Maxed Out on Ethanol

By Dan Gilligan, PMAA President

Every PMAA member company stores and dispenses a variety of liquid fuels such as gasoline, E85, diesel, biodiesel and heating oil.  These companies and their customers benefit from plentiful supply of liquid fuels therefore we are very supportive of the important “supply” benefits ethanol and biodiesel provide. Unfortunately, the national ethanol mandate has hit its limit because there is only so much gasoline being consumed. The ethanol industry says the mandate can be easily reached if retailers just start selling E15.  Some PMAA members would like to offer E15; however, legal and regulatory uncertainties are keeping them from doing so.

In our view, the single greatest barrier to E15 is legacy underground infrastructure at the retail level.  The most obvious infrastructure barrier is the typical two tank system found at most gas stations. Very few retailers can justify eliminating Premium or E10 to offer E15.

The less obvious and least understood infrastructure barrier is legacy underground equipment such as piping, submersible pumps, leak detectors, floats, adhesives, sealants, sensors and probes.  EPA requires UST equipment to be compatible with the product stored.  However, most legacy equipment is certified compatible with ethanol blends no greater than 10 percent.  EPA’s Office of Underground Storage Tanks (OUST) recently published guidance for retailers to certify legacy equipment as E-15 compatible. The guidance calls on equipment manufacturers to voluntarily certify for E15 components originally manufactured for E10.

There are two problems with this approach. First, most retailers lack the detailed records necessary to fully identify the specific model and manufacturer of the dozens of components in a UST system.  Second, even where identification can be made, many manufacturers will not provide E15 certification for fear of product liability if a component fails. Additionally, manufacturers are motivated to sell new equipment which is certified for E15.  While we applaud EPA OUST for efforts to provide an alternative method of demonstrating E15 compatibility, we believe the guidance offers no realistic pathway for retailers to prove that the legacy equipment is compatible with E15.

We support EPA’s proposal to lower the 2014 “corn-based” ethanol mandate because exorbitant RIN prices could incentivize retailers to take risks they normally would not take. A study performed by UL and NREL demonstrated some UST system components might fail when subjected to E15.   EPA should not be incentivizing retailers to take risks with environmental protection.

Another reason to lower the ethanol mandate is to prevent the loss of neat Premium in some markets.  We are already seeing some refiner-suppliers blending E10 Premium, eliminating consumer choice to purchase fuel without ethanol.  There are circumstances where ethanol free gasoline is essential.   For example, some owners of aboveground storage tanks need ethanol free gasoline to reduce water/alcohol/ phase separation.  Currently, those customers are paying extra for Premium because they need ethanol free gasoline. If RIN values are exorbitant, ethanol-free gasoline could become totally unavailable in some markets, a very negative unintended consequence.  E15 could have a promising future when the infrastructure barriers are resolved.

Comments are closed.