Blend Wall Crumbles in Retailers’ Eyes

There is no such thing as a 10 percent blend wall unless petroleum marketers don't allow a choice. Independent retailers are demonstrating the blend wall can be breached.
By Ron Lamberty | July 19, 2016

When the U.S. EPA held hearings in November 2013, after its first attempt to (illegally) use Big Oil's blend wall argument to reduce the conventional biofuel portion of the renewable fuel standard (RFS), Bruce Vollan, a Baltic, South Dakota, fuel marketer, said, “There is no such thing as a 10 percent blend wall unless petroleum marketers don’t give their customers choices above 10 percent.” 

Oil companies have done exactly that, using restrictions in supply agreements to prevent station owners from offering blends above 10 percent.  Meanwhile, more than half of Bruce’s customers buy blends above E10, and ethanol is 25 percent of his overall sales, with months as high as 32 percent.

In the first six months Petroserve USA offered E15 and flex fuels in six of their North Dakota C-stores, overall ethanol volume increased to 13.4 percent—and the E15 price wasn’t even on the street sign yet. Bosselman Enterprises offers higher ethanol blends in 13 of its Nebraska locations, and ethanol makes up almost 15 percent of the overall fuel mix at those stations.

Protec Fuel is an E85 wholesaler, supplying 289 stations from Maryland to Texas, with plans to add 300 more locations in the next 12 months utilizing funds from USDA’s Biofuels Infrastructure Partnership. About half of the current customers are newer locations with flex fuels offered on multiple islands. E85 makes up 18 to 28 percent of the fuel business at those locations, using as much as 32 percent renewable fuel in E10 and E85.

The other stations Protec supplies are older locations with E85 offered on only one island. E85 makes up 9 to 13 percent of fuel sales at those stores. Now, 9 percent E85 sales may not sound like much, but assuming the other gasoline sold is E10, those stations’ overall ethanol sales are 17 percent—well beyond any so-called E10 blend wall. In fact, a station at the higher end of that group, selling 13 percent of its volume as E85, would hit 11 percent overall ethanol volume, even if every other gallon they sold was E0.

Retailers are proving the RFS is achievable, yet Big Oil persists in its “blend wall” rhetoric and the quest to get rid of the RFS. Having worked in the C-store and petroleum marketing business for over 35 years, that’s no surprise.

When lead was being phased out of gasoline 40-plus years ago, the oil industry said it was impossible—and unnecessary. API said “the mass of evidence proves unquestionably that lead isn’t a significant factor in air pollution and represents no public health problem in any way.” It told EPA, if lead was removed from gas, cars would “erode and explode.” It said it would cost tens of billions of dollars to replace infrastructure, put refiners and retailers out of business, waste huge amounts of crude oil, prevent future oil exploration, and, of course, cause huge price increases at the pump.
If that sounds familiar, it’s because the oil industry has used that playbook to attack every regulation put in place over the years to make fuels cleaner.

In the ’90s, the oil industry said EPA’s new underground storage tank regulations would lead to the disappearance of gas stations from small towns across the country. In the early part of this century, it said reducing sulfur in gas would (again) destroy engines and reducing sulfur in diesel fuel essentially would outlaw diesel vehicles.

Each time, EPA stood its ground and the oil industry made the required changes. Air and water quality improved and none of API’s disaster predictions materialized.

Today, the oil industry rants about RFS infrastructure cost, engine damage and liability—nothing specific, just scary, scary, “liability.” And, as it did with laws removing lead, API now says the RFS is not necessary.

It’s disappointing, but predictable. When you’re Big Oil, it’s what you do.

In his 2013 testimony, Bruce Vollan also told EPA, “The secret to getting over the blend wall… is to TRY to get over the blend wall.” Other retailers have proven Bruce right. Now EPA must TRY to get over the blend wall. Stand firm and enforce the RFS. Obligated parties will comply, retailers will offer more ethanol without incident and air and water quality will improve. Just as Congress intended.

Author: Ron Lamberty
Senior Vice President
American Coalition for Ethanol