Is E15 Finally Poised for Summer Sales?

As 4 billionth mile is driven on ethanol blend, retailers lobby Trump for RVP waiver

UPDATE: A meeting May 8 at the White House between EPA and USDA officials and senators representing corn-growing and oil states resulted in an agreement to allow E15’s sale year-round and to not pursue a price cap on Renewable Identification Numbers (RIN), according to one of the participants, Sen. Chuck Grassley of Iowa. The group also discussed how to reallocate blending obligations that the EPA had waived for several small refineries in 2018, and the potential of attaching RINs to exported biofuels. “While details weren’t decided, I look forward to reviewing a plan being developed by Secretary Perdue and Administrator Pruitt,” Grassley said in a statement. “Any fix can’t hurt domestic biofuels production.”

WASHINGTON -- It took four years for 1 billion miles to be driven on E15. Then the next billion miles happened in four months. And the third and now the fourth billions of miles were a matter of three months each. This is one big sign that consumers have accepted the 15% ethanol fuel blend, drawn by its higher octane rating and lower price relative to E10, said Mike O’Brien, vice president of market development for ethanol industry group Growth Energy, Washington, D.C.

“The momentum is growing, and that’s a function of consumers trying it, liking it and not having any problems whatsoever with the fuel,” O’Brien told CSP Daily News. The U.S. Environmental Protection Agency (EPA) has approved E15’s use in vehicle model years 2001 and newer.

“We haven’t had a single solitary report from any retailer of any issue related to E15,” O'Brien said. “That’s what happens when you have a product that comes into the market and just continues to do well.”

Despite this growth, it could be even greater if the EPA approves a Reid vapor pressure (RVP) waiver allowing E15’s sale during the summer months. President Trump recently expressed support for the idea, saying, “We’re going to be going probably to 15, and we’re going to be going to a 12-month period.”

This would take good growth to great growth, O’Brien said.

“Once we get clearance on the RVP waiver, now all of a sudden there’s another four months of sale that haven’t been there in the past,” he said. “Think about 4 billion miles, and they’re doing that on eight months a year in fuel sales, not 12 months. So you’re going to see a lift from that alone.”

RVP Waiver Push

Trump is holding another meeting this week with senators representing corn-growing and oil states to present his proposal for biofuel policy. “The White House is saying this is the last meeting, so we are expecting some type of resolution or some plan going forward,” a source told Reuters.

In advance of the meeting, a group of 11 fuel retailers, including Sheetz, Murphy USA, RaceTrac, Kwik Trip, Kum & Go, Thorntons and Family Express, wrote the president, asking him to continue his support for lifting the RVP waiver and provide a timeline for it.

“Without this fix, we will be forced to once again relabel our fuel dispensers to ensure that we are complying with federal law starting on June 1,” said the May 7 letter coordinated by Growth Energy. “If we did not properly label our fuel dispensers, the [EPA] could fine each retail fuel outlet not in compliance $37,500 per day.”

The letter said that, assuming the RVP waiver is not lifted, E15 retailers would spend more than $1.5 million this summer to relabel fuel dispensers.

The letter also asked Trump not to place a price cap on Renewable Identification Numbers (RINs), a maneuver that some refiners and oil-state legislators have proposed as a way to control the cost of RINs. Also, the retailers asked him to limit the number of small-refinery hardship waivers, which are intended to relieve small producers who are financially struggling of their blending obligations under the Renewable Fuel Standard (RFS). The EPA has provided more than two dozen of these waivers in 2018, according to Reuters, including to Andeavor and CVR Refining, a refinery majority owned by Trump’s former special adviser Carl Icahn, an RFS opponent.

Biofuels supporters argue that the increased number of waivers is undermining RFS and RIN prices. “These actions curtail the market incentive and certainty provided to our businesses to sell E15 and would render useless any decision to allow year-round E15 sales,” the retailer letter said.

A separate letter sent to the president this week on behalf of retailers in 29 Midwest and central states, including Kwik Trip and Kum & Go, by the Iowa Renewable Fuels Association also asked for his support for an RVP waiver and pushed back on the high number of small-refinery exemptions.

“The value of RINs was part of the economic equation in our decision to invest in E15,” the letter said. “This year, we have seen RIN prices tumble by two-thirds – not because of increased blending, but because of questionable and secretive RFS exemptions being handed out by the EPA. These actions by the EPA have undercut the return on our investments and have left us in the dark as to the real value of our RIN assets. Being allowed to sell E15 year-round would help take some of the economic pain out of the unexpected collapse of RIN values.”

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