Pilot Bullish on Ethanol Again

Began offering 10% blend over the weekend

KNOXVILLE, Tenn. -- After blending ethanol into its local gasoline in the 1980s and early 1990s before discontinuing it for economic reasons, Pilot Travel Centers is again bullish on the additive and is mixing it in local supplies, reported The Knoxville News Sentinel.

Pilot began selling the 10% ethanol blend in its East Tennessee travel centers last Friday and began offering it at 42 area convenience stores last Saturday, said the report. Stores that Pilot operates with Conoco will not carry ethanol, it added.

Gasoline prices [image-nocss] at the locations did not change, with a gallon of regular unleaded selling for $2.05 to $2.07, according to Alan Wright, vice president of supply and distribution for Pilot.

Jimmy Haslam, president of Knoxville, Tenn.-based Pilot, told the newspaper that the company first used ethanol 20 years ago when the state offered a four-cents-a-gallon tax exemption as part of an economic development plan for opening A.E. Staley's Loudon plant and a similar plant by Tennol in Jasper, Tenn.

Pilot is contracting with the former Staley plant, now owned by Tate & Lyle, to supply the fuel locally. Pilot has other ethanol suppliers in different parts of the country.

The company sells 10 million gallons of gasoline and diesel a day and 550,000 gallons of ethanol daily, the report said; 83% of its petroleum sales is diesel and 17% is gasoline.

When the state's tax incentive ended in the early 1990s, Pilot went back to 100% gasoline because of costs to buy and mix ethanol, Haslam said.

The economics of ethanol went from favorable to unfavorable, he said. What we're seeing now is more states are mandating ethanol. It makes economic sense to do it. Before, ethanol was more expensive than gas, but now gas is more expensive.

In other ethanol news, last week, in a letter to Energy Secretary Samuel Bodman today, Senators Tom Harkin (D-Iowa) and Evan Bayh (D-Ind.) requested the U.S. Department of Energy investigate the continued refusal by oil companies to blend low-priced, domestically produced ethanol into the nation's gasoline supplies. The letter comes on the heels of a Consumer Federation report which concluded that gasoline prices could be significantly reduced if more ethanol were used in the nation's fuel supply.

And the U.S. Senate adopted Senator Barack Obama's (D-Ill.) amendment to provide tax credits for building E85 ethanol fueling stations into the Senate transportation bill. This proposal would encourage increased ethanol use, provide motorists who drive Flexible Fuel Vehicles (FFVs) with cheaper fuel, and help reduce our nation's dependence on foreign oil.

This bill will give motorists another option at the pump and will send a clear message that the United States Senate is serious about reducing our country's dangerous dependence on imported oil. I think that most Illinoisans would agree that a fuel made of 85 percent Midwestern corn is a lot more desirable than one made from 100% Middle Eastern Oil, said Obama.

The legislation would provide a 50% tax credit for the cost of building a new E85 vehicle refueling facility, up to $30,000.

For too long our country has relied too heavily on foreign oil to fuel its energy needs, and American consumers are paying an increasingly heavy price for their lawmakers' inability to address this problem, said Obama. Our dependence on foreign oil is keeping us tied to one of the most dangerous and unstable regions in the world. We've talked for too long about energy independence in this country. If Congress passes this bill, then we will finally have done something about it.

With ample local supply from Tate & Lyle and gasoline selling at a premium, Haslam told the paper that he is not expecting a major impact on Pilot's income or expenses from the shift to ethanol. He said Pilot is even considering experimenting with an 85% ethanol blended gasoline, especially if oil supplies get as tight as they are projected to in the fourth quarter.

Although Tennessee does not require ethanol use, it does make companies label their gas pumps to show that regular and midgrade fuel contains a percentage of ethanol. Premium grade, which has the highest octane, will not have the additive because it throws the octane balance off, according to Wright.

Haslam said switching to an ethanol-gasoline mix would not be a major expense for the company, which is already required by law to offer the blend in the Midwest.

Wright estimated that 30% of the gasoline sold in the United States has ethanol in it. He said the environmentally friendly fuel is also safe for automobile engines.

Locally, Pilot will buy its supply from Tate & Lyle in Loudon and truck it to a 30,000-gallon storage tank on Middlebrook Pike. Tanker trucks will then add 10% ethanol to their gasoline shipments, which will be distributed to Pilot locations, said the report.

Haslam declined to say if the additive will increase or decrease Pilot gasoline prices over time except to say company locations will continue to be the price leader in the Knoxville market. I think it will enable us to be very competitive with gasoline, he told the paper.

Meanwhile, while he has been involved with the University of Tennessee for more than 50 years as a football player, booster and some say the real power broker of the athletic department, the 74-year-old Haslam says he is ready to give up one of his most influential positions and will leave the university's board of trustees when his term expires in 2007, the Associated Press reported.

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