The ethanol craze in rural America is barely a whisper at America's gas stations.
Last year, the National Ethanol Vehicle Coalition (NEVC) predicted that by mid-2007 there would be 2,000 E85 (85% ethanol-blended fuel) dispensing sites nationwide. However, just 1,221 sites of the nation's 170,000 fueling stations dispense E85 despite the country's booming ethanol industry and a growing number of flexible-fuel cars.
But there are signs more pumps may be coming soon.
One holdup was United Laboratory's (UL) reluctance to certify E85 dispensing equipment. That should change by the end of this year, according to UL. Last fall, the independent product compliance testing organization withheld its certification of E85 pumps pending further study of appropriate safety standards. Although UL stated it saw no evidence of safety concerns with operating E85 dispensers, research has shown that high alcohol fuels like E85 are more corrosive than gasoline.
Authorities in most states have permitted specific pumps without UL certification. UL's decision likely dampened the enthusiasm for E85 pumps. “These things were popping up like dandelions and suddenly it was stalled,” says Mark Lambert, communications director for the Illinois Corn Growers Association.
Bosselman Energy, Grand Island, NE, has four E85 fuel dispensers among its 50 retail sites. President Fred Bosselman says the company would like to put in more E85 pumps but says there is some “fear” in moving ahead knowing the dispensers are not UL-approved even though their existing E85 pumps appear to be working fine.
“Some of the big box retailers haven't come online with their mass E85 infrastructure as yet,” says NEVC's Deputy Director Michelle Kautz. “They are waiting for the certification.”
A changing market dynamic may also entice more retailers into the E85 market, according to ag economist Vernon Eidman, a professor emeritus at the University of Minnesota who has followed the ethanol industry closely for five years.
Eidman says wholesale prices for ethanol throughout 2006 averaged 64¢/gal. more than RBOB, the gasoline ingredient used by blenders. Consequently, Eidman says blenders or retailers had to be willing to take a loss or hike up the price of E85. The latter is a tough sell because ethanol is less fuel-efficient than gasoline so consumers see equal value when they purchase E85 for about 75% of the price of regular gasoline or less, Eidman says.
But E85 margins may be improving. “We are moving into a period where ethanol is much less expensive than gasoline based on everything I can see in the markets,” Eidman says. He predicts the price of ethanol will be about $1.74/gal. or 10¢ below RBOB by mid-October due to more ethanol plants coming online, plus less demand pressure for ethanol as an oxygenate in the production of reformulated fuel.
Major oil companies have also been accused (by Iowa U.S. Senator Chuck Grassley, for one) of standing in the way of E85 due to perceived restrictive policies dealing with matters like how stations source products, locate pumps or label pumps, supply credit or advertise fuels.
“What I'm afraid of is that these companies aren't serious about expanding the availability and use of alternative fuels,” Grassley says. “If you look at the E85 stations in my home state of Iowa, only one of 65 Iowa stations selling E85 is a major branded station.”
American Petroleum Institute President Red Cavaney was quoted saying, “E85 can only come into its own when you can get larger volumes of ethanol, and it's got to be cellulosic ethanol, into the system and that's not here yet.”
According to the American Coalition for Ethanol, 99% of domestic ethanol production is consumed in low-level blends like E10. This leaves only 1% to be blended into E85.
British Petroleum (BP) spokesman Scott Dean says there have been misconceptions about his company's E85 polices, such as whether pumps dispensing unbranded E85 can be placed under the BP canopy.
“They can locate the pump underneath the canopies if they wish, but we have very clear guidelines and printed diagrams and images of how they need to label the pumps,” says Dean.
He adds that BP is planning to sell a branded E85 fuel on a limited basis once the UL certification is resolved, but that the company has recently invested in a $500 million research center with the University of California-Berkeley and the University of Illinois to study next-generation biofuels derived from plants and organic matter other than corn. “Ethanol is a great start but we are looking well beyond traditional first-generation ethanol,” Dean says.
For an up-to-date listing of E85 fueling stations in the U.S., visit www.e85refueling.com.
Editor's note: ConocoPhillips now allows 1,300 affiliated gas stations to offer E85 under their branded canopies in Colorado, Illinois, Iowa and Nebraska, in response to stations' requests there. The states were selected because of marketer requests, as well as the availability of ethanol supply. ConocoPhillips gas stations in all markets continue to be able to sell E85 outside the branded canopy in a separate unbranded fueling dispenser in all markets if they choose.
E85 ethanol vehicle sales rose by 40% during the first quarter of 2007 compared to a year ago, from 159,992 vehicles to 266,859.