Retailers Get Trump's Ear to Plead the Case for E15

Future of ethanol blend unclear as regulatory, political landscapes shift

CHICAGO -- Last week, Mike Lorenz of Sheetz pled the case for E15 in front of the big man himself: President Donald Trump.

Lorenz, executive vice president of petroleum supply for Sheetz Inc., Altoona, Pa., was part of a round of meetings last week between Trump, ethanol and oil industry groups and their respective senators, and the heads of the U.S. Environmental Protection Agency and the agriculture department at the White House. Trump was trying to encourage a deal between ethanol and refining supporters and, after a few days, two items seemed to grab the focus of negotiators: a cap for Renewable Identification Numbers (RINs), the credits that obligated parties such as refiners use to prove compliance to Renewable Fuel Standard (RFS) blending quotas; and a year-round waiver for selling E15, the 15% ethanol-gasoline blend. 

In most markets, Reid vapor pressure (RVP) volatility restrictions currently prevent the sale of E15 to flex-fuel vehicles from June 1 to Sept. 15, meaning most vehicles cannot purchase the ethanol blend during the busiest driving period of the year. Ethanol advocates see lifting this restriction as the key for E15’s greater growth.

“The president clearly saw the value of year-round E15,” Lorenz told CSP Fuels. “It frankly is a win-win-win. It’s a win for ethanol, a win for refiners, who, if you sell more E15, you will have more RINs available and that should bring down their price … and it’s a win for the consumer because they can buy the product year around, especially during the peak driving season.”

According to ethanol industry group Growth Energy, more than 1,300 fueling sites in 29 states offer E15.

Refiners and their representatives seemed adamant about putting a cap on RIN prices; it is a nonstarter for the ethanol industry, which believes that wider E15 sales would address the same problem without kneecapping the biofuel’s growth in the fuel supply. Lorenz is not sure whether negotiators will be able to bridge that gap. “It seems like there’s some sense of urgency to change things but people’s positions are kind of set and so it’s hard to get them to move,” he said.

Hurry Up and Wait

For Sheetz, the implications of a year-round RVP waiver on E15 are big. The chain has the greatest number of E15 sites in the United States, with 220 locations that sell E15 and E85, the 85% ethanol-gasoline blend. Since it put in the first locations, Sheetz has made a few changes to how it markets the fuel. In the beginning, Sheetz labeled it as “E15,” and then rebranded it as “Unleaded 15.” Now it is rebranding it again as “Unleaded 88,” referring to the octane of the fuel. The reason? To clear up consumer confusion.

“The consumer has no idea what E10 is even thought that’s 97% of the gasoline sold in the U.S.,” Lorenz said. At the average gasoline pump, signage typically does not refer to the 10% ethanol blend as E10. Instead, it’s regular grade, with the octane rating getting higher play.

“That’s why we settled on Unleaded 88,” Lorenz said. “If you walk up to anyone on the street and say ‘What is unleaded?’—they know that’s gasoline. If you say ‘Unleaded 88’ they know 88 is the octane.”

Sheetz is updating its pump labels with the new name and adding it to all street signs to communicate its 5-cent-per-gallon discount to E10. The retailer is done adding E15 to existing stores but plans to include it at all new builds. Lorenz describes sales as “decent, but we’re looking to grow sales, and that will take some marketing.”

Kum & Go LC, West Des Moines, Iowa, is also hopeful about E15’s potential. The chain, which has more than 400 stores in 11 states, offers E15 at about 130 sites. Matt Spackman, vice president of fuels, sees the legislative stalemate around the RVP waiver as a key challenge for the fuel. “We’re getting acceptance, and we’re constantly testing different approaches to the products, but we’d love to see more sales than we’re getting,” he told CSP Fuels.

And QuikTrip Corp. added E15 to dozens of its sites in the Dallas market in 2017. Today more than 50 locations there sell the ethanol blend. “It has a chance to be very successful, but like anything else, it just takes time,” Mike Thornbrugh, manager of public and government affairs for the Tulsa, Okla.-based chain of 740 stores, told CSP Fuels. For now, QuikTrip does not plan to add E15 to more markets; instead, it is focusing on how to make the current offer in Dallas even better.

When asked how optimistic he is about the potential of a political agreement on E15, Lorenz demurred, citing the frequent starts and stops between negotiations that create a “hurry up and wait” atmosphere for those invested in change.

“It would be a complete guess, because there are too many moving parts,” he said. For now, Sheetz is focusing what it can control—communicating E15’s potential to its fuel customers.

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