Maybe marketers have been listening

Curious marketers are asking about ethanol because they are hearing about higher customer counts and better margins selling fuels that cost their customers less, writes Ron Lamberty. This column appears in the December issue of EPM.
By Ron Lamberty | November 13, 2015

As I’m writing this column in late October for people to read in late November or early December, it occurs to me that some important events will have happened by that time—events that could change the marketplace for ethanol in the United States for years to come. Even more change could come in 2016, with other EPA rulings or decisions and an election. And yet, with rules and regulations possibly changing dramatically in the upcoming weeks, months, and years, if I had to make a prediction, I would guess there will be more ethanol sold in 2016 than any other time in history.

Now, that’s absolutely a guess—but it’s a guess based on what I am seeing in that other very important part of ethanol’s world: the retail fuel marketplace. Starting with petroleum marketer trade shows I took part in earlier this year, to the three we attended in September and October, I can report that marketer interest is better than it’s been any time over the past five years. Marketers already selling higher blends of ethanol report some of the highest volume, most profitable times they’ve ever had, and they are telling their fellow marketers about it. Well, they’re telling fellow marketers who don’t have stations near their stores. No reason to help the completion figure out why you’re kicking their butts!

It’s important to have policies that make sure markets are treating ethanol fairly, and there are still plenty of things that need to be accomplished to make sure E85, E15, and other blends can be sold without oil industry manufactured restrictions. But I’m far more encouraged by more petroleum marketers “getting” ethanol, or at least seeing the success of others and wondering what that is all about. Whether it’s renewable identification numbers (RINs), equipment compatibility, or blending economics, ethanol discussions with petroleum marketers at trade shows and events have changed from “Why should I sell E15 or E85?” to “How can I sell E15 or E85?”

It certainly didn’t hurt that the USDA put up $100 million dollars to help stations owners update their fueling equipment for higher blends of ethanol. That funding, which becomes $200 million when coupled with state and, or, private matching funds, becomes even more attractive as marketers are facing another change in the equipment required to accept new Europay, MasterCard, Visa or so-called smart credit cards that contain a microchip.

While a change in card processing equipment a few years ago failed to generate the interest in new equipment many predicted, this change is different. It’s different because this time, if a station owner decides not to install the new technology, he or she will be on the hook for any fraudulent charges made at that station. And this change is more expensive than the last one. The National Association of Convenience Stores told Congress it will cost $26,000 per station to upgrade, which is only a few thousand dollars less than buying all new dispensers and receiving a 75 percent grant from USDA.

Having said that, those issues aren’t the main reason curious marketers are asking about ethanol. They’re hearing about higher customer counts and better margins selling fuels that cost their customers less. They’re beginning to compare their fuel options, and our fuel is making sense more often.

And if more interest from U.S. station owners isn’t enough, at the NACS show, the world’s largest convenience store and fuel retailer trade show, nearly half of the people picking up ethanol information from our booth were from Canada, South and Central America, India, and China. Not people from those nations who now live in the United State, marketers who sell fuel in those countries. There is growing interest in ethanol in other countries, especially countries where laws are changing to allow ethanol as a fuel choice for the first time. If our laws won’t protect marketer’s ability to provide fuel choices at the pump, we’ll be able to sell it where they will.

Author: Ron Lamberty
Senior Vice President
American Coalition for Ethanol
605-334-3381
rlamberty@ethanol.org