Fuels Forward Blog: Where’s Your Loyalty?

Who wins under proposed RFS changes? No easy answer

Blog Post: 12:15 p.m. Monday, Nov. 18, 2013Fuels Forward: A CSP Blog

OAKBROOK TERRACE, Ill. -- The recent, long-awaited proposal by the EPA to lower ethanol volumes required under the Renewable Fuel Standard (RFS) for 2014 was clearly a win for the oil industry and fuel retailers--or was it? Truth is, the general public tends to assume that fuel retailers are always aligned with and loyal to Big Oil, or that if they sell high-ethanol blends such as E85 that they are in the pocket of Big Corn.

From speaking with retailers, including those who sell high-ethanol blends, I get the impression that their loyalty is to their own business first. As one retailer who soured on E85 told me recently, he is not anti-ethanol, and he is not a cheerleader for the American Petroleum Institute (API), which has been one of the biggest opponents of ethanol and the RFS, arguing for its total repeal. Instead, this retailer is selling what his customers want to buy, and he wants to do it as safely and profitably as possible. Any additional benefits--cleaner air, U.S.-grown fuel--are gravy.

Of course, other retailers might be more motivated by the idea of petroleum alternatives. But let’s all agree that the aims of the RFS, to reduce the reliance on imported oil, to promote a more environmentally friendly way of fueling our automobiles, to support domestic energy, are all admirable. You can debate the politics and science of corn-based ethanol, but in my opinion, it is tough to deny that more choices are good for consumers and retailers. They just need to make plain old business sense to be sustainable over the long-term.

If you would like to read the EPA’s announcement on the proposed new guidelines, click here. As always, I welcome your questions and comments--please send them my way at soller@cspnet.com.

Blog Post: 1:30 p.m. Wednesday, Nov. 13, 2013

OAKBROOK TERRACE, Ill. -- Nearly a decade ago, when I was hired as CSP’s petroleum editor, propane was the highest-consumed alternative fuel in the United States. If you’d asked someone “natural gas or electric?” they would think you were asking about ovens. And less than 10,000 flex-fuel vehicles (FFVs) ranged the road.   

It is amazing how much the fuels landscape has changed since then. Compressed natural gas (CNG) is consumed at double the gallon-equivalent of propane, more than 600,000 FFVs are in use, and an electric car is Motor Trend’s Car of the Year.

And yet some things have shifted little. Traditional gasoline and diesel are still king--vehicles consumed 170.6 billion gallons of gasoline and diesel combined in 2011, according to the latest EIA figures, compared to around 516 million gasoline-equivalent gallons of alternative fuels.

But those traditional fuel numbers sit on a slowly eroding base. EIA recently reported that new-vehicle fuel economy has more than doubled since the 1970s, and is expected to jump by more than 50% by 2040.

As John Eichberger, vice president of government relations at NACS, told attendees at the recent “Future of Fuels” educational session at the 2013 NACS Show, “Petroleum remains king, but it’s giving up some of its fiefdom.”

The challengers? Ethanol—already 10% of most gallons of gas sold—compressed natural gas (CNG), electric, hydrogen, methanol, biodiesel—all in different stages of breaking into the fuel infrastructure, each with its unique head and tailwinds. The challenge for all of these: Provide a clear advantage to gasoline or diesel, while not inconveniencing the consumer.

It’s a tricky balance for alternative fuels and one I will be tackling in this blog. If you sat in on the “Future of Fuels” session, you might remember panelist Norman Turiano, principal of Turiano Strategic Consulting LLC and former senior manager of fuels develop at Wawa. He told retailers to get prepared and pre-pipe their new builds for whatever that future fuel could be—in his opinion, most likely CNG, but possibly even hydrogen.

On a similar NACS Show panel last year, wearing his retailer hat, Turiano acknowledged the long-term outlook of traditional fuels.

“We’ve seen declining gas gallons. Do we accept it as a business model or address it?”

Let’s continue that conversation. E-mail me your thoughts at soller@cspnet.com, comment below, and stay tuned for the next post of “Fuels Forward.”

Samantha Oller is senior editor/special projects coordinator for CSP Magazine.

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