OPINION: Now is the perfect time to add E15

By Ron Lamberty, senior vice president, American Coalition for Ethanol | March 03, 2021

If you’re a station owner who has been considering offering E15 (or higher ethanol blends), you should know the price of ethanol is much higher than it was this time last year, there are no federal grant programs to pay you for adding new equipment, and the time to start offering E15 could not be better.

You read that right. As much as we ethanol people have tried in the past to convince you to offer new blends of our fuel by finding money to pay for new tanks, lines, and dispensers for your stores, there have always been much more compelling reasons to sell E15 and higher ethanol blends. And the most compelling reason today is: You can offer a higher octane fuel at a lower pump price than your competitors, which will bring in new customers, increase volume, and add profit to your bottom line. Even better, if E15 is a fuel you've considered, it is very likely grant money won’t matter, because your current equipment is more than likely more compatible than what you’ve been led to believe.

Setting aside equipment for a moment, the reason higher ethanol blends are so attractive now, is the reason it has usually been attractive in the past. Ethanol costs less than gas. Prices have increased from last year, but gasoline prices have increased far more. In addition, the price of RINs (something you've also been taught to be wary of) has risen, giving ethanol blenders an opportunity to use the value of those RINs to lower the cost of high ethanol blends below the “fighting grade” in your market, while still adding a penny or two to your store’s bottom line.

The basic “math” is this: Rack prices for ethanol continue to be 10 to 20 cents below gasoline, so adding an additional 5 percent ethanol would only lower the cost of E15 by a half cent or a penny versus E10. The E15 would be 88 octane, because ethanol is much higher octane than gasoline, so E15 creates marketing opportunities even when it is not much cheaper than gas. However, RIN prices are above $1.00 per gallon of ethanol, which translates to the extra 5 percent ethanol in E15 bringing its price five to six cents below E10, providing retailers the opportunity for lower pump prices AND a slightly better profit per gallon. Competitors with E10 can only match by giving up significant margin. Or adding E15…

As to the equipment question, EPA recently announced a proposed rule on E15 labeling and underground storage tank compatibility, which could make it easier for station owners to prove what we have always known is true - most existing station equipment is already compatible with E15 (and much higher blends, actually). Many station owners have been told – repeatedly - their equipment may not be compatible with E15, and have been left to imagine the incompatible parts were underground and expensive, which is rarely the case. The EPA proposed rule references ACE’s Flex Check E15 compatibility tool as a place station owners can get an idea how compatible their station might be.

We encourage you to check out the equipment at your own station at flexfuelforward.com or by clicking the Flex Check link above, and if you’ve got time, we encourage you to comment on EPA’s proposed rule, and let them know you might be interested in selling E15 if it didn’t involve clearing a bunch of hurdles no other fuel has to face. And as always, feel free to contact me at rlamberty@ethanol.org or Chuck Beck at cbeck@ethanol.org if you’ve got questions.