E15 (15% ethanol, 85% gasoline) is a higher octane fuel available in 23 states at retail fueling stations. E15 was approved for use in model year 2001 and newer cars, light-duty trucks, medium-duty passenger vehicles (SUVs), and all flex-fuel vehicles (FFVs) by the U.S. Environmental Protection Agency (EPA) in 2012. This approved group of vehicles includes more than 80% of the cars, trucks and SUVs on the road today. What is more important is the fuel consumed by these vehicles constitutes more than 85% of the unleaded fuel sold. Just think about the potential. Not only is there increased margin opportunities with E15, but you could easily become the price setter in your area on a product your competition does not offer. Imagine how your price sign would look with a price lower than your competition.
Why sell E15?
Each retailer that offers E15 today had their own reason for entering the market, but most saw the promise of this high octane, lower cost, fuel. E15 typically has an octane rating of 88, but a lower cost than regular unleaded. This gives the retailer a lower priced fuel on the price sign, and lures in additional customers. This discount also gives the retailer a chance to make more profit margin while still giving a discount to consumers. It has also been proven that E15 is not just cannibalizing E10 customers, it attracts new customers. Overall fuel volumes are up at every station offering E15 today. This is true of the standalone independents and the major chains. If you want more customers inside your store, higher ethanol blends like E15 can help.
Who is offering E15 today?
Sheetz, Kum & Go, Murphy USA, MAPCO Express, Protec Fuel, Minnoco, Thornton’s and Hy-Vee all offer E15 to 2001 and new vehicles today at several stations. Thanks to recent grants from the USDA and the ethanol and agriculture industries, nearly 2,000 new E15/E85 stations are scheduled to open across the country in the next 12 months. Will you be next?
How to sell E15?
The RFA has developed the E15 Retailer Handbook to provide fuel retailers with regulatory and technical guidance in order to legally store and sell E15 ethanol blends. The Handbook provides sample checklists and questions that all potential E15 retailers should contemplate before moving forward with offerings of E15. Specifically, the Handbook offers guidance regarding:
- Federal regulatory requirements including blender registration, octane posting, proper pump labeling, compliance with an EPA-approved fuel survey, and OSHA regulations
- State and local fuel safety regulations
- E15 conversion guidelines for fueling infrastructure
- Retail conversion procedures
- E15 fuel specifications and properties
- Transportation and storage requirements
- Safety and firefighting procedures
What is the Misfueling Mitigation Plan?
In the E15 Retailer Handbook you saw mention of the Misfueling Mitigation Plan, or MMP. The EPA required a MMP as part of the E15 approval process. The following conditions must be met for E15 to be offered to consumers. While these requirements may seem complicated, they really just take a few minutes to complete and RFA is available to assist you through the process:
- Labels must be placed on E15 retail dispensers indicating that E15 use is only for MY2001 and newer motor vehicles. The RFA offers these labels at no cost – just ask!
- Product Transfer Documents (PTDs) must accompany all transfers of fuels for E15 use. You already have these today – no additional requirement.
- Parties involved in the manufacture of E15 must participate in a survey of compliance at fuel retail dispensing facilities to ensure proper labeling of dispensers. This survey is active today, and it only takes 5 minutes to register. Visit www.RFGSA.org to learn more.
- Parties must submit a plan addressing conditions to EPA for approval. RFA has these letters prepared in advance for your use. Simply update the drafts with your company information and submit to EPA.
RFA has the only submitted and approved Model E15 Misfueling Mitigation Plan.
** The EPA mandated E15 label states what vehicles E15 may be used in. It is important to note that dispensing E15 into a vehicle or engine that may not use E15 is prohibited by federal law. Vehicles that may not use E15 are model year 2000 and older cars, light-duty trucks, and medium-duty passenger vehicles. All motorcycles may not use E15 as well. For more information on E15’s use in motorcycles, please read RFA’s Fact Sheet. Engines that may not use E15 are all off-road vehicles, including boats and snowmobiles, all off-road equipment, including lawnmowers and chainsaws, and vehicles with heavy-duty engines.
Please see the RFA Automobile Fact Sheet for E15 that addresses fuel economy, the testing of E15, and other frequently asked questions.
Cost to Sell E15:
The cost of upgrading an existing retail gas station to sell E15 is substantially less than recently suggested by ethanol opponents. The cost is very dependent on the existing infrastructure at each individual station. The Petroleum Equipment Institute (PEI) conducted a nationwide study and examined the potential cost of installing E15 at retail gas stations under 10 different scenarios. For example, stations that are just required to have compatible equipment can offer E15 with minimal investment. Those that can use existing dispensers—such as the Kansas station that was first in the country to sell E15 last summer—can offer E15 for under $1,200 on average per station. In this case, the investment in converting the station to sell E15 can be recouped in just one month (due to the potential for increased profitability from the sale of E15).
Those that require a listing by a testing laboratory also have inexpensive options. Stations can choose to retrofit their dispensers to offer E15 for under $4,200 per dispenser on average or replace dispensers to offer E15 for under $20,500 per dispenser on average. Even new stations being built could add E15 for under $10,000 per dispenser on average.
How do retailers pay for these upgrades? The good news is the return on investment (ROI) is quick given today’s markets. Given ethanol’s discount to gasoline and the current value of RINs, retailers offering mid-level ethanol blends like E15 can quickly recoup their investments in infrastructure.
Retailers should also keep in mind that the PEI cost estimates do not include any available incentives that help defray installation costs. Federal, state and local incentives and grant programs are available in most areas, and would further help reduce the cost of equipment and installation. One example, the USDA’s REAP Program, has funded hundreds of blender pumps that can offer a range of ethanol blends like E15. Retailers interested in incentives can contact the RFA directly and see what incentives are available at federal, state and local levels.
Click here for the PEI letter outlining the 10 scenarios and the cost for each.
Updated March 2016