The Kudzu is an Asian vine that was intentionally introduced into the U.S. years ago for erosion control. It’s now known as the vine that ate the South. Fast growing and impossible to eradicate, it relentlessly engulfs trees and forests in its path. It’s a great example of a governmentally mandated idea that grossly missed the mark.
Ethanol is another plant-formulated wonder notion, designed to “make our lives better,” whether we like it or not. The current 10% ethanol (E10) gasoline concoction was foisted on the country around 2005 as a hedge against energy dependance from foreign sources, but years later was rendered unnecessary due to the fracking revolution.
With the imposition of the Renewable Fuel Standard (RFS) an entire ethanol industry was created that has grown so large that it has become an irresistible fact-of-life. Like the Kudzu, it’s another example of a governmentally mandated bright idea that defies logic and is elusive to eradicate.
The Environmental Protection Agency (EPA)’s recent approval to allow eight Midwest states to sell year-round E15 is when the current ethanol status-quo gets upset and becomes dicey for store operators and fuel marketers, as most underground storage tank (UST) systems can’t safely handle anything beyond E10.
Although this is currently a Midwestern issue, it isn’t too far-fetched to envision an expanded E15 market penetration into other states, given the relentlessness of the ethanol industry and the governmental greenies pushing higher blend levels and EV’s.
Underwriters Laboratory (UL) currently certifies most existing UST systems to an E10 level. Ethanol blends above E10 may be harmful to pumps, lines, gaskets, sealants and release detection components and do not have UL certification. This assessment was even supported by the EPA’s January 2020 opinion entitled “E15’s Compatibility with UST Systems.”
The degradation of the glues and fittings from the introduction of E15 gasoline has the potential to cause widespread fuel leaks. And guess who will be left holding the bag from these discharges? You guessed it; retail operators and fuel marketers, who have no control over what product is available for sale.
When leaks eventually occur from blends above the 10% threshold, claim denials can be expected from private insurance and many state tank funds, throwing the liability and clean-up costs back to the site operator or property owner. In other words, the fund would deny a claim in which noncompliance with ethanol compatibility was directly related to a discharge.
It is estimated that the cost to upgrade a currently compatible site to accommodate higher ethanol blends could exceed $200,000, rendering the recent EMV credit card upgrade fiasco small by comparison. In markets where E15 becomes the norm, UST system upgrade mandates may result once widespread leaks are detected.
Owners (or their fuel suppliers) that don’t upgrade a site that suffers a fuel discharge can expect to face numerous financial consequences from site closures, brand amortization recapture responsibility, lease and mortgage defaults and untold legal expenses.
Congress is introducing a bill entitled the “Higher Blends Infrastructure Incentive Program (HBIIA) Reauthorization Act” that will authorize $500 million for necessary UST upgrades. Not only is this a drop in the bucket, but it doesn’t come close to adequately upgrading the country’s retail petroleum infrastructure.
To further complicate matters, the money is doled out in the form of grants, which doesn’t cover the full cost of an upgrade, while the cost to hire a grant writer ranges from $5,000 to $10,000, with no guarantees that HBIIA money will be awarded.
Ignoring the ethanol industry’s vested interest in higher blend levels, this situation may be an insidious backdoor method to expedite the demise of retail petroleum, quietly foisted upon the industry by progressive environmental advocates in Washington, D.C.
Given all of this, plus the fact that ethanol produces 33% less energy than gasoline and most drivers around my neck-of-the-woods prefer pure gas in their cars and corn liquor in a bottle, logic suggests that ethanol’s perceived value is much higher than its actual worth, and realistically needs to sunset.
However, if it has grown too big to kill, then maybe formulating the stuff using kudzu versus corn could at least provide some tangible benefits.
For information on the HBIIA grant program, I recommend contacting the fuel marketer’s association in your state. Join if your company is not already a member and become actively involved. They are fighting the good fight on
your behalf.
The views and opinions expressed in this column are those of the author and do not necessarily reflect the views of CStore Decisions.
Mark Radosevich is a recognized industry advocate, possessing over 40 years of continuous petroleum industry engagement. He is president of PetroActive Services, a strategic business advisory firm that exclusively serves the wholesale petroleum industry. He can be reached at: [email protected] or (423) 442-1327.
