Critics decry ethanol blend switch
The option of filling a vehicle up with regular unleaded gasoline is disappearing quickly in North Dakota and not everyone is happy about it.
The continuation of a change that has already happened in many other parts of the country, Peace Garden State service station fuel suppliers are swiftly moving away from offering non-ethanol "87 octane" gasoline.
Largely in response to the Environmental Protection Agency-mandated Renewable Fuel Standard -- which was established as part of the Energy Policy Act of 2005 and was developed to ensure that transportation fuel sold in the U.S. contained a certain minimum volume of renewable fuel -- refiners have moved away from offering an ethanol-free version of a regular unleaded option to service stations.
"We made the switch just in the last week," said DJ's Tesoro General Manager Mike Staudinger on Friday from his Dickinson station. "We're still in the infancy stage of finding out how people are going to react, but, so far, there hasn't been much response. Some customers have asked why we're not selling (87 octane) unleaded any longer and we just say that it's because the refinery isn't making it anymore."
DJ's receives its fuels from the Tesoro Mandan Refinery, which no longer offers a regular unleaded 87 octane option to its commercial customers, Staudinger said.
"My understanding is that the fuel that is picked up in Glendive (Mont.) and made at Mandan Tesoro -- they're not making it anymore," Staudinger said. "I can't say that no other station is selling it, but, generally, you're not going to be able to go down the road and buy regular unleaded without the up-to 10 percent ethanol added. So far, I've only had one customer that has been really upset about it."
North Dakota Ethanol Council Chairman Jeff Zueger said the changeover has been in the works for the past couple of years nationwide and that the state is simply witnessing the back end of the wave.
"What's happening today in North Dakota has happened throughout the U.S. over the course of about the last two years," Zueger said. "Refiners have switched from making a regular-grade 87 octane gasoline that then could be blended with ethanol or sold directly to consumers, to making a sub-grade gasoline, 85 or lower octane gasoline, that cannot be sold directly to consumers because of the octane requirements by the EPA. They're moving these lower-grade octane products into terminals where they're blended with ethanol to get to the 87 octane or to higher octane levels."
To meet the RFS standards required, Zueger said suppliers are generally blending ethanol or biodiesel products at about 10 percent of the makeup of the finished product.
While ethanol- or biodiesel-free fuel is still an option at most gas stations, it's generally going to cost drivers more.
"The business decision that refiners have been making is to offer retailers like a 91 octane premium grade for those customers who don't want ethanol blended into their products," Zueger said. "That's what you're starting to see at the pump. As we continue to transition with this, you're going to see less and less 87 octane gasoline without the ethanol blend, but I know the major refiners who supply North Dakota have made the switch already."
While Zueger said he believes ethanol blended gasoline ultimately means slightly lower prices at the pump, some are not thrilled with the change, including North Dakota Petroleum Marketers Association President Mike Rud.
"We're not happy about it and we never were happy about it," said Rud on Friday. "We heard some rumblings about this about a year ago and we've been working with folks to try to get things going in the right direction and keep regular unleaded in the system. If you look back at the taxable sales of gallons for the 2012-13 fiscal year in North Dakota, you'll see that 45 percent of the sales were still regular unleaded gasoline with no ethanol. What that tells you is there's a pretty big demand in North Dakota for that product."
While consumers don't seem to have much of a choice in the matter, opponents of the switch have argued that regular unleaded gasoline, at lower prices than what stations are charging for premium blends without ethanol, should be offered for use in certain older vehicles and small engines and for customers who are simply more comfortable with regular 87 octane blend gas.
"The reality is that these refiners have to meet these renewable standards or they're going to pay some serious tax credits and we understand that part of it," Rud said. "It's basically out of control at this point. What we've been working on in Washington, D.C., with our folks is to sit down, take a good look at this, and let's make it right for every stakeholder. If we're going to keep these regulations in place, let's make it so refiners aren't hit with such wild fines. What we're doing is taking away consumer choice."
Set at 9 billion gallons in 2008, the required number of gallons of renewable fuel blends by 2022 is 36 billion gallons, according to the EPA website. The enhanced goal was put in place as part of the Energy Independence and Security Act of 2007, though the volume of domestically-produced fossil fuels has skyrocketed in the U.S. over the course of the past six years.
"I had a guy call me who goes from Bismarck to Beach to visit his mother in a nursing home every weekend," Rud said. "He said, 'Mike, I drive a 1991 Dynasty. What am I going to put in that car?' I told him that I have a 1992 Blazer and a 1998 Ford pickup that I can't run ethanol in. I told him he'd probably have to put premium in, but that's about a 50-cent per gallon difference now and he's on a fixed income. What we need to do is to just continue to put pressure on our congressional delegation to address this issue."