Gaining a Competitive Edge With Higher Fuel Blends

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Gaining a Competitive Edge With Higher Fuel Blends

By Melissa Kress, Convenience Store News - 09/19/2012

JERSEY CITY, N.J. -- Selling higher fuel blends makes sense and, according to one retailer on the forefront of the issue, it also makes cents.

During today's webinar, "Creating a Competitive Advantage With E15 and Higher Blends of Ethanol Fuels," presented by Convenience Store News and sponsored by Growth Energy, all six speakers agreed that E15 and higher blends are the way of the future -- for retailers, consumers and the overall U.S. economy.

Scott Zaremba, president of Zarco 66 and Earth Friendly Fuels, was the first retailer in the United States to bring E15 to the pumps. He operates eight locations outside the Kansas City metropolitan area. He officially cut the ribbon on an E15 pump at his site in Lawrence, Kan., in July and reported today that he has no regrets. With no promotions or advertising, Zaremba's business is seeing between 15 percent and 20 percent of its customers opting for E15.

And that may just be the beginning. He expects to see big changes as E15 hits all eight of his locations and a marketing campaign gets underway. Although many retailers have raised liability concerns about motorists who put E15 in a car not built for the fuel, Zaremba said there have not been any engine damages or customer complaints traced back to a fuel issue.

Best of all is the edge E15 gives Zarco 66 in the marketplace. "It is a tool that helps differentiate us from other retailers in our market," he said. "So make sure you are diligent and do all the things you need to do to bring in E15 and you will be successful."

Aside from it being a prudent business move, offering E15 helps the local economy, and the country as whole, said Tom May, director of marketing at MFA Oil Co. Buying higher blends of ethanol fuel supports local farmers, which is a big plus for consumers who wish to keep their money in the local economy, he explained. More than that, ethanol blends helps "fuel our energy security," May added.

"MFA believes it is the right thing to do as a retailer and the right thing to sell for our customers," he said.

Retailers who want to throw their hats into the E15 ring need to meet certain requirements, explained Robert Anderson of the Office of Transportation and Air Quality at the U.S. Environmental Protection Agency (EPA). Retailers who get E15 blended upstream must label their fuel pumps appropriately; maintain records for five years from the date the fuel was received or created; and comply with all other appropriate federal, state and local fuel requirements.

Retailers who blend on-site, like Zaremba’s Zarco 66, must meet those requirements and more. They must submit a fueling mitigation plan for EPA approval, participate in an E15 compliance survey and register as an oxygenate blender for RFG (reformulated gasoline) if blending in RFG, he said.

Chad Johnson, Encore marketing manager at Gilbarco, also advised that retailers need to consider several key questions before deciding to add E15 or higher blends to the forecourt. For example, they need to ask what the return on investment will be, will they need new tanks and what the risks of a consumer misfueling are, he said.

Retailers, though, do not have to go it alone. Growth Energy's market development department works with retailers to make ethanol a successful part of their business, according to Mike O'Brien, vice president, market development at Growth Energy. Specifically, the company helps retailers with the initial startup, helps them develop and execute promotional programs to drive business, and provides the tools that help make ethanol a success, he said.

E15 is taking off away from the gas station as well. Approximately three years ago, manufacturers approached NASCAR executives and leaders with the idea of bringing alternative fuels into the sport, recalled Richard Childress, president and CEO of Richard Childress Racing. NASCAR chose E15 and since then, the sport has logged almost three million miles with E15 in high-performance engines that "take a brutal beating," he noted.

Two years into a six-year E15 agreement, NASCAR has not registered one fuel-related problem, Childress reported.

NASCAR has also tested E30 without any issues, he explained, adding that E30 may be the next step in fuels. "I think that is the future in not only racing but in modern vehicles," Childress said.