North Dakota Not Making the Grade

State's stations phasing out regular unleaded gasoline

DICKINSON, N.D. -- The option of filling a vehicle up with regular unleaded gasoline is disappearing in North Dakota. Peace Garden State gas station fuel suppliers are moving away from offering nonethanol 87-octane gasoline, reported InForum.

In response to the Environmental Protection Agency (EPA)-mandated Renewable Fuel Standard, refiners have moved away from offering an ethanol-free version of a regular unleaded option to stations.

"We made the switch just in the last week," Dickinson-based DJ's Tesoro general manager Mike Staudinger told the newspaper. "We're still in the infancy stage of finding out how people are going to react, but so far, there hasn't been much response. Some customers have asked why we're not selling [87-octane] unleaded any longer, and we just say that it's because the refinery isn't making it anymore."

DJ's receives its fuels from the Tesoro refinery in Mandan, N.D., which no longer offers a regular unleaded 87-octane option to its commercial customers, Staudinger said.

"What's happening today in North Dakota has happened throughout the U.S. over the course of about the last two years," North Dakota Ethanol Council chairman Jeff Zueger told the paper. "Refiners have switched from making a regular-grade 87-octane gasoline that then could be blended with ethanol or sold directly to consumers, to making a subgrade gasoline, 85 or lower octane gasoline, that cannot be sold directly to consumers because of the octane requirements by the EPA. They're moving these lower-grade octane products into terminals where they're blended with ethanol to get to the 87 octane or to higher octane levels."

While ethanol- or biodiesel-free fuel is still an option at most stations, it's generally going to cost drivers more.

"The business decision that refiners have been making is to offer retailers like a 91-octane premium grade for those customers who don't want ethanol blended into their products," Zueger said. "That's what you're starting to see at the pump. As we continue to transition with this, you're going to see less and less 87-octane gasoline without the ethanol blend, but I know the major refiners who supply North Dakota have made the switch already."

While Zueger said he believes ethanol blended gasoline ultimately means slightly lower prices at the pump, some are not thrilled with the change, including North Dakota Petroleum Marketers Association President Mike Rud.

"We're not happy about it and we never were happy about it," Rud told InForum. "We heard some rumblings about this about a year ago, and we've been working with folks to try to get things going in the right direction and keep regular unleaded in the system. If you look back at the taxable sales of gallons for the 2012-13 fiscal year in North Dakota, you'll see that 45% of the sales were still regular unleaded gasoline with no ethanol. What that tells you is there's a pretty big demand in North Dakota for that product."

While consumers don't seem to have much of a choice in the matter, opponents of the switch have argued that regular unleaded gasoline, at lower prices than what stations are charging for premium blends without ethanol, should be offered for use in certain older vehicles and small engines and for customers who are simply more comfortable with regular 87-octane blend gasoline.

"The reality is that these refiners have to meet these renewable standards or they're going to pay some serious tax credits, and we understand that part of it," Rud said. "It's basically out of control at this point. What we've been working on in Washington, D.C., with our folks is to sit down, take a good, hard look at this, and let's make it right for every stakeholder. If we're going to keep these regulations in place, let's make it so refiners aren't hit with such wild fines. What we're doing is taking away consumer choice."