getting more ethanol to consumers
TRANSCRIPT
E15 Update • E15 is now available in 13 states at more than
85+ stations. • New stations in new states in-progress.
Examples: TX, GA, FL, VA. • Many new stations in-progress in existing states. • Sales remain strong for most, all stations
reporting E15 sales between 10-45% of total sales volume.
E15 Update • Continuing to explore options in RFG markets.
Know of companies in those areas exploring equipment options.
• Conversations continue with all retailers across the country that will listen.
• Terminals looking at offering blended E15 – until terminals start offering, can’t do E15 w/o E85.
• Prime the Pump. • Chicago E15 Mandate. • Summer volatility season remains biggest hurdle
– presses importance of RFG markets.
E85 Update • More than 200 new stations in 2014, most outside of the
Midwest. • RIN, ethanol and gasoline markets continue to push new
players into the market and drive more enticing pricing. • Recent drop in gas prices will likely slow volumes. • Stations with slow turnover rates potentially upside down. • Ethanol plants offering direct product becoming more important,
not only locally, but with destination retailer delivery via truck or rail.
• Know of many new stations scheduling installations across the country. Hundreds of others waiting on EPA’s RVO decision.
• Pushing AFDC (DOE) and E85prices.com to allocate more resources to properly maintain E85 station database(s).
E85 Pricing
• Both pictures taken Saturday, December 6th. • Left: E85 $.50/gal more; Right: $1/gal less.
Retailer Education
• RFA’s Efforts: – Promote industry initiatives. – Continue national educational effort, but also target key
states specifically and flood markets with information. – Pitch “oil-like” business case. – Utilize existing databases to contact retailers by email,
mail and fax. Collecting more contact info as available. – Conduct state-specific webinars, workshops when
feasible. – Webinars, workshops, face-to-face meetings and other
outreach conducted. More planned.
Retailer Education
• Fuel retailers compete on RUL, which is 87.2% of their business.
• Premium sales are between 1.5-5%. Keep in mind how much of this is midgrade.
• Now more vehicles have favorable E15 language & warranty than FFVs for E85 or vehicles that require premium!
• Need all of ethanol industry to help push their local retailers to explore options.
BYO Ethanol Campaign
• Extend key elements of program for next 3 years: – Continue hosting webinars and educational
seminars/workshops. – Maintain website: www.BYOethanol.com. – Attend and exhibit at “Top 5” petroleum marketer events.
• Fund infrastructure compatibility review to assist retailers and regulators for all E10+ blends. – Project underway, will be complete in less than 4 months. – Includes compatibility review of Chicago stations for E15 mandate
discussion.
• Fund infrastructure. – Funding effort in KS to collect data for business case. – Stations “in the works” in outside of Midwest.
Dispenser News
• EMV changes coming soon, dispensers must be compatible by 2017, or retailers accept liability for fraudulent transactions.
• UL is dragging their feet on elimination of 87 listing protocol, which would eliminate E10 only dispensers.
• Wayne made announcement at end of July that one of their most popular dispensers, the Ovation 2, will be E25 compatible, eliminating E10 only option.
• Gilbarco discussing similar options. • Efforts underway to determine cost to switch early. But,
doesn’t guarantee E10+ blends are sold, just that infrastructure is there.
Infrastructure Funding Efforts
• Prime the Pump. • Other industry initiatives. • State Incentives:
– Tax Credits. – Grant Programs. – Motor Fuels Tax Rates.
• Local Incentives: – Gilbarco/Corn Growers. – American Lung Association. – Individual Ethanol Plants. – State Corn Growers. – Clean Cities Coalitions. – MN E15 Coalition.
Why does that matter?
• The typical station owner today doesn’t have deep pockets.
• Investment is typically focused elsewhere on higher margin items (think coffee, etc.).
• Belief in need of franchises remains high with the “I don’t want to worry about that” mentality.
• If you want to push infrastructure, we will need to invest.
Big Oil Influence
• Top 5 oil companies now own just 424 stations.
• Top 5 oil companies control 47,928 stations OR 31% of all stations.
• Major refiner-branded outlets total 29,938 OR 19% of all stations.
• Combined 50% of all stations.
Why Big Oil Influence Matters?
• Control the decisions. • Control the fuel supply. • Control the dispensers purchased. • …all while having zero liability.
Contractual Terms
• Length. • Volume Requirements. • Image Requirements. • Wholesale Price Requirements.
Balance of Fuel Power
• Convenience stores selling fuel has increased 21% over past decade.
• Overall number of fueling locations has dropped 9% over same time period.
• Hypermarkets (5,093 total stations) now sell 12.6% of all fuel sold.
• Hypermarkets also average 280,000 gallons/month OR more than double normal average.
Opposition
• Normal players: API, AFPM, Food Groups. – RFS is broken, needs repealed, we make enough. – Too expensive. – We have tried ethanol, no one wants it.
• New players: PMAA. – State they are NOT Big Oil, but claim members have to
buy costly RINs. – Lobby every ethanol situation w/ pro-oil stance and
lobby Congress & OMB to repeal/reduce RFS. • FTC supposedly investigating Big Oil activites at
retail, but nothing in well over a year.
Consumers
• Want cheap fuel. • Interest in alternative fuel technology declines w/
gas prices. • Why do they consider alt fuel vehicles?
– 51% of consumers would consider an alternative vehicle to protect the environment .
– 45% to reduce American dependence on foreign oil. – 42% to reduce their carbon footprint. – 41% to increase their driving range. Source: NACS
Recent Example: Florida • New stations in Florida have been open ~10
days. • E15 is averaging ~17% of total volume. • E85 is averaging ~18% of total volume. • Proving once again, if priced as market allows,
ethanol-blended fuel will sell. • Stations have lowered their RUL competition to
65% from 87%.
Conclusion
• Multiple efforts will continue with same end game, we need more infrastructure to get our product to consumers.
• There are stations that can add E15 and E85 at a relatively low price point. RFA has hundreds at the ready, could be online in less than 6 months.
• Dispenser changes can lead to quicker adoption in the field.
• If part of the ethanol industry, find your preferred way to invest.