Original article published by Omaha World Herald
At a U-Stop gas station and convenience store in Lincoln last week, the pumps dispensing gasoline with 15 percent, 30 percent and 85 percent ethanol attracted a steady of stream of customers who have embraced blends higher than the E10 that has become a fixture at the nation’s fueling stops.
Higher-blend ethanol “is the right product for me,” said Mick Pierce, who was gassing up his minivan with E85. “I have 14 grandkids with sports and activities from southwest Lincoln to northeast Lincoln, so it saves me a little money.”
The savings were more than decent. Pierce’s E85 cost $2.89 a gallon, versus $3.47 for E10. On a 15-gallon fill-up, that works out to almost $9. Done weekly, that’s almost $40 a month.
A straightforward appeal to the consumer pocketbook is emerging as the chief strategy of an ethanol industry facing uncertain government mandates. Gasolines mixed with higher blends of ethanol are going to be required if the goal is to get more renewable fuels into U.S. vehicles, according to industry representatives in Nebraska, the second-largest producer of the motor fuel, and the third-largest of its main ingredient, corn.
Serious consideration of higher blends emerged last year, after the Environmental Protection Agency proposed cutting the amount of corn-based ethanol that must be mixed into the nation’s fuel supply by about 9 percent, to 13.1 billion gallons. Protests from the ethanol industry ensued and the matter is still under debate.
In cutting the mandate — the EPA is charged with enforcing the 2005 federal law that guides ethanol mixing regulations — the agency cited what the industry calls the “blend wall.” That is the saturation point at which gasoline-ethanol blends higher than 10 percent are required, because lower ethanol percentages are insufficient to get all of the EPA-mandated ethanol into the nation’s fuel supply.
There were about 10 million flex-fuel vehicles on the road a year ago, according to the federal Energy Information Administration. Flex-fuel vehicles are the newer models that can accommodate high mixes of ethanol with clear gas. But there are few of them compared with the total U.S. light-vehicle fleet of about 250 million, suggesting that they won’t make a big immediate dent in the nation’s fuel mix.
That leaves a far vaster universe of potential E15 candidates, cars and light trucks made in 2001 or later that the EPA says can safely use the fuel. Ethanol advocates say 15 million new E15-eligible vehicles join the fleet every year.
There is a caveat. From June 1 through Sept. 15 in most of the country, only flex-fuel vehicles are authorized by the EPA to use E15, because of emission concerns. Only in the other months does the EPA allow any vehicle made in 2001 or later to use E15.
For now, E15 availability is spotty. The Nebraska Ethanol Board website lists a handful of retailers around the state offering it, mostly in smaller towns and at a few farmer co-ops. E85, certified by manufacturers as safe for the newer flex-fuel vehicles, is more widely available.
The important thing, ethanol folks say, is that right now, the higher the ethanol content, the lower the price, even factoring in mileage declines attributable to the lower energy content of ethanol. The federal government says E15 reduces gas mileage by about 5 percent, while ethanol advocates have said it is less than half that. E15 was selling last week at the Lincoln U-Stop at 84th Street and U.S. Highway 6 for $3.42 a gallon, versus $3.47 for E10 and about $4 a gallon for 91-octane gasoline, the only clear gas the station sells.
“Gas is gas,” said Todd Becker, chief executive of Omaha-based ethanol producer Green Plains Energy. “Right now, we are the cheapest molecule, and that is what is going to be decisive in this.”
Becker said people should not make any mistake in evaluating what is going on. It comes down, he said, to what will make retailers the most money. And in the motor fuel business, where profit on the combustible liquids sold from the pumps is close to zero, it means attracting people indoors where the moneymakers shake their assets from the store shelves.
“This is about potato chips and soft drinks,” Becker said. “There are economic reasons for retailers to offer E15.”
In Nebraska, the 50-store Pump & Pantry chain owned by the Grand Island-based Bosselman Cos., sells E15 at some locations. There is also the Lincoln-based U-Stop chain, which offers E15 at the one location in Lincoln.
Others are taking it far more seriously. The Tennessee-based convenience store chain MAPCO Express said this year that it plans to offer E15 at all new stores, aiming for 100 locations overall out of its roster of 362 in seven states.
As can be expected with a politically charged topic involving billions of dollars, not everyone likes it. Ethanol has long-standing and vociferous critics, and higher blends get the double-barrel treatment just as their predecessors did.
“Ethanol blends higher than 10 percent can damage engines and fuel systems that can cause vehicles that use it to break down, even vehicles that EPA has approved to use the fuel, according to Coordinating Research Council’s testing,” said Carlton Carroll, spokesman for the American Petroleum Institute. “There is also a CRC study showing more ethanol can harm onboard diagnostic systems and cause the check-engine light not to turn on when something is wrong or to turn on unnecessarily.”
Carroll also said that some auto manufacturers have said they will not honor warranties when higher blends cause damage and that the American Automobile Association found in a survey that only 12 million out of the 240 million light-duty vehicles on the roads at the time of the analysis were approved by manufacturers to use E15. Thirteen manufacturers stated that the use of E15 may void warranty coverage, Carroll said.
“An overwhelming 95 percent of consumers surveyed by AAA were not familiar with higher ethanol blends such as E15, which is just now appearing in a handful of filling stations in the Midwest, indicating a strong likelihood of consumer confusion leading to misfueling,” he said.
The ethanol industry disputes all of that, saying E15 is the most-tested fuel in history and is safely used in other parts of the world in vehicles that are identical to those sold by the same manufacturer in the United States.
“There is no difference in the vehicles using it elsewhere around the world and those that could be using it here,” said Green Plains CEO Becker. “That is all fun and games on the part of ethanol opponents.”
Back at the Lincoln U-Stop, horse breeder Ken Stading said he comes in about twice a week to fill up gas cans with E15 for use in weed cutters, tractors and other power equipment at his K/B Stables. Stading said he has noticed no abnormal wear and tear on the small engines, a common complaint heard from ethanol critics.
“Had no trouble at all,” Stading said. (Becker puts it this way: “I can’t solve the world’s energy problems one lawn mower at a time.”)
At stake is an industry that has barreled onto the scene. There are now about 224 U.S. ethanol plants, with an aggregate capital investment of about $22 billion. In Nebraska, there are 24 plants, while No. 1 corn producer Iowa has 42 to lead the nation.
Ethanol advocates are fond of saying that the Midwest could easily be self-sufficient in both fuel and food, dependent on no trading partners and that the multiplier effects of the ethanol business benefit everyone from farmers to taxing authorities.
But in the end, none of that really matters when it comes to motivating people to buy ethanolized gas, said Mark Whitehead, owner of Whitehead Oil, operator of the U-Stop chain.
“No one is going to do it for farmers or the economy of Nebraska,” Whitehead said. “They are going to do it for themselves.”