Nebraska Drivers can expect bigger ethanol emphasis at pump

Source: By ART HOVEY / Lincoln Journal Star • Posted: Friday, September 20, 2013

Changes in Lincoln’s retail gasoline market are taking shape rapidly and will continue to play out during the weekend and into next week.

Some stations are dropping regular unleaded from their product mix and offering a choice of ethanol blends. Others will keep an ethanol-free option for customers, but those filling their gas tanks can expect a big price spread.

The adjustments are being made in Nebraska because gasoline refiners no longer will provide an 87-octane product, typically sold as regular unleaded, to terminals in Lincoln, Omaha and other locations. Similar changes are happening in South Dakota, Kansas and Iowa, and they were implemented earlier in much of the rest of the United States.

Mark Whitehead, president of Whitehead Oil Co., said Conoco-Phillips no longer would provide 87-octane to local stations after 10 a.m. Thursday.

“What that means is that over the next two or three days, we will be changing over our products to the new products offered,” Whitehead said.

The result at Whitehead Oil will be 87-octane and 89-octane, both containing ethanol.

That applies to the company’s U-Stop locations and to its 31 Lincoln stations overall.

Pump choices are headed in a different direction at Sapp Brothers’ Sinclair station on Cornhusker Highway in northeast Lincoln.

Sought out in Omaha, Don Quinn, president of Sapp Brothers Travel Centers, said drivers can fill up with what industry insiders call “87 clear,” meaning fuel without ethanol, or with 87-octane marketed as a 10 percent ethanol blend.

“Most people purchase gasoline based on price,” Quinn said of the latter, “so that will be the No. 1 seller, if you will.”

Both Quinn and Whitehead acknowledged resistance to buying ethanol blends among some drivers. That customer grouping is likely to get smaller now because of greater price disparity.

From this point forward, non-ethanol 87-octane will be made by blending lower-octane gasoline with premium grade fuel.

“That’s going to shrink down dramatically,” Whitehead predicted, “but there are some individuals who have a strong preference against ethanol.”

He noted that in states beyond Nebraska and its immediate neighbors the move toward more ethanol pumps has been accepted “with no fanfare and little or no consequence.”

However, his stations will continue to offer premium grade fuel without ethanol. “We are anxious to see what happens with premium unleaded, which is a clear product, to see whether or not sales on that go up.”

A Journal Star check of prices at various Lincoln stations earlier Wednesday turned up an apparent 20-cents-per-gallon price variation between an unleaded 87-octane pump and an E-10 87-octane pump at a Casey’s station north of the downtown area.

The Journal Star was not able to reach a Casey’s public relations source to confirm the reasons for that $3.50.9-$3.70.9 disparity.

“The state of Nebraska is in an interesting position,” Whitehead said, “in that we’ve been offering unleaded with ethanol longer than just about any state in the country.”

That situation dates to the 1980s.

Nonetheless, Steve Sorum of the Nebraska Ethanol Board said it would take more time to firm up what drivers can expect to find at their usual refueling points.

“There are still a lot of questions out in the marketplace,” Sorum said, “and we’re still probably a couple weeks away on which refiners will offer which products at certain terminals.”

Bruce Heine, based with Magellan Midstream Partners in Tulsa, Okla., said that company stopped shipments of 87-octane fuel through pipelines serving Nebraska on Sept. 16.

The changeover on the fuel delivery end will be complete, “including Lincoln, by the 24th of this month.”

Heine said refinery and pipeline carrier decisions were “driven by the Renewable Fuels Standard,” the federal rule that requires an increasing portion of highway fuel come from grain-based and other renewable sources.

He described 10 percent ethanol blends as “an effective way to increase octane and generate RINs” — Renewable Identification Number, referring to the ethanol credits refiners can buy to meet their renewable fuels commitments.

Sorum and others have portrayed the refinery adjustments as a way to squeeze more money out of a barrel of oil.

Sapp Brothers’ Quinn said he couldn’t speculate on how many drivers would resist a bigger ethanol emphasis at the pump.

“Obviously, we’ll watch that very carefully so as to know exactly what products to carry and to offer to our customers.”