QUEST FOR ‘PURE GAS’

Ris­ing de­mand for E0 boosts re­new­able fuel in other blends

The Washington Times Daily - - FRONT PAGE - BY BEN WOLF­GANG

Ethanol’s rise over the past decade has given birth to an un­der­the-radar mar­ket: Amer­i­cans who are will­ing to travel miles out of their way and pay sig­nif­i­cantly more per gal­lon for ethanol-free fuel.

Like lo­cally sourced food or an­tibi­otic-free chick­ens and eggs, so-called E0, or “pure gas,” has gen­er­ated a cult­like fol­low­ing will­ing to pay a pre­mium. More than 12,000 ser­vice sta­tions across the U.S. and Canada now of­fer E0, ac­cord­ing to pure-gas. org and other groups that track fuel trends.

While fed­eral man­dates make find­ing pure gas some­what dif­fi­cult

— the vast ma­jor­ity of sta­tions in the U.S. sell pri­mar­ily E10, gaso­line blended with about 10 per­cent ethanol — spe­cial­ists say there is a ded­i­cated mar­ket for the prod­uct. Some cus­tomers may hold fast to the no­tion that ethanol dam­ages en­gines over time, or they may want to protest govern­ment poli­cies that have forced in­creased amounts of ethanol into the gaso­line sup­ply.

What­ever the rea­son, the ser­vice sta­tion own­ers that sell pure gas, of­ten at a per­gal­lon price 40 cents higher than E10, have found in­creas­ing de­mand.

“Con­sumers don’t buy things be­cause re­tail­ers sell them. Re­tail­ers sell them be­cause con­sumers want to buy them. If you see an out­let that’s sell­ing pure gaso­line, non­blended gaso­line, it means there’s a sig­nif­i­cant de­mand in the mar­ket,” said R. Timothy Colum­bus, a Washington lawyer who rep­re­sents the So­ci­ety of In­de­pen­dent Gaso­line Mar­keters of Amer­ica and the Na­tional As­so­ci­a­tion of Con­ve­nience Stores.

“People may have 1,000 rea­sons they want to buy it,” he said. “Re­tail­ers have only one rea­son they sell it, and that is con­sumers want it.”

Ethanol pro­po­nents at­tribute the de­sire for E0 fuel to the pub­lic re­la­tions war waged by the oil and gas in­dus­try, whose share of

the fuel mar­ket could be chipped away fur­ther by growth of the ethanol in­dus­try.

Other trade groups, such as those rep­re­sent­ing small-en­gine man­u­fac­tur­ers, also have taken a pub­lic stand against ethanol. They warn that the fuel harms their prod­ucts and urges the pub­lic to be wary of gaso­line with in­creas­ingly high lev­els of ethanol.

“We’ve seen these scare tactics from the oil in­dus­try and even the small and off-road en­gine in­dus­tries. … You have the com­bi­na­tion of all the neg­a­tiv­ity be­ing well-funded and the op­por­tu­nity for these fuel re­tail­ers to cap­i­tal­ize on that con­cern,” said Robert White, vice pres­i­dent of in­dus­try re­la­tions at the Re­new­able Fu­els As­so­ci­a­tion, a lead­ing ethanol trade group.

While re­fin­ers ob­vi­ously can sell E0 to ser­vice sta­tion own­ers who in turn sell it to cus­tomers, the un­der­ly­ing process is more com­pli­cated.

The 2007 Re­new­able Fuel Stan­dard, fed­eral leg­is­la­tion passed with bi­par­ti­san sup­port and signed by Pres­i­dent Ge­orge W. Bush, called for in­creased amounts of ethanol to be blended into the na­tion’s gaso­line sup­ply each year. Right now, the man­date calls for a roughly 10 per­cent blend av­er­age.

That doesn’t mean that ev­ery sin­gle gal­lon of fuel sold in the U.S. con­tains 10 per­cent ethanol. Higher blends such as E15 or E85 are also avail­able at many sta­tions across the coun­try, just as E0 is be­com­ing in­creas­ingly com­mon.

To com­ply with the fed­eral re­quire­ments, fuel com­pa­nies must sub­mit re­new­able iden­ti­fi­ca­tion numbers, or RINs, to the En­vi­ron­men­tal Pro­tec­tion Agency.

Com­pa­nies that sell E0 must have higher blends, such as E15, avail­able else­where. If they’ll fall short of the 10 per­cent av­er­age, they can pur­chase RINs from other com­pa­nies that ex­ceed the thresh­old.

“The way it works is be­cause EPA set the stan­dard now just over 10 per­cent. For ev­ery gal­lon of E0 that gets sold, some­where else in the coun­try there’s some amount, a cor­re­spond­ing amount, of E85 … or E15 or some other fuel that’s be­ing blended into the mar­ket to pro­vide the RINs that en­able the re­tailer of E0 to sell that fuel,” said Patrick Kelly, se­nior fu­els pol­icy ad­viser at the Amer­i­can Petroleum In­sti­tute, the oil and gas sec­tor’s lead­ing trade or­ga­ni­za­tion.

Mr. Kelly said the API is fully sup­port­ive of E10 for high­way and non­road en­gines.

“Above and be­yond that, that’s a whole host of other is­sues,” he said, reit­er­at­ing concerns that E15 and higher blends could pose prob­lems for at least some en­gines.

Mov­ing for­ward, the ethanol in­dus­try be­lieves that E0’s share of the mar­ket­place even­tu­ally will peak.

“I think there’s room for growth be­fore they fig­ure out where the mar­ket pen­e­tra­tion value is,” Mr. White said. “At some point, if the sta­tion across the street of­fers [E0], the mar­gin isn’t go­ing to be as strong. The com­pe­ti­tion will drive that back down to [con­sumers saying], ‘OK, maybe E10 is a bet­ter deal.’”

ASSOCIATED PRESS PHO­TO­GRAPHS

WEL­COME SIGN: More than 12,000 ser­vice sta­tions across the U.S. and Canada now of­fer ethanol-free fuel, at­tract­ing cus­tomers will­ing to go the dis­tance and pay a pre­mium for “pure gas.” Mean­while, higher blends such as E15 or E85 pro­duced from corn are also be­com­ing com­mon.

ASSOCIATED PRESS

Cars across the U.S. are run­ning on an av­er­age 10 per­cent ethanol fuel as a re­sult of the 2007 Re­new­able Fuel Stan­dard call­ing for an in­creas­ing amount of biofuels.

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