Renewable Fuels Association

July 22, 2014

Ethanol produced in the United States has been the most economically competitive motor fuel in the world over the past four years and has played an important role in reducing consumer fuel costs, according to a new analysis released today by the Renewable Fuels Association (RFA).

The analysis, conducted by ABF Economics, examined actual wholesale prices paid for ethanol, gasoline, and alternative octane sources in several key U.S. and world markets in the 2010–2013 timeframe. Based on the market data, the report concludes that “…U.S.-produced ethanol is an exceptionally competitive additive and fuel source…” and that “…U.S. ethanol has emerged as the lowest cost transportation fuel and octane source in the world over the past several years.”

Commenting on the analysis, RFA President and CEO Bob Dinneen said, “As proven by the recent boom in exports, American-made ethanol has evolved into the most cost competitive transportation fuel and octane source in the world. Through rapid technology adoption and innovation, U.S. producers have proudly earned the distinction of being the global leader and low-cost producer of clean-burning, renewable ethanol.”

“Despite the fact that ethanol offers greater consumer choice at a lower cost, entrenched petroleum companies continue to erect barriers that deny access to larger volumes of renewable fuels,” Dinneen continued. “In a truly free market, consumers would always choose a fuel that is produced domestically, is better for the environment and climate, and costs much less than gasoline. Unfortunately, free markets only exist in text books, underscoring the need for monopoly-breaking policies like the Renewable Fuel Standard.”

The ABF Economics study found that even after accounting for transportation costs to the reference markets of Los Angeles, Chicago, and New York, “The ‘spread’ between ethanol and RBOB [gasoline] has averaged 30 to 40 cents per gallon over the past four years in these three key markets, and the difference averaged more than 60 cents per gallon in 2012.”

As a result of this cost differential, “…ethanol blended with RBOB to produce reformulated gasoline at a 10 percent (E10) blend has reduced the cost of motor fuel to consumers.” Importantly, the author notes that ethanol’s impact on gas prices goes far beyond the wholesale price spread: “This does not include the additional downward impact ethanol has on gasoline prices as a result of extending supplies and reducing demand for crude oil.”

In closing, the study indicates that the competitiveness of U.S. ethanol will only improve in the future: “This competitive advantage is expected to increase further, as U.S. ethanol and feedstock producers adopt new technologies and crude oil prices continue to trend higher.”

Click here to read the report "The Economic Competitiveness Of U.S. Ethanol."

To read the original story, go to : New Analysis: U.S. Ethanol Is Lowest Cost Motor Fuel, Octane Source On The Planet

Fleet Owner

July 15, 2014

By David Cullen

A new engine/powertrain combination developed by Cummins Inc. that’s fueled by E85 (an ethanol/gasoline blend)  cuts carbon-dioxide (CO2) emissions by 50% to 80% vs. a baseline gasoline-powered medium-duty truck, according to the manufacturer.

Dubbed the ETHOS engine by Cummins, the 2.8L powerplant was designed specifically to run on E-85, which the engine maker describes as a “clean-burning blend” of 85% ethanol and 15% gasoline.

Cummins said that “to take full advantage of the favorable combustion attributes and potential of E85, the engine operates at diesel-like cylinder pressures and incorporates advanced spark-ignition technology” to “deliver the power (up to 250 hp) and peak torque (up to 450 lb-ft) of gasoline and diesel engines nearly twice its 2.8L-displacement.”

The engine maker said that the over 1,000 miles and 1,500 hours accumulated on the ETHOS 2.8L over the past 2.5 years shows that “this technology is capable of far exceeding the 50% CO2 emissions reductions outlined in the project's goals.”

A final on-road validation testing phase has been underway in the Sacramento, CA, area since June and will continue into this month.

"The Cummins ETHOS engine, developed through a research partnership with the California Energy Commission (CEC), clearly demonstrates that by combining innovative engine design and combustion approaches with low-carbon alternative fuels, we can determine a path to significant reductions in greenhouse gas (GHG) emissions," said Wayne Eckerle, vice president-- Research & Technology for Cummins.  He noted that the engine maker is very appreciative of the CEC's funding participation in this important effort."

The ETHOS incorporates an integrated stop-start system to further reduce fuel consumption and emissions. In stop-start mode, the engine shuts down after the vehicle comes to a complete stop and the brake pedal remains depressed, Cummins explained. As the driver's foot is lifted from the brake, the system automatically starts the engine “to seamlessly allow acceleration from the stop.”

In addition, Cummins-integrated specific system controls, along with a robust starter, smart alternator and sensors, combine to handle the additional stop-start duty cycle and maintain reliable operation over the life of the engine, the company stated.

Cummins said it also worked closely with Allison Transmission to integrate that company’s 2000 Series transmission into the powertrain to ensure “smooth and efficient stop-start operation,” noting that the transmission is equipped with hydraulic circulation features “to ensure smooth operation and quick vehicle launch during stop-start driving.”

Additional partners in the project included Valvoline, which provided NextGen engine oils specifically designed for lower CO2 emissions, and Freightliner Custom Chassis Corp. (FCCC), which provided a prototype MT45 Class 5 step-van vehicle.

Read the original story here : Cummins : E85-fueled Engine Cuts Medium-Duty CO2 Emissions by 50% to 80%

The Hill

July 16, 2014

By Sens. Chuck Grassley and Amy Klobuchar

It’s vacation season across America. That means family road trips are underway and the traveling public is paying even closer attention when they pull up to the pump.

America’s road warriors have long cherished affordable gas prices. Today’s drivers also value clean-burning fuel choices that help the environment and boost America’s energy independence.

Look back four decades through the rearview mirror.

History shows how the 1973 oil embargo exposed the economic risks and geopolitical vulnerabilities associated with perilous dependence on foreign oil. While gas shortages roiled consumers, the embargo gripped the U.S. economy and foreign policy with steep consequences.

Since then, policymakers have worked to bring greater stability to U.S. energy security, through the creation of the Strategic Petroleum Reserve and more domestic production, conservation (fuel economy standards) and diversification, including incentives for homegrown, clean-burning, renewable biofuels.

Most recently, Congress created the Renewable Fuel Standard (RFS), in 2005, to promote the development and use of domestic renewable biofuels. We also supported the law’s expansion in 2007 to bring 36 billion gallons of renewable fuels online annually by 2022.

The federal law has helped to displace oil imports, increase domestic energy security, create jobs in rural America, curb pollution with cleaner-burning fuel and lower prices at the pump for consumers. Pure and simple, the RFS is good for America’s energy, as well as its environmental and economic stability.

In recent years, Congress also has enacted provisions to promote the installation of blender pumps at gas stations nationwide, providing consumers with a greater choice of fuels.

Still, the nation’s energy policy is running into some bumps in the road. For starters, the Environmental Protection Agency last fall pitched a misguided proposal to greatly reduce the RFS for fiscal 2014. The proposed rule would lower the volume targets for advanced biofuels from 3.25 billion gallons to 2.2 billion gallons. This proposal is causing uncertainty that could scare off future investments in this promising, innovative industry.

Biofuels also are facing stiff resistance from Big Oil. This time, it’s not OPEC putting a stranglehold on the marketplace. It is instead the powerful oil industry that, reports show, is blocking the pipeline for biofuels to get to market.

Last fall, we asked the Department of Justice and the Federal Trade Commission (FTC) to investigate possible anticompetitive practices by the oil industry. We shared concerns we heard that oil companies allegedly are mandating retailers carry and sell premium gasoline, which prevents the retailer from selling renewable fuels without installing expensive infrastructure upgrades. By forcing a franchisee to carry premium gasoline as a condition of carrying regular gas, the oil company may be using its economic power to leverage unreasonable, discriminatory arrangements that are in violation of federal laws. The Department of Justice and the FTC responded with assurances that they are taking steps to identify, prevent and prosecute practices in the petroleum markets that violate anticompetitive or fraudulent business practices.

It’s a long-standing tactic for these big international oil companies. On the one hand, Big Oil argues that the RFS is broken because the industry says it can’t mix the higher blends. On the other hand, those same companies appear to be doing everything they can to prevent any widespread investment in infrastructure by their franchisees and smaller stations that are buying and selling their gasoline.

Big oil companies can cry crocodile tears, but it’s their self-inflicted actions that are standing in the way of meeting the requirements of the RFS, not ethanol producers. Big Oil can’t argue it should be repealed because it doesn’t work when Big Oil is the one responsible for ensuring that consumers don’t have the choice for higher ethanol blends.

That’s why we kindly suggest the decision-makers at the Justice department and the FTC take a close look at a recent investigative study conducted by the Renewable Fuels Association. Its fact-finding analysis shows how oil companies appear to be blocking the sale of greater volumes of renewable fuels through bullying business tactics. Big Oil likes to say it has no control over what’s offered at the pumps of retail gas stations and franchisees — but the facts say otherwise.

The report’s “Consumer Choice Report Card” shows less than 1 percent of branded stations offer E15 or E85. Specifically, of nearly 48,000 retail gas stations carrying a “Big Five” oil company brand, fewer than 300 offer E85 or E15. That flunks any reasonable standard of fairness in the marketplace. The report flushes out fuel supply contracts, franchise agreements and other documents that show how Big Oil flexes its authority to undermine the sale of E85 and E15 renewables.

Tellingly, according to the report, independent stations are four to six times more likely to offer E85 and 40 times more likely to offer E15 than stations selling a “Big Five” oil brand. It would be foolish to view these findings as a fluke. Facts are hard to fabricate.

America has mapped out a long-term strategy to pump up competition in the transportation fuels sector, secure innovative, cleaner renewable fuels to protect the environment and boost more domestic oil production to help immunize the economy and consumers from dependence on foreign oil.

Let’s not let Big Oil spoil the route to greater, cleaner energy independence. U.S. energy security is not for sale. It’s time to hand over the keys to consumers and let renewables and traditional fossil fuels compete side by side at the pump.

Ethanol Producer Magazine

July 16, 2014

By Holly Jessen

When Charlie Good, mechanic and owner of Good & Quick in Nevada, Iowa, started preparing to add E15 to his product offerings at his independent gas retail store, he noticed his contract with ConocoPhillips said he couldn’t sell anything with an ethanol content higher than E10. He called his supplier and was told he’d have to either wait several months, until his contract was up, or pay $30,000 to get out of it. In the end, Good negotiated an agreement that he would put his own canopy up and just fly the ConocoPhillips flag for the remainder of the contract.

Good sees absolutely no downside in letting his ConocoPhillips contract run out and going with an unbranded fuel supplier. Still, he admits it was a difficult decision. “I’m not going to lie to you and tell you I wasn’t afraid of doing this,” he said. “… I know how the big boys can eat you up if they want to.”
Nationwide, there are 135,000 retail gas stations, with 84,000, or 63 percent, under single ownership, says Mike O’Brien, vice president of market development for Growth Energy. And, unbranded or independent retailers, some of which are under single ownership and some that are not, are starting to offer E15. Over time, this will give those companies a competitive advantage and, eventually, force major oil brands to start selling it, he adds.

Good agrees, saying that offering alternative fuel blends is a way for independent retailers to survive and excel against oil majors by finding a niche. “I don’t believe you will see Casey’s or Kum & Go or any of these majors adapt to these fuels, until the public demands it,” he says, naming his two competitors in Nevada.

Since his central Iowa gas station switched to an unbranded fuel, there have been no problems with fuel quality and Good is so confident there won’t be, he 100 percent guarantees the fuel. So far, the only complaint Good has received is that that store no longer takes ConcoPhillips credit cards. Other than that, his customers couldn’t seem to care less that the canopy no longer displays the name of an oil major. “Brand loyalty means nothing now,” he says. “It’s all about what it’s going to cost me.”

In fact, the end of May, Good had sold nearly 7,000 more gallons of fuel as compared to the same time last year. “The big mistake that I made was, I only put one blender pump in,” he says, adding that although he spent half a million dollars updating his station he wishes he had found the extra money to make all three of his pumps blender pumps. In all, 15 to 20 percent of his fuel sales is ethanol.

There are other benefits. He’s spending 2 to 7.5 cents less a gallon on unbranded fuel stock and saving significantly on credit card fees. His new supplier charges him a 1.7 percent fee on credit card payments from customers, down from 3 percent, his previous rate, saving him about $3,000 in one recent month.

Detour Ahead
Good isn’t the only retailer encountering pushback from big-name petroleum distributors attempting to limit retailers’ options when it comes to selling ethanol blends, says Robert White, director of market development for the Renewable Fuels Association. That’s been true for E85 but it’s particularly been an issue with E15. “The majors, at least until they feel a pinch from competitors, are pretty much either requiring that they put in all new equipment, label it to the nines, which would basically scare off any reasonable person, or they can’t put it under their canopy at all.” 

Darin Schlapia, the branch manager of Creston Farmer’s Co-op in Iowa, encountered difficulty when he attempted to negotiate a brand agreement with Cenex for a new Farmer’s Co-op location, which will be built in Mount Ayr, Iowa, this fall. Even though Cenex markets ethanol and distillers grains and recently acquired a 133 MMgy ethanol plant in Rochelle, Ill., its contract requires gas retailers offer at least two different grades of gas, E10 and straight gas with no ethanol content. In order to sell E15 and other higher blends, as the co-op planned, the gas station would have had to add additional equipment. Schlapia knew from sales numbers at the Farmer’s Co-op station in Afton, Iowa, that the cooperative would sell more gallons of fuel if it offered E15 and other ethanol blends instead of ethanol-free gas. “Afton sells regular 87 gasoline and we might sell 50 gallons a day at the most,” he says, adding, for comparison, that the store could sell about 600 gallons of E10 in the same day. “People are definitely choosing the higher ethanol blends. To spend that much money on equipment, just to have another grade of gasoline, was not economical.”

The Mount Ayr station will still purchase its fuel from Cenex but, because it’s not a Cenex branded station, it isn’t allowed to display that logo anywhere. Schlapia is disappointed in the Cenex stance on E15 and thinks it needs to be re-evaluated. And yet, he understands that the company is trying to make sure all Cenex branded stations have a consistent offering of the same fuels, he says.

In Kansas, Scott Zaremba says Phillips 66 created new rules designed to keep him from selling E15 after he’d already moved forward with becoming a registered E15 retailer. The oil company told him he had to sell E15 on a yellow E85 hose, which actually goes against U.S. EPA requirements for selling E15 to heritage vehicles. So he paid $380,000 to get out of his contract and changed the name of his seven gas stations from Zarco 66 to Zarco USA. “They told me if I used anything with 66 in my name they’d hang me out to dry,” he says.

The move was well worth it, in his opinion. “We have to be able to sell whatever products we want out of our retail facilities that we own and we operate,” he says. “… They were just trying to dictate what was going to happen at the facility and we weren’t going to let them.”

In Minnesota, the Minnesota Service Station & Convenience Store Association is working with independent retail stations to band together under one logo and the name Minnoco. So far, four retailers in the Minneapolis, St. Paul area have joined, says Lance Klatt, executive director of MSSA. Although selling alternative fuels isn’t a requirement for Minnoco retailers, most are doing just that. With the help of various funding sources, including Growth Energy, the Minnesota Corn Growers, Minnesota Department of Agriculture and Minnesota Lung Association, Minnoco retailers have received financial support to install equipment to sell E15 and other higher ethanol blends. That’s a big draw for retailers who might not be willing to take a chance on E15 otherwise, Klatt says. 

Retailers have responded enthus-iastically, appreciating the opportunity to bring new fueling options to their customers and make their own decisions on how to run their business. Klatt expects there will be 25 Minnoco stations offering E15 and higher ethanol blends by November. “Right now we feel like it’s the most sought after image in the Minneapolis marketplace,” he says, adding that retailers like the look of the logo as well as the opportunity to manage their own brand.

Of those stations already signed up, 15 or 20 percent of their sales are E15, E30 and E85. That’s driving increased fuel sales to current and new customers. There’s also work being done in cooperation with the Minnesota Pollution Control Agency and the Minnesota Agriculture Department to possibly launch E15 statewide, labeling it as the new midgrade fuel, he says. 

Read the original story here : E15 Retailers Get Creative