Support Year-Round E15 – Even if you don’t sell E15
Posted on 04/06/2022
Last month, the National Association of Convenience Stores (NACS) and the Society of Independent Gasoline Marketers of America (SIGMA) both sent letters to EPA asking the agency to allow the sale of E15 year-round to “provide much-needed price relief at the pump while enhancing America’s energy security and improving gasoline’s emissions characteristics.” Congress granted EPA emergency waiver authority to address unusual or extreme supply situations like those that pushed pump prices to record highs following Russia’s invasion of Ukraine, and that situation gives no indication it will end quickly.
At first glance, that might appear to be a policy change only benefiting stations currently selling E15, but there is actually good reason all marketers should support the availability of E15 year-round.
The effect on current E15 retailers and their customers is obvious. Without such a ruling from EPA, most retailers offering E15 today could not do so legally from June 1 through Sept. 15. Based on current rack prices alone, adding 5 percent more ethanol saves at least 4 cents per gallon (.80-.85 cent rack price differential vs gas x 5%). But most E15 retailers sell the additional RINs they earn by selling additional ethanol, making the net price of ethanol two dollars lower than gasoline at the rack. Five percent of two bucks is 10 cents, meaning E15 marketers can reduce their pump prices and maybe even keep some extra margin, while the consumer gets a higher octane, cleaner fuel at a lower price than the 10 percent blend used in 95 percent of passenger vehicles.
Right. So that’s how year-round E15 helps those folks… What about everyone else? First, I wouldn’t be doing my job if I didn’t point out that with today’s fuel market economics, you really should strongly consider adding E15 to your own product mix. More than 90 percent of the cars on the road can use E15, and E15 is covered under warranty in just about every car that still has a warranty. And contrary to popular belief, most of your current equipment is compatible (find out at https://flexfuelforward.com/flexcheck/), and if yours isn’t, another round of infrastructure grants from the U.S. Department of Agriculture will be made available in the next few months. Keep an eye on flexfuelforward.com for updates.
But the most important reason to support year-round E15 is that the ability for retailers and consumers to choose 5 percent more ethanol means they can also choose to use 5 percent less gasoline. That even helps those who don't use E15, because it forces oil companies to reduce unleaded gas prices to be competitive enough to not lose that extra 5 percent volume.
On the other hand, we don’t know how much higher unleaded prices will go if retailers selling E15 right now are not allowed to sell it starting June 1. Needing 5 percent more gasoline in some of the fuel might not sound like a lot, but 2 percent or less of our gasoline comes from Russian sources and look how world events involving Russia have impacted our nation’s pump prices. Imagine if that was 5 percent! Granted, it’s not an apples-to-apples comparison, but in specific markets, there could be some dramatic price swings if EPA fails to take action.
If you sell E15, hopefully you’ve already contacted your Senators and Representatives and let them know you want access to year-round E15. If you haven’t, please do. If you don’t sell E15 yet, hopefully you’ll see how its availability can help you and your customers, and you’ll let your elected officials know of your support, too.