As fuel makers start registering their high-ethanol gasoline blends with US regulators, petroleum retailers say there are practical and legal barriers that could keep the fuel out of most markets for as long as a decade.
The ethanol industry used this week's Renewable Fuels Association conference in Orlando, Florida, to applaud a recent US Environmental Protection Agency decision that started the registration process for E15, a gasoline blend containing 15% ethanol. But they acknowledged that getting it to markets across the country will take time.
Dan Gilligan, president of the Petroleum Marketers Association of America, estimated that achieving a 20% market penetration could take five to 10 years, with prairie states like Iowa adopting it much sooner.
Gilligan said in an interview that service stations first need assurances they will not face liability for engine damage if they follow requirements for posting labels explaining that the fuel has only been approved for vehicles made in 2001 or later and not for older cars, lawnmowers and other small-engine equipment.
"A retailer has to decide is the juice worth the squeeze?" Gilligan said. "Am I going to increase volume sales enough by dealing with all this confusion with my customers?"
Tim Columbus, a lobbyist for gasoline retailer association SIGMA, said legislation proposed in 2010 by US Representatives John Shimkus, Republican-Illinois, and Mike Ross, Democrat-Arkansas, that was designed to clear up some of the liability issues may be revived.
Gilligan also said retailers would have to make a tough call about which fuel to displace with E15. He estimated that 140,000 of the 160,000 stations nationwide have two underground storage tanks: one for premium and one for regular. Except in rural areas, most stations would not have room to install a third tank, he said.
Fuel stations in competitive markets, however, might decide to go exclusively to E15 to beat neighbors on price and avoid confusing labels, Gilligan said.
"They would just say, 'This gas station is for cars after 2001, period. No chainsaws and all that,'" he said. "You would certainly cut down your misfueling liability."
Grady Chronister, owner of 12 convenience stores in Illinois that sell 40 million gallons a year, told RFA members that achieving a 15% mix through "splash blending" on tanker trucks would be difficult, depending on what refineries supply.
Scott Zaremba, owner of eight gasoline stations with ethanol blender pumps, said he would not face the same problem in Kansas, where regulators require the availability of clear gasoline. His tanks have straight gasoline and straight ethanol, which get blended on site. But there are only about 2,500 blender dispensers in the US.
Chronister said he would like to offer E15, but would only do so if he could offer it at all 16 fueling spots at his stations.
"When you buy fuel, you don't make an appointment," he said. "You buy it at your convenience, not ours. So we have to accommodate everyone at the same time."
Kristy Moore, RFA vice president for technical services, said that once E15 clears the remaining regulatory hurdles -- fuel registration, approval of misfueling plans and others -- the trade group would deploy an educational campaign to help retailers get comfortable with the new fuel. She boiled down retailers' legal duties to posting federally approved labels and answering any questions customers have about E15.
Gilligan predicted E15 would take off when one of the biggest players, like a Valero, decides to move in that direction.
"But I can't envision that anytime soon," he said, adding that PMAA is not anti-ethanol and supports any expansion of liquid fuels. "So you've got to think the folks in the ethanol industry are thinking very long-term about this -- jumping all these hurdles so that, maybe 10 years from now, a decent presence of E15 might exist in the marketplace. They probably quibble with my statement."
Moore declined to estimate how long it might take the fuel to reach most markets, but she said rising oil prices could speed the process.
"Fuel economics is going to play a huge role here," she said. "If we see a massive increase in the price of a barrel of oil, that makes fuels like E15 more attractive. It's going to take less of a hit on consumers' pocketbooks. It's safe and effective."
Charlie Drevna, president of the refiners lobby American Fuel & Petrochemical Association, also declined to predict the timing of an E15 rollout. He said protecting customers will be utmost in refiners' thinking.
"Whether there's liability or not, we have to understand and make sure that anything we produce, that anything that's tied to our industry has to be safe and reliable," he said. "EPA is still along way from providing that evidence."
Drevna, one of the most vocal opponents of the Renewable Fuel Standard, said E15 and other federal policies must stop treating biofuels like replacements for traditional fuels.
"They're a supplement," he said. "If they were an alternative, you'd be running your vehicles and equipment on 100% of this stuff, not 2%, 3%, 5% or 15%. They're supplements. But the system falls apart when these supplements are mandated to be used at levels that can potentially harm the consumer or at levels that doesn't exist."
