Gas Station Owners Mostly Wary of E15

Wall Street Journal charts retailer debate over offering higher ethanol blend

LAWRENCE, Kansas -- Since the E15 ethanol blend hit the market for regular cars in July, eight stations in Kansas and Iowa have started to sell it, according to a Wall Street Journal report, citing the Renewable Fuels Association (RFA). It said regulators in three other states--Nebraska, South Dakota, and Illinois--have cleared it for sale and expect stations there to offer the fuel soon.

But concerns over storing the fuel and burning it in older vehicles have stalled its adoption, the report said. Most stations are in "sit back and wait" mode, R.J. Rymas, director of fuels for Rockford, Ill.-based gas-station owner Road Ranger LLC, told the newspaper.

"Right now, I don't think it opens up that large of a market share," said Rymas, whose company has 80 stations in six states. "I have not seen anybody in any market that I operate in that is planning on doing it."

He said most of his underground storage tanks aren't certified to hold fuel with more than 10% ethanol, meaning it would take an investment of tens of thousands of dollars to replace them with tanks that can store E15.

Bill Walljasper, CFO of Ankeny, Iowa-based Casey's General Stores Inc., which has 1,700 locations, had a different concern: The Environmental Protection Agency (EPA) has only approved E15 for vehicles with a model year of 2001 and later. "All of a sudden, now you are putting a product in the ground that may or may not work in some of your consumers' vehicles," he told the Journal.

Casey's has no immediate plans to offer the fuel, he added.

Scott Zaremba, whose Zarco 66 stations in Kansas were the first in the country to sell E15, said the biggest benefit of offering more than one gasoline blend is that his prices are less tied to the "take it or leave it" prices of oil refiners. "We have a little bit more control over our destiny," he told the Journal.

(Lawrence, Kansas-based retailer Zaremba was recently elected president of the Petroleum Marketers & Convenience Store Association of Kansas.)

The industry is holding information sessions for gas station owners and pushing to make it easier for them to offer the fuel, said the report.