Growing the Market for E15, Midlevel Blends, Exports

Win or lose in the RFS discussion, ethanol leaders must put their best foot forward and get ahead of the curve. It's time for producers to up their market development games and make a collective industry push for higher-level blends.
By Donna Funk | January 22, 2014

For several years, the ethanol industry has been under increasing scrutiny in social and news media, especially from its detractors. Recently, the comment period concluded for the proposed federal 2014 Renewable Volume Obligations that call for decreased biofuel use. With seemingly more critique than compliments, it appears ethanol leaders might have to reset their philosophical views to something different than in the past. 

We all understood the renewable fuels standard (RFS) would someday be up for review. Recent discussions with the U.S. EPA have largely centered on reducing the mandatory amount of ethanol originally scheduled in the RFS that should be consumed in the U.S. fuel supply. It’s been a wake-up call of sorts and a challenge to the industry to show the product’s value, increase education as to the benefits of ethanol (health, environment, energy, etc.) and not solely rely on growth of the E10 market. Win or lose in the EPA RFS discussion, ethanol leaders must put their best foot forward and get ahead of the curve. This means upping our game in market development.

One of the best ways to get ahead of the curve is to work with a local retailer to carry E15. If you haven’t considered this or pushed for this goal, it’s a shame. Working with a retailer means helping them understand the true value of the renewable fuel. Many times it’s not just the owner of the gas station who needs the education but also the other suppliers in the entire value chain. The retailer is limited to what his customers are asking for and what the “major” will allow, if it’s a branded station. During conversations, ask the retailer for higher blends and at the same time ask the “major” to allow stations to carry higher blends. Consumers should make the ultimate decision of what fuel to purchase and we don’t want their options to be limited or made for them. 

When a retailer carries E15, it also ensures relationship building that can grow the local market. Consumers will relate to the value of ethanol once it is more readily available to put in their vehicles. 

Engaging in social media or other public relations tools is also key to market development for E15. Posting success stories or customer comments can help break down misinformation and share why a higher blend of ethanol is a good thing. Without investment in market development, a local plant is putting its future in the hands of someone else. There is a positive story to tell and no one is better to tell it than the industry’s own ethanol leaders.  This isn’t a fight you should leave for someone else to fight for you.  The continued safety of our nation, success of the industry and well-being of your plant and investment depend on all of us doing our part and becoming totally engaged.

The reality is we are faced with a 10-percent blend wall and less-than-stellar growth in gasoline demand. If ethanol is the lowest-cost, lowest-priced carbon molecule available in the world, then the industry should also take advantage of export markets. Kennedy and Coe LLC anticipates growth in these markets this year and we have clients who are exporting to many countries around the world. It’s another leg of market development that can determine how much impact ethanol can truly have in the U.S. agriculture and rural economy.

Consult your financial services partner to polish your market development strategy and let’s bring the ethanol industry into 2014 with a new approach for the future. 

Author: Donna Funk, CPA
Kennedy and Coe LLC 
800-303-3241
funk@kcoe.com

Contributor: Greg Krissek 
Manager, Kennedy and Coe LLC 
gkrissek@kcoe.com