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FULLSERVICE Ethanol reaches a turning point A s virtually everybody reading this should well remember, at the start of the 2000s the oxygenate MTBE was raising drinking water concerns relative to gasoline storage tank leakage. Ethanol was the other oxygenate used in non-attainment areas where oxygenated gasoline was required to meet Clean Air Act of 1990 standards. The oxygenate requirement itself was, at that time, also under attack as while oxygenates were seen as solving some air quality issues, they were similarly seen as making others worse. The discussion then evolved into phasing out the oxygenate requirement, but at the same time creating a replacement Renewable Fuel Standard that would greatly expand ethanol volume in motor fuels. The justifications for this move switched back and forth between the old environmental arguments and newer arguments centered on reducing the dependency on foreign oil post 9/11. The oil industry opposed this ethanol expansion citing ethanol transportation and supply issues. The stated reasons presented by both sides certainly had honest supporters and were reasonable positions at the time. But a cynical person, or perhaps simply a realistic one, would note that a gallon of ethanol replaces (energy content differences aside) a gallon of conventional gasoline, and that benefits agribusiness at the expense of oil companies. Indeed, similar motivations were seen behind the push for the original oxygenate mandate and the subsequent efforts to field MTBE as an alternative to ethanol. The RFS made it through Congress in 2005 despite initial opposition. Since that time, ethanol (at least the corn variety) has lost a lot of its luster as an environmental solution and the current advances in the fracking process have made the foreign oil justifications even less viable than they were previously. With mandated ethanol volumes exceeding current gasoline demand volumes that would maintain the common 10 percent (E10) fuel mixture (and the industry running out of RINs) a 15 percent blend — E15 — is being pushed to no great enthusiasm. There is currently a public and political reevaluation of the need to significantly revise the current RFS, or perhaps even repeal it. For NPN Magazine, and for the industry in general, the focus has always been: does this product makes sense in the marketplace and can marketers and retailers turn a profit? Marketers and retailers in a position to take advantage of favorable RIN values and with ready access to ethanol supply can certainly make a profit. I interviewed one such marketer, Bruce Vollan, owner of Midway Service/Vollan Oil in Baltic, S.D. who has no problem selling enhanced ethanol products such as E15 and even E85. "Our E85 sales have been very strong, probably more so than ever," he said. "There is a huge (price) variance. We are at $3.35 on our E10 and we are at $2.19 on our E85. That's from factoring in the RINs and being able to pass some of that along to the consumer and there gets to be huge savings." Vollan noted that E15 has become his second best selling product after E10. For Vollan ethanol not only makes sense, but it's a winner. However, Vollan does live in corn country, where you can find strong community support for ethanol, and ready access to supply. And while RINs are great for ethanol today, that has not always been the case. There are also potential liability issues with the new product that ethanol supporters say are overblown (perhaps with some justification), but we do live in a litigious society so such concerns certainly cannot be ignored. Hopefully whatever solution is reached will be one that lets the market – and marketers and retailers individually – decide ethanol's place in the product mix. n Keith Reid EDITOR-IN-CHIEF kreid@specialtyim.com 4 September 2013 THE SOURCE FOR PETROLEUM AND CONVENIENCE MARKETERS Editorial office List Rental/REPRINTS EDITORIAL STAFF cnaughton@specialtyim.com 1030 W. Higgins, Suite 230 Park Ridge, IL 60068 Cheryl Naughton Phone: (678) 292-6054 Fax: (360) 294-6054 Editor-in-Chief Keith Reid Corporate Office kreid@specialtyim.com 1030 W. Higgins Road, Suite 230 Park Ridge, IL 60060 (847) 720-5600 Fax: (847) 720-5601 (847) 720-5615 Associate Editor Debra Reschke Schug SUBSCRIPTION CUSTOMER SERVICE dschug@specialtyim.com (847) 720-5618 Phone: (845) 856-2229 Fax: (845) 856-5822 Contributing Writers Stephen Bennett Maura Keller Mark Ward, Sr. PRODUCTION Art Director Brian Snook Production Manager Karen Kalinyak advertising & SALES National Account Manager – East: Tom Buttrick 135 E. 55th Street, 5th Floor New York, NY 10022 (212) 588-9200, 1325 tbuttrick@specialtyim.com East: Dave Campbell (413) 528-2364 Fax: (413) 528-8835 dcampbell@specialtyim.com Central & South: Rich Alden (603) 899-3010 Fax: (603) 899-2343 ralden@specialtyim.com Central and Mid-West: Leslie Palmer (248) 530-0300 Fax: (248) 530-0301 lpalmer@specialtyim.com West: Glenn Datz 626 Wilshire Blvd., Ste. 500 Los Angeles, CA 90017 (213) 596-7200 gdatz@specialtyim.com CLASSIFIED SALES Glenn Datz 626 Wilshire Blvd., Ste. 500 Los Angeles, CA 90017 (213) 596-7200 gdatz@specialtyim.com NPN—National Petroleum News (ISSN 0149-5267) is published 9 times per year including two special issues Marketfacts and Marketfacts Review Issue (October) by Specialty Information Media. 1030 W. 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