OPINION: 2019 brought some good ethanol news for retailers

By Cassie Mullen, director of market development at the Renewable Fuels Association | January 02, 2020

As we enter this new decade of the 2020s, the future looks incredibly bright for higher blends of ethanol. Here are a few of the highlights we experienced in 2019 that will no doubt lead to continued expansion in the new year. 

 

E15 Year-Round

In early 2019, after nearly a decade of tireless efforts by RFA and other ethanol industry advocates, retailers and congressional supporters, EPA finally lifted the restriction on year-round sales of E15. The fall of an outdated regulation related to Reid Vapor Pressure – or RVP – allowed all retailers the ability to finally provide consumers more choices at the pump for cleaner, more affordable biofuel blends year-round. The rule change was monumental and even prompted a public endorsement from President Trump, affirming his 2018 commitment to “unleash the power of E15 to fuel our country all year long.”

Relatedly, New York State’s approval of E15 in November signals great news for retailers and drivers alike. New York ranks fourth in gasoline consumption, and with the country coming off the highest monthly sales ever for gasoline, there is a lot of room for volume growth for E15 and other ethanol blends.

According to data from the Minnesota Department of Commerce, E15 sales during the summer of 2019 were up 115 percent compared to the summer of 2018. And through October, total E15 sales jumped 33 percent in 2019 compared to the same period in 2018.

 

Growing Retailer Interest

Major retailers including Casey’s, Kum and Go, Sheetz, QuikTrip, Murphy and Racetrac strengthened their support for E15, having a significant impact in the marketplace and spawning the expansion of the blend to more than 2,000 locations in 30 states. Casey’s added 149 locations over the summer months, with plans to potentially add E15 at more than 500 of their 2,100 locations when all is said and done. Referencing previous restrictions, Casey’s Fuel Director, Nathanial Doddridge said, “The summertime E15 restrictions have been a major concern for us for a long time and would typically slow down our E15 expansion. Now that we know we can provide our guests with a consistent experience at the fuel pump year-round, we are expanding E15 at a faster pace to stay ahead of our competition.”

Sheetz, an early adopter of E15, has said that their expansion plans include 20 to 30 stores per year and all of them will include both E15 and E85. According to Mike Lorenz, executive vice president of fuels for Sheetz, “The consumer is highly sensitive to gasoline prices and will change their behavior for as little as three cents per gallon. One of the biggest obstacles a lot of retailers face today is foot traffic. So being able to offer a product that can be a differentiator can provide a competitive edge bringing in new customers and help retain current customers.” 

Sheetz operates 590 locations in six states, with almost half of those locations already offering E15.

 

A Promise to Streamline E15 Regulatory Burdens and Invest in Infrastructure

In early October, the Trump administration announced that EPA would soon “initiate a rulemaking process to streamline labeling and remove other barriers to the sale of E15.” This was welcome news to us, as RFA has pushed for years to reform the burdensome E15 compliance survey and revise the excessive E15 “warning label” that has deterred drivers from trying the fuel. It was also announced that USDA is planning to launch an infrastructure funding program to “facilitate higher biofuel blends,” and RFA looks forward to working with the Agency on the details of this program.

 

Infrastructure Credit Included in Tax Extenders Package

The renewal and expansion of important renewable fuel tax provisions was a great win the entire renewable fuels industry at the end of a busy year. Of specific interest to retailers, , Congress retroactively reinstated the alternative fuel refueling property credit for 2018 and 2019 and extended it through 2020. Under the credit, refueling equipment for E85 installed through December 31, 2020, is eligible for a tax credit equal to 30 percent of the cost, not to exceed $30,000. Permitting and inspection fees are not included in covered expenses. This credit is also available for 2018 and 2019 tax years.

For more information on this important tax credit, contact the RFA.

Most will agree that 2019 was a very challenging year for the ethanol industry, but it was one in which we saw some significant successes in expanding the market for higher blends. And as we begin 2020, there are many signs of better days ahead for ethanol producers, fuel retailers, and consumers looking for lower-cost, cleaner-burning fuels.