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Robert Rapier

Robert Rapier

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Oil Industry Works Hard to End the E15 Fuel Blend

Oil Industry Works Hard to End the E15 Fuel Blend

I just finished reading a story that made my blood boil. It was about how the oil industry is using dirty tricks to keep the ethanol industry in check. I need to sit down, take a deep breath, and make sure everyone knows of the atrocity that has happened in Kansas.

The problem started when the ethanol lobby requested — and subsequently received — a waiver from the Environmental Protection Agency (EPA) that would allow up to 15% ethanol in gasoline blends. The current limit is 10%, which is a problem for the ethanol industry because the mandate in the Renewable Fuel Standard already has the country at the 10% limit. It would be a huge boost to the ethanol industry if that limit was moved up to 15%, because that would increase the potential size of their US market by 50%.

Since the EPA allowed 15% — but didn’t mandate it — and because some automobile manufacturers have stated that use of E15 would void car warranties, I predicted that E15 sales would be essentially nonexistent.

Related article: Exxon’s $100m Algae Investment Falls Flat

And that is exactly what has happened. E15 has failed to win over consumers. Few stations offer it. Head ethanol lobbyist Bob Dinneen says that it is the oil industry’s fault that E15 isn’t being sold. Now comes evidence from Kansas that Dinneen may be onto something.

In ‘Ethanol lobby sees red over a yellow gas hose in Kansas’, Reuters brings us the story of Scott Zaremba, who owns Kansas-based Zarco 66. Zaremba says Phillips 66 (NYSE: PSX), his main fuel supplier, is telling him to stop selling gasoline blended with 15 percent ethanol. Well sort of. Actually, not really. Here is what the story claims:

On April 1, Zaremba received a notice from Phillips 66, the nation’s third-largest refiner, that he could no longer sell the E15 fuel from his regular black fuel hoses, as he had been selling it since last July.

Instead, any gasoline with more than 10 percent ethanol has to be served from a separate, yellow hose, according to a copy of the Phillips 66 guidelines seen by Reuters. The aim is to distinguish E15 from other Phillips 66-branded gasolines with 10 percent or less ethanol.

So they aren’t quite forcing him not to sell E15, but they are asking the impossible: For E15 — which many car makers have not approved — to be easily distinguished from E10 by dispensing it from a yellow hose. Now come on! A yellow hose? Do those even exist? Probably not. So in effect, they did force him to stop. The story goes on to explain that Zaremba has quite a dilemma:

He has other options, but they aren’t cheap – or very feasible. For example, it would cost $100,000 to $250,000 to install new stand-alone gas pumps for E15, Zaremba said. Or he can always pay a $412,000 fee to Phillips 66 to break his marketing contract – expensive options that have so far kept him in compliance with the Phillips 66 guidelines, the only way he said he could.

So, his choices were:

1.    Get a yellow hose
2.    Pay up to $250,000 for a new stand-alone E15 pump
3.    Pay $412,000 to Phillips 66 to break his contract
4.    Stop selling E15 and blame Phillips 66

Zaremba opted to stop selling E15. After all, what other choice did he have? Even if yellow hoses do exist, who wants to pump their gasoline from a yellow hose? Typical dirty oil company tricks. Monte Shaw, Executive Director of the Iowa Renewable Fuels Association couldn’t have said it any better: “They’ve essentially declared an all-out war (on E15).” I can only imagine the reaction of people who have experienced the horrors of war pulling up and seeing a yellow hose on a gas pump. I am sure it gives them flashbacks.


Related article: China’s Growing Use of Methanol as a Cleaner Alternative to Gasoline

The oil companies already make it difficult for me to pump diesel into my gasoline-powered car. Now they want to make sure I am “aware” if I am putting in E15 just because it might void my warranty and I might blame them. It’s a sad day for Kansas, and a sad day for America. Yellow hoses indeed.

By. Robert Rapier

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  • SA Kiteman on June 12 2013 said:
    What he should do is replace ALL his hoses with yellow hoses and sell away. Can't BUY a yellow hose, paint it already. Heck, shrink-wrap it with yellow SW.

    This is a simple story about a whiner who thinks the world revolves around himself and his little gas station.

    Grow up already!
  • Robert on June 12 2013 said:
    Good I say, I don't want any E fuel in my car. It destroys engines, 02 sensors, the CAT and only makes farmers in the Midwest rich. Growing corn is the worse way to Produce Ethanol, suger cane or even sugar beat. Also the corn growing cost more in resources then the amount of oil saved and lastly farmers can not obtain feed corn for their cows causing beef prices to rise. E fuel is a bad deal and just another boondoggle government mandate.
  • Edmond Dantes on June 12 2013 said:
    The ethanol mandate is one of the most environmentally destructive, and pork-bellied laws the United States has seen. Not to mention, it functions as a regressive tax on the poor (more allocated corn ethanol==less food supply allocation). The American people have the agricultural lobby to thank for this gem. The repeal and reinstatement of the free market in this market would help to lower gas prices and put money back into the struggling American consumer's pocket.
  • Others on June 12 2013 said:
    Read this article guys

    China is using so much Methanol, so why not USA use more Ethanol, in Brazil all the gas sold has 25% Ethanol and those vehicles are running just fine.

    Oil companies know that they cannot compete with Ethanol on price, so they are using pressure tactics.
  • jbutzi on June 13 2013 said:
    This is a non-problem and it is hard to believe it is being written up in this way.
    First, as you note at the end of the article, no-one wants to pump fuel that could harm their vehicle whether diesel or E-15. So, the use of a 'yellow' (or any other color) hose is reasonable to prevent an avoidable mistake and therefor is an aid to the consumer who is not always careful or aware.
    Second, it is easy to make a hose yellow and costs are not an issue. Besides, shrink-wrap tape you can use duct tape or paint,

    What is the real problem!
  • John on June 13 2013 said:
    So with 15% ethanol we can get even worse gas mileage from our gasoline designed cars, great. Either design a car to run the fuel and take advantage of the octane it has or forget it. Same with methane, it would be great in a car designed for it. Not a "flexfuel" vehicle that will get 25% less mpg running it.
    Stop blending it. Stop the "summer"/"winter" blends too.
    Ever wonder why you get 20% worse mileage in the winter? Yeah that's the gas mixture, not the cold air or whatever else people say.
  • tom on June 13 2013 said:
    In Chicago I hear big oil has gasoline selling for about $4.50 a gallon. Interesting that ethanol sells for only $2.30 a gallon wholesale. So if you can't beat ethanol on price, than kick them out of the game by golly! Can't wait tell big oil gets the price to $4.50 a gallon everywhere. I fear this argument has nothing to do with engines or warranties or milage, but has everything to do with kill the competition at any cost so we call all pay big oil $4.50 per gallon.
  • Cliff on June 13 2013 said:
    I'm I wrong if I take this as being a spoof?
  • Cliff on June 13 2013 said:
    I mean, why wouldn't I want to know if I'm putting a fuel in my car that would damage it and void the warranty?
  • tom on June 13 2013 said:
    My point is that I believe the anti ethanol issues raised, are in fact way over played. I have used elevated ethanol blends in my car with no problems. The EPA (not some light weight organization), has tested, and tested, and tested the E15 blend for usability and compatibility with the existing car fleet. If the EPA would have found any issues, I believe they would not have approved the fuel. No one is forcing anyone to use E15, it's all about allowing the fuel to be offered as an option to consumers, just like regular, mid grade and premium are offered but not forced on anyone. I think the real issue here is that the "ethanol mandate" has replaced about 850,000 barrels of gasoline use per day in the US. This is a very significant number if you manufacture gasoline or produce crude oil. Ethanol makes the gasoline market pie smaller and creates a gasoline surplus that helps hold down the price of gasoline. In Chicago where there is a current gasoline shortage, the price is about $1.25 more per gallon than what I pay where I live. Dollars and cents I believe are the real issue here, hiding behind all the anti ethanol hype we hear. If you really trust big oil to watch your back, well, just remember to keep your hands up in the air.
  • Brian Carpenter on June 13 2013 said:
    The author is a moron. Yellow hoses exist.


    Corn based ethanol is a boondoggle designed to put a floor under corn prices. Sugar beets and other high sugar plants would be better, but 90% of the ethanol produced is mandated by statute to come from corn. All other sources combined have to be produced out of the remaining 10%.
  • SA Kiteman on June 14 2013 said:
    The "Archer Daniels Midland" full coffers law?
  • Edmond Dantes on June 14 2013 said:
    @Tom - If ethanol is so great, then how come the government has to mandate its inclusion? I am sure the free market would recognize its wonderful qualities with a lack of government intervention
  • Brian Carpenter on June 15 2013 said:

    The gov't mandate stems out of ethanol's use to replace another chemical formerly included in gasoline, but outlawed by the EPA.
  • tom on June 17 2013 said:
    Reality 101: Big Oil will ALWAYS do what is best for Big Oil. For Example: The Oil Industry never voluntary took Tetra Ethyl LEAD out of Gasoline on their own, (no matter how harmful it was to you or the environment) they were forced to remove it by the EPA. The same is true for Ethanol, the oil industry will never offer this fuel on their own. (They fight it tooth and nail). Because - it is in direct competition with their business of producing oil and refining it into gasoline. The only way ethanol will ever be sold is if its use and thus availability are mandated by the government. That's the world we live in. You don't need to look any further than the subject case in Kansas, where stations trying to sell E-15 are being hassled by their Big Oil supplier, to make it as difficult as possible.
  • Brian Carpenter on June 19 2013 said:

    Reality 102: EVERYONE will always do what is in their own interests, including the ethanol industry.

    I've got nothing against biofuels. Ethanol in concentrations of more than 10% is hard on engines which have not been designed for it, but it's not terribly hard to design engines that will tolerate it reasonably well. But corn is not the best choice for an ethanol feedstock.

    We used to grow a lot of sugar beets up here in Western SD, but nobody grows them anymore, and the processing plants have shut down. This is pretty poor corn ground up here (125 bu/ irrigated acre is about it,) but it grew good sugar beets. I looked into reviving the beet industry and putting in an ethanol plant. I gave up. It won't happen under the current regulatory regime. Corn is king, even when it's not the best way to go.
  • Pradip on June 26 2013 said:
    This has to be a parody of some sort. It's impossible to take seriously.
  • Robert Coe on July 20 2013 said:
    I see all kinds of money being thrown into ponds, photo bio-reactors and the genetics of Algae. It's almost as if they want to find ways to make algae too expensive to compete with fossil petroleum.
    I have to wonder why is no one spending money on a way to harvest algae from the naturally available sources?
    With our lakes, rivers, ponds, reservoirs, swamps across the world choked with algae,in many cases to the point of toxicity, why not find a way harvest it for oil production?
    Terra resources R&D is developing technology to harvest algae from the wild, completely solar powered. This offers a two fold benefit, first harmful algae blooms can be harvested for oil, as a result the blooms are reduced and toxicity is averted. Second it will create a new industry and jobs harvesting algae, while contributing to our national energy independence. Please contact me if you are interested in this project.

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