There’s a big push throughout various parts of the country to introduce higher ethanol blends beyond the traditional E10 level.
Adding 5% more ethanol results in a slight one-point increase in octane, from 87 for E10 to 88 octane for E15. In addition to a higher octane claim, the product can currently be offered at a price below regular E10, primarily due to the current government-mandated renewable fuel standard.
Store operators who adopt the new fuel may gain a competitive advantage, and their customers may enjoy higher octane at a lower price. At face value, this seems like a slam dunk that should virtually assure success and move this new product into the top volume category, if not replace E10 entirely, as the renewable fuels industry craves.
On the flip side, E15 promoters fail to mention that gas mileage suffers with higher ethanol blends.
Consumer research done by E15 advocates revealed that calling the product what it is, namely ‘Unleaded with 15% Ethanol’ or E15, was not good for sales. To overcome this challenge, the ethanol industry folks introduced the name “Unleaded 88” to place on the price sign and dispenser, thus promoting the higher octane at a lower price than Regular 87.
The only indication that Unleaded 88 is really an E15 product is on the little orange sticker on the dispenser next to the nozzle. Recent presentations by one ethanol industry group have touted the use of the name Unleaded 88 on a price sign as a “best industry practice,” which has prompted some industry leaders to question how consumer deception could be considered a best practice.
They pointed out that the only factor determining whether a consumer can legally as well as prudently use E15 is ethanol content. They questioned how leaving out the ethanol percentage in the new naming convention can be termed a best practice.
The widespread adoption of Unleaded 88 is fraught with other challenges. Current retail infrastructure tops the list for limiting factors.
During a recent presentation by one of the ethanol industry groups, they claimed “they have sites selling E15 that are 30 years old.”
But have they made all of the upgrades necessary to be doing it legally?
According to the Environmental Protection Agency (EPA), thread sealants certified for ethanol blends beyond E10 weren’t available in the marketplace before 2007, and EPA doesn’t believe all sites have used the +E10 thread sealant since that date due to its higher cost.
This is just one of the many items in an underground storage tank (UST) system that needs to be approved for use with blends of ethanol over 10%. Others include flex piping systems, gaskets, seals; the list is extensive. Every site is different, and retailers must do the extensive due diligence necessary to responsibly adopt this new product.
Many insurance policies (whether a state fund or private insurance) require compliance with all federal and state laws, including UST system compatibility with higher blends. Dispensing E15 with non-certified UST components could invalidate a cleanup claim and push financial responsibility back to the marketer or store owner.
In addition, E15 is not approved for all cars or other types of motorized machinery. Consumers that unknowingly use an E15 product could have their warranty coverages voided.
Responsible ethanol industry messaging to retail operators must begin with the true financial commitment necessary to responsibly and legally sell E10+ fuels.
It’s up to each E15 retailer to decide what is ethical when it comes to using product names that many consider to be at best less than transparent, if not outright deceptive.
Mark Radosevich is an industry advocate, 40-year petroleum professional and president of PetroActive Real Estate Services LLC, offering confidential mergers & acquisition advisory, representation and financing services exclusively to petroleum wholesalers. Contact him at [email protected], (423) 442-1327 or learn more at www.petroactive.net.
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