Lincoln drivers give ethanol less than full embrace

Source: By ART HOVEY/Lincoln Journal Star • Posted: Monday, November 4, 2013

Little more than a month after the oil industry changed pipeline deliveries and nudged drivers of Lincoln’s cars and trucks toward an ethanol diet, the surprise might be that ethanol-free fuel still has a strong presence in the market.

That’s despite price spreads between what many in the industry call “clear unleaded” and ethanol blends, on the cheaper side, that have approached 40 cents a gallon at some stations.

“We’ve picked up some business,” said Dan Hergert of the Hergert Oil Co., “and basically all the business we’ve picked up has been regular unleaded.”

Hergert offers 10 percent ethanol blends, too, at his four Super C outlets in Lincoln. But it’s ethanol-free gasoline that has been making the cash register ring more frequently.

“It’s amazing to me how many don’t like ethanol,” he said.

The retail fuel picture was thrown into a state of flux in Lincoln and across Nebraska in late August. That’s when pipeline suppliers let it be known that they would close the loop on practices already in place across the rest of the United States and quit delivering 87 octane fuel to the local sector.

For those who still wanted gasoline without ethanol in it, that meant that they would get a 50-50 combination of 82-83 octane and more expensive premium grade fuel.

Todd Sneller of the Nebraska Ethanol Board predicted Friday that the market would swing more in ethanol’s direction as time goes on.

Sneller called regular unleaded “a product that’s quickly disappearing here.”

That doesn’t mean that he’s pleased with all aspects of changes at refueling points.

“I think, at this point, the biggest disappointment is that we see this much confusion in the marketplace.”

He thinks ethanol has been unfairly cast as a villain. “In some instances, it’s created a negative perception about ethanol, that, for some reason, ethanol is the reason behind these changes.”

Getting to the core of the matter is no easy task.

The big petroleum companies say they’re boxed in by the federal renewable fuels standard that requires that an increasing portion of highway fuel comes from renewable sources.

Others outside the industry have said refiners are intent on squeezing more gallons of gasoline and more money out of a barrel of oil.

The 21 Casey’s General Stores in Lincoln are among the 125 Casey’s in the state that are also holding the line and selling regular unleaded alongside ethanol blends.

“A clear 87 product is still the product that our customers demand,” said Bill Walljasper, based in Ankeny, Iowa, as Casey’s chief financial officer. “So that’s really the driving force behind continuing to offer that product.”

Casey’s has taken the same stance in Iowa and Kansas.

“A lot of people still have vehicles or maybe small engines — whether they’re boats or lawnmowers, whatever they may be — that are looking to put in a clear product,” Walljasper said.

Nobody sought out for this story believes that the market has settled into where it’s going to be for the long haul.

“It’s only been just a little over a month since we had the switch,” Walljasper said.

Sneller said the picture “changes almost every day at every station. But I think we’ll see even more (price) disparity, because we’re seeing a significant drop in ethanol prices right now.”

Hergert said his life is complicated by the fact that the ConocoPhillips terminal in Lincoln won’t blend an 87 octane fuel without ethanol. And the nearby Magellan terminal sometimes runs out.

“We have to go to Omaha occasionally to buy the product.”

That’s a factor in the 30-cent spread between 10 percent blends and regular unleaded at his stations.

“We’re the little guys, just the retailers, the bottom of the food chain,” Hergert said. “But it’s a head scratcher. I don’t think (fuel wholesalers) thought clear 87 would be that big a deal.”