Blender pumps dispense more ethanol choices
Saint Louis Today
MOSCOW MILLS — For years, the only choices at the gasoline pump were regular, premium or mid-grade gasoline.
A few years ago, some rural gas stations began carrying E85, an ethanol blend derived mostly from corn.
Now, Warrenton Oil Co.'s FastLane station off U.S. Route 61 in Lincoln County is taking those choices a step further by becoming the first Missouri retailer to install so-called blender pumps that enable the sale of 20- and 30-percent ethanol mixes, E20 and E30.
The Moscow Mills station is among 100 or so nationwide — mostly in the Corn Belt — to install the new pumps. They're part of a broader effort by farmers and biofuels producers to stimulate new demand for the grain-based fuel, which has leveled off after a dramatic boom earlier this decade.
Plans call for additional blender pumps to be added this month at another Warrenton Oil station in Taylor, Mo., as well as a location in western Missouri under the program, said Gary Clark, senior director of market development for the Missouri Corn Growers Association, which initiated a pilot program last fall to get some of the new pumps installed. There are no blender pumps installed in Illinois, according to an industry trade association.
The Corn Growers Association invited the Missouri Department of Agriculture's Weights and Measures Division to participate in the program to give station owners confidence they wouldn't run into regulatory snags, Clark said.
The pumps at the Moscow Mills station don't look much different than those at any corner gas station, except there are two hoses — a yellow one for fuel products containing more than 20 percent ethanol and a black one for gasoline that contains up to 10 percent ethanol. And there are five buttons representing different fuel products for consumers to choose from: regular gasoline, premium gasoline, E20, E30 and E85.
Only so-called flexible fuel vehicles can burn fuel that contains more than 10 percent ethanol. And only about 8 million, or 3.5 percent, of the nation's fleet of cars, pickups, vans and sports utility vehicles fit that category.
Blender pumps tap two underground tanks; one with gasoline and one with ethanol. A dispenser mixes the fuels on the spot to create a prescribed ethanol-gasoline blend. Typically, ethanol is mixed with gasoline before delivery to retailers.
The technology is the same used to mix regular and premium gasoline to create a mid-grade product. In this case, the only difference is the pumps are outfitted with special hoses and fittings made to withstand ethanol's corrosive properties.
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Dave Baker, vice president of sales for Warrenton Oil Co., said the decision to add the new pumps was about giving consumers more options at the pump. He said the pumps cost about 25 percent more than a typical pump, but didn't specify exactly how much.
For the ethanol producers, blender pumps represent a possible avenue to escape market saturation.
That's because most gasoline sold in Missouri and elsewhere across the country already contains the maximum 10 percent ethanol. And sales of E85 have been slow to develop because relatively few stations carry it and only a small percentage of vehicles can use the fuel. So producers are literally running out of avenues to sell more ethanol.
Clark, of the Corn Growers Association, believes blender pumps can also be part of the solution even though most vehicles can't run on mid-level ethanol blends. "Blender pumps give us an avenue to break through that," he said. "It has the potential to have a really big impact."
Of course, it remains to be seen if consumers will embrace the new ethanol products.
Not too long ago, it was thought that E85 would elevate ethanol from being a fuel additive to a gasoline alternative. But that hasn't happened.
One reason is infrastructure. Many retailers didn't see it as worthwhile to invest tens of thousands of dollars for new pumps to dispense a fuel that consumers weren't buying. Value is another factor. Ethanol contains less energy than gasoline, so drivers who fill up with E85 get 20 percent to 30 percent fewer miles per gallon than if they'd filled up with gasoline.
Ethanol producers say the new blends — E20 and E30 — help address that problem. They cite a 2007 study research co-sponsored by the American Coalition for Ethanol and the Department of Energy that shows mid-level ethanol blends represent an optimal mix that may provide equal or better fuel economy than regular unleaded gasoline. The petroleum industry disputes those findings.
At the FastLane station in Moscow Mills, regular gasoline was selling for $2.40 a gallon on Wednesday morning. E85 was $2.25 a gallon; E30 sold for $2.30 and E20 was $2.35.
The ethanol industry is also lobbying to get federal regulators to allow non-flex fuel vehicles to burn fuel containing up to 15 percent ethanol. A decision, expected earlier this month, was postponed until the middle of next year.
Ethanol producers say new products and blending more ethanol into the nation's gasoline pool are necessary to help meet the 2007 federal law requiring the use of 36 billion gallons of ethanol by 2022.
"There has to be a mechanism in the infrastructure system to deliver that fuel and right now it doesn't exist," said Robert White, director of market development for the RFA.
That push by the ethanol industry faces opposition from a range of interests, from food and livestock industries to oil companies and environmentalists, all of which have urged the EPA to deny the request.
Ronald Leone, executive director of the Missouri Petroleum Marketers and Convenience Store Association, said issues such as consumer education and labeling are imperative to the rollout of blender pumps.
More importantly, there needs to be a business case for the pumps before retailers are going to be willing to install them. Despite higher prices in recent years, gasoline retailing is a low-margin business — a reason major oil companies have mostly exited the retailing business.
"This is a substantial investment. Even with all of the government incentives, this has to make economic sense," Leone said.
Federal and state tax credits are available to help offset the cost of installing blender pumps, which can be tens of thousands of dollars. The Missouri Corn Merchandising Council is also offering up to $2,000 per station to help offset the cost of the blender pump installation.
Benefits for the retailer include providing customers with additional choices and a chance to capture the federal tax credit of 45 cents per gallon of ethanol that's mixed with gasoline. Right now, the credit goes to refiners and fuel wholesalers who mix ethanol with gasoline at storage terminals.
The return on investments on E85 dispensers was iffy at best. Now, with government incentives, the blender credit and with retailers facing pump upgrades to enhance debit card security, ethanol producers see this as the right time to push blender pumps.
"If there was ever a perfect storm, it's now," White said.
