THE BILLION GALLON MAKET NEXT DOOR
Posted on 05/06/2019
By Ron Lamberty, Senior Vice President, American Coalition for Ethanol
Three years ago, gasoline retailers in Mexico had no control over what brand or grades of fuel they sold in their stations. They also didn’t determine fuel prices, when they got fuel deliveries, or even whether they have fuel on hand. Eighty years ago, Mexico created the state-owned oil company Petróleos Mexicanos, better known as Pemex, and that company dictated every aspect of the Mexican fuel marketplace.
That began to change in 2016 when, following successful deregulation of other industries in the country, the Mexican government decided to deregulate the petroleum market, with phase-in of those new rules on a region by region basis starting in 2017. As those regions came on board, station owners could consider a brand change, and even a change in the products they sell at their locations. The U.S. Grains Council scheduled a series of workshops with the Mexican Association of Service Station Suppliers (AMPES), the Mexican equivalent of the Petroleum Equipment Institute (PEI), which represents companies selling fuel pumps, tanks, and other equipment and asked ACE to help introduce ethanol into the fuels discussion in Mexico.
ACE was chosen because our approach has always been to work with prospective retailers, and provide them with information and the experiences of other retailers and wholesalers who have already switched to the blends they were considering. At seven meetings in 2017 and 2018 we explained what ethanol is (200-proof tequila), and how it helps increase octane while reducing emissions and costs. As in the case with most retailer workshops, the last point — how much less ethanol costs, garnered the most attention.
With experience going all the way back to the 1980s, when ethanol was first sold in the United States utilizing “splash blend” racks near gasoline terminals, ACE has the unique ability to show petroleum marketers in Mexico how they could not only sell ethanol to station customers, but possibly be a supplier of ethanol to other stations using the same approach we took to first sell ethanol in the U.S. The three workshops that have been held so far in 2019 have offered more “how to” advice on equipment for splash blending, and discussions of how to deal with logistical challenges of getting ethanol to various locations in Mexico.
There are many hurdles to clear before there is widespread ethanol use in Mexico, and ACE will continue to provide whatever assistance we can to serve the potential billion+ gallon customer next door.