Academy of Sciences study the effects of E15 on engines.

The concerns are twofold: Will it damage 2001 and newer models it has been approved for? And what would happen if it is mistakenly used in older vehicles, or equipment such as lawnmowers, that aren’t supposed to use E15?

Automakers say that they also have concerns about using E15 in newer vehicles and that further study is needed. They also point out that owner manuals state that using more ethanol than is in E10 will void the warranty.

“Our position hasn’t changed,” said Sharon Basel, a spokeswoman for General Motors Corp. “We’re pretty confident that cars and trucks will be damaged.”

Outdoor equipment such as lawn mowers wasn’t approved to use E15, and manufacturers say misfueling could be a problem. Consumers could either accidentally use E15 or be tempted by a lower pump price to use it anyway.

“We know people will misfuel,” said Kris Kiser, president of the Outdoor Power Equipment Institute trade group. “This is a train wreck.”

Itching to start

The ethanol industry, frustrated by such arguments and believing years of study showing that E15 can be used safely, is eager to get to the ground game of getting E15 into the country’s fuel stream.

Robert White, director of market development for the Renewable Fuels Association, is now based in Olathe and gearing up for a push once the EPA approves applications from ethanol sellers.

Tom Palace, executive director of the Petroleum Marketers & Convenience Store Association of Kansas, said: “Our members support E15. The bigger issue is the logistics.”

QuikTrip, a major retailer, says it hasn’t decided whether to sell E15 and won’t until after it becomes legal.

In fact, selling a new fuel like E15 isn’t simple — or cheap. One way is to use pumps that can blend gas and ethanol. But there are only about two dozen of those pumps in Kansas now, and a blending pump can cost around $30,000, although there will be some financial assistance to buy them for E15.

The other way is to deliver E15 already mixed, but that will require stations to have a separate storage tank for that blend. Wholesale fuel outlets would have to prepare for it as well.

Bruce Heine, a spokesman for Magellan Midstream Partners, which operates the largest wholesale terminal in the Kansas City area, said they haven’t been approached about providing E15 but if they did it would likely require additional storage to be built.

White believes the logistics will be handled.

To be successful, he said, E15 will need to be cheaper than E10, which he expects to happen.

“I think the economics are going to drive it in the marketplace,” he said.