First post in a while - my apologies for the delay!

What a rough few months it has been on this end.

I am going to dedicate my first post in a while to RaceTrac, a fuel retailer in the southern tier.

RaceTrac has modified the way in which they do business. RaceTrac began adding E85 at any new or remodeled stores at the close of 2013. Looks like their first E85 store was the store on Ferguson in Dallas along with the store in College Park GA, right next to Atlanta Hartsfield-Jackson International Airport. However, around this same time, they began adding ethanol-free at some new and remodeled stores as well. So up until just a couple months ago, it was gasoline, diesel, and EITHER E85 OR Ethanol-Free at every pump. And compared to stores up here, RaceTrac stores are HUGE. It is nearly unthinkable to have 18-24 pumps at one station, except for the occasional truck stop that is well outside of densely populated areas. So in the same way that E85 is available at every pump at the stores which carry it, helping to dramatically increase sales, E0 was also available at every pump at stores which carry that. We're not talking at one pump, or at a pump which is either hidden or at the back of the property like what we have up here, but E0 at 24 pumps. From what I've seen, ethanol-free appears to be priced just above premium (93 octane) E10. At this point, I honestly find myself asking, why bother carry E10? Most stores had 87 octane E0 put in, but some RaceTrac/RaceWay stores got 89 or 90 octane E0.

Ethanol_Addict and I have been talking about this, and he brought up a good point. 89 or 90 octane are not very comparable in terms of cost-effectiveness with 87 octane. Many folks would think "well, I don't need 90 octane for my lawn mower or my boat" (so in a way, this is a double edged sword - it could also increase 87 octane E0 stores). But with a higher octane, folks can point to this increased octane as the reason for the increased cost. Now however, with 87 octane, people may be more likely to realize that the lack of ethanol is the reason for the price premium.

But, in September, EA and I found what appeared to be an anomaly. I found a store that had just opened in Naples Florida, which added BOTH E85 and Ethanol-Free. I first asked the attendant if they carried E85. He replied that they do. So I then clarified and asked, "so you guys don't carry ethanol-free" - at which point he told me they carry both - half E85 on one side, and half E0 on the other. I was stunned. I called again later to verify. Ethanol_Addict did the same. Since then, we have had several more stores open which carry both. Honestly, I would rather a store carry both E85 and E0 than just E0. And when you're talking 12 E0 pumps and 12 E85 pumps, that's still more E85 access than almost any store up here would provide. We now have RaceTrac stores which carry both E0 and E85 in Naples, Daytona Beach, Bradenton, and Largo in Florida. Another store is in the works for the city of Wesley Chapel, expected to open soon. In Georgia, we now have two stores with this setup, and we also have two in Louisiana.

To top it off, RaceTrac has actually converted some stores to E85. I can honestly say that I have never heard of a store converting E0 over to E85, especially not a chain of this size. But so far, I have counted three of them. Stores in Sarasota Florida, and Norcross Georgia, have both converted their ethanol-free tanks and pumps over to E85. This to me is huge. This to me means that RaceTrac knows how to make E85 profitable and wants to sell the fuel.

RaceTrac, much like Speedway in their expansion, has brought E85 in these setups (at 18-24 pumps in each station) to states which otherwise didn't have very effective E85 coverage, or had hardly any at all. For example, digging through the topics here on the forums, I found a topic where the poster was wondering when E85 would come to the Bayou State. Now, not only do we have several stations, but we have RaceTrac stores which have it at multiple pumps. I have also found a topic where someone was lamenting the lack of E85 in Louisiana's capitol city.

I am on top of multiple leads, and are checking in on them from time to time.

Here is what I want to know: where the heck were these stores when I went down to Florida for the National Ethanol Conference in 2014?!? (I wouldn't mind going to the one in NOLA in February, but I'm unable to pay for it) RaceTrac has stores in Jacksonville, Daytona Beach, Melbourne, Orlando, and in Ocala. ALL of these stations would have made that trip immensely easier. In fact, I ran out of fuel right around where the Orlando store was built.

I encourage everyone to check out my RaceTrac spreadsheet, listing every store in the chain, and highlighting stores which have E85 as well as stores which have E0. You can find it by clicking here. In a separate post, I will remunerate the stores which have been added since the last update here.

This just in... it is now a good time to own a flex fuel vehicle!

My eyes have widened and my jaw has dropped to the ground over the past couple of weeks.

This is nothing new to the ethanol industry, but corn has taken an absolutely unprecedented drop in price over the summer, and many farmers are worried (rightfully so) that the price will plummet further with a record corn crop expected. Conditions this year in the midwest were extremely supportive for corn farming, so I'd be surprised if the crop is not a record one.

Notice the constant, nearly uninterrupted slide in price since the spring. I've highlighted where the break-even point is for most farmers (at least the ones I've talked to). We are already at $1.20/bushel below profit, so you can expect ethanol plants to have less corn truck traffic this fall than they traditionally do.

For farmers and for the ethanol producers, this is not good news. Despite ethanol production being at a 26 week low recently, the price of ethanol continues to plummet. It likely has further to go too. Notice in the graph on the left, which depicts ethanol futures over the past 6 months, that ethanol was relatively stable in price up until Labor Day... then it took a nose dive thereafter. 

This is really crimping margins for ethanol producers. Thankfully due to low feedstock costs (corn being so low), margins here aren't too terribly bad. Where it becomes a problem is the price of Distillers Dried Grains, the animal feed byproduct of ethanol production. This price is typically locked in with the price of corn.

Now to the good news. The tumbling price of corn is finally translating to low prices at the pump. This is making E85 extremely attractive to consumers who own flexible fuel vehicles, or FFVs. E85 at many stations is now upwards of $1.00/gallon below gasoline, including Speedway stores - which have widened price spread between E85 and gasoline to at least $1 in Ohio, Illinois, Kentucky, Michigan, and West Virginia. Spreads at Speedway are also at 90 cents in Pennsylvania, 80 cents in Indiana, and 40 cents in Tennessee. This may not sound like a great spread, but Tennessee has little ethanol production, and is well outside of the corn belt.

Thanks to Speedway and other stations in Michigan that keep a $1/gallon price spread (see my previous post about yellow hose), other stations have been forced to compete.

Prices are as low as $1.99 in North Aurora, Illinois, and $1.97 in Lowell, Michigan!

The southern tier: A new frontier for E85?

It has come to my attention that we are seeing a rapid increase of E85 stations in the deep south, stretching over to the desert southwest. Being almost as far from the corn belt as it gets, coupled with the fact that Texas is known to be oil country, one might not expect this to be an area to find ethanol. Believe it or not, only six states do not have any E85 available at all. These states are Rhode Island, Vermont, New Hampshire, Maine, Hawaii, and Alaska. Last October, I managed to find Connecticut's first E85 pump, at a Shell in Waterford, Connecticut. 44 down, 6 to go!
http://e85vehicles.com/e85/index.php?/topic/6197-connecticut-finally-gets-public-e85/

With that being said, check out this increase in E85 stations in Texas. Texas now has more E85 stations than Nebraska! According to e85prices.com, a crowd-sourced website with users reporting E85 prices and comparing them to the prices of gasoline, Texas has 134 fuel stations that carry E85. Nebraska, a corn belt state, has 91. However, it is important to remember that Texas is a very big state - and Nebraska has far more E85 availability per capita than Texas does.

This next picture does a good job showing the concentration of E85 stations alongside the rough concentration by county of flex fuel vehicles.

Kudos to the National Renewable Energy Laboratory for putting this neat map together! Now to be completely fair, this map uses data from the Alternative Fuels Database for E85 stations (shown here as the blue pins), which is a separate database from e85prices.com.

Here's a key for the shaded counties:
Note: FFV is an acronym for Flex Fuel Vehicle

Yellow: 5 to 45.5 FFVs per 5 square miles
Green: 45.5 to 91 FFVs per 5 sq. miles
Blue: 91 to 139 FFVs per 5 sq. miles
Red: More than 139 FFVs per 5 sq. miles

Correlating almost perfectly with the concentration of flex fuel vehicles is the concentration of E85 stations.

Next, for comparison purposes, here is the map of stations according to the database e85prices.com. You can find this exact map at www.e85prices.com/texas.html.

I also found a Mapco Mart station in Southaven, MS. This is the first station in the Memphis area... even with the high concentration of flex fuels there.

Also worthy of note, is Las Vegas. Yes, Vegas. The city growing so fast it gains something like one person every 7 seconds. Thanks to a regional company called Rebel Oil, E85 is now available at over two dozen retail locations in the Las Vegas metro. E85 is more concentrated there than it is in my hometown of Lansing, Michigan!

In Nevada of all places.

A well-known southern chain called Race Trac is also beginning to add E85 to some of its stores, bringing their total of 0.0% of their stores carrying E85 to at least 0.25%. This is how we now have a station in Ocala, Florida... at least 40 miles from the nearest E85 pump.

So while the battle over the Renewable Fuel Standard continues in Washington, DC, and we continue to see stations add E85 in high numbers up here in the corn belt... let's not forget that E85 is now expanding to the southern tier of states. All the way from San Francisco over to southeast Florida.

Spotlight on: Kum and Go (or Kum N Go)

On Monday June 16, 2014, I decided to drive all the way out to Omaha to participate in a promotion being held by the plains states chain known as Kum and Go. This promotion, paid for entirely by Kum and Go, offers E85 to consumers for two hours at several stations for $0.85/gallon. Yes, 85 cents per gallon. Boy, 17 gallons for $15 was extremely nice. From what I've learned, this is something that Kum and Go does quite often. Not surprisingly, Kum and Go was given an A+ rating on the Consumer Choice Report Card, a report published by the Renewable Fuels Association, ranking major station chains by what percentage of their stores carry E85 and/or E15. Kum and Go was rated 4th in the country, with approximately 1 in 3 stores carrying E85. I've learned that Kum and Go is very friendly to ethanol.

Kum and Go is largely based in Iowa, with many of their stores located inside their home state. However, this chain has stores all the way from Montana down to Oklahoma. Founded in 1959 in Hampton, Iowa, Kum and Go now operates 420 stores in 11 states. Today, Kum and Go is the fifth largest privately held, corporate run, convenience store chain nationwide. Some of their stores are even LEED-certified, meaning they meet very strict energy efficiency standards. Kum and Go has a very successful business model, and I wish them only the best. If only we had some stations here in Michigan...

Yellow Hose, and how it is affecting demographics in this region

I've mentioned in earlier posts about a program called yellow hose. My employer, Carbon Green BioEnergy, has a deal in place with 33 retailers in Michigan where they are sold near-cost E85 (pre-blended at the plant), on the condition that they maintain a $1/gallon difference between E85 and regular gasoline. In what started with barely over a dozen locations, has nearly tripled since the program took effect in October 2013.We now have participating stations in southwest Michigan, Grand Rapids, Lansing, and the Flint region.

What Mitch Miller, Carbon Green BioEnergy CEO, and Carbon Green are doing is proving that at $1/gallon, E85 sells. And sells a lot. A number of folks know their vehicle is flex fuel, but won't use E85 unless it's close to or greater than a price difference that works for them. Recall that E85 has between a 15% and a 25% loss in miles per gallon when compared to its E10 Regular counterpart. The beauty of a flex fuel vehicle is that you are not required to use any specific blend of ethanol - you can use ethanol-free gasoline, go all the way to E85, or use any mixture of the two. Just don't go back and forth with the ethanol content of the fuel (i.e. switching back and forth between E85 and regular gasoline). Most people that I've talked to personally, have told me that they want a $0.70 to $0.80/gallon price discount to regular gasoline before they'll use E85. From a financial standpoint, I at least understand where they come from. I think this fight is about more than mpg, but I'll get into this in a later post.

At $1/gallon price difference, people begin to notice. People notice when $3.59 is posted in a price sign right next to $2.59. Sales of E85 continue to skyrocket, and are on what seems to be an exponential curve. I'm not able to share too many of the sales numbers, but many of these stations saw a 2-3 fold increase in E85 sales immediately after yellow hose took effect on October 1st, 2013. I know I did a double take when my dad gave me the daily list of prices to submit to e85prices.com. I saw $2.38 at the Carriage Hills Marathon I mentioned in my previous post, and I asked my dad a couple times, "am I seeing right? I know it's 10:00 at night, but is this correct"? Sure enough, it was. I had to go and confirm these prices for myself. Earlier that day, both stations had E85 at $2.89/gallon. 50 cents/gallon of a price drop is virtually unheard of in just a few hours for any region of the country. That allowed me to see $1.99 later that winter. 

Any rate, you name a walk of life, job, age, type of car, personality, attractiveness/appearance, and odds are I've seen it fill with E85. I have seen all kinds of people fill with E85 lately.

The plant location itself is in Lake Odessa, Michigan. To add an additional outlet for the product, Carbon Green BioEnergy installed two above ground tanks (one for regular E10, and one for E85) alongside a pump. This pump dispenses Regular E10, E15, E30, and E85. It is credit-card only, open to the public, and is available 24/7. Need fuel at 2 am? Not a problem! Just stop on in and pump. Within a few months, we learned that 2,000 gallons was not a big enough tank for E85. We sell upwards of 1,200 gallons of E85 per day, and this is excluding sales of E15 and E30, which blend fuel from both tanks into the desired blend for the consumer. It has been a challenge keeping the tanks full, and we already have daily visits from one of the companies we supply E85 to as part of yellow hose, Petersen Oil and Propane. They load up with E85 from the loadout at the back of the plant, and fill the tank for us. Problem is, they can't even seem to do that fast enough! While there are short periods of calm at the pump, we frequently have lines of 2 or 3 cars waiting to fill at the pump. While cleaning the pump, I've spoken to folks from nearby communities like Sunfield, Hastings, and Ionia. This station fills in a sizable gap in E85 locations, and people definitely appreciate being able to fill up for $2.25/gallon. At least twice now, we've had to close the pump because the tank was empty. Right now, the company is exploring options to prevent this problem from occurring again.

My point in all of this is that this is precisely how we overcome the "blend wall", a fictional argument against expansion of ethanol blending, that argues we've blended in all of the ethanol to the transportation fuel market that can be absorbed in the capacity we're using it (E10, mostly).

Bruce Babcock, an economics professor at Iowa State University, has done some amazing research regarding E85, ethanol, and agriculture. His work has included a study which proves what, I think, many in the ethanol industry already know. At good prices spreads, people want to buy E85. Not everyone, but far more people than would be the case if the price difference was small.

I encourage you to read more from his publication How Much E85 Can Be Consumed in the United States. In my opinion, this is equally as important to proving this point as the work that Carbon Green BioEnergy is doing. 

I'm elated when I go to an E85 station, and see all kinds of people fill up with E85. It's awesome to see both sides of the E85 pumping E85 at the same time. More and more people are using E85, which is actually increasing pump capacity! As more people continue to learn about the price difference between E85 and gasoline, sales will continue to increase. I think one hurdle is that there is only one double-sided E85 pump at most stations, which also dispenses gasoline. It frustrates me to no end when I have to sit there and wait for either side of the E85 pump to open, when the people there are pumping petrol - when there are at least 6 gasoline-only pumps open at that same station. I'm concerned that we will have people who might want to use E85, be forced to fill with petrol because they're in a hurry.

But one thing at a time.

It's a little bit like asking the pope

On Friday, the low fuel light came on as I was heading back to the Dad's, so I was forced to fill up a couple days before I had planned to. I ended up stopping at the J&H Family Stores Marathon in East Lansing, MI's Carriage Hills to get fuel.

And WOW, that pump was slow! It took me over ten minutes to put 18 gallons of E85 into my Dodge Charger's tank. Initially, I wasn't paying attention. You get easily distracted when you have a new 128 GB 4G iPad. While I was waiting for the fuel to pump, four kids in a Chevy Impala came up to the other side of the pump. Not upsetting me in the least, they put the yellow nozzle in their car's tank. Before long, they started talking to each other about how slow it was. Then they started chatting me up, wondering if mine was going slow as well. One of them then asked me about my Charger, and asked me if I knew where else to find E85 in the Lansing area. I've memorized nearly every E85 station in the state, so I have no excuse when I run out and am forced to put in gasoline. This thankfully has not happened since November, and I am making sure that it doesn't. But any rate, I even know the phone numbers to all the stations in the Lansing metro. This was where my boy scout experience came in handy. They always teach you to "be prepared". I always have on hand in my car, at any one time, E85 flyers for Lansing, Grand Rapids, and Flint. These flyers describe why ethanol is important to use over oil, and each market's flyer shows all of the stations in that area on a map, with each station listed above - showing the address, name of the station, and the phone number to confirm E85 availability.

That evening when I went to spend some time with the dad, I told him about this, and he phrased it in a way that I don't think can be topped. No matter what your religious views or how passionate you are (or are not) about religion, this one was great. He said, "it's like asking the pope if he knows anything about being catholic".

I'll delve into how the demographics associated with E85 are changing on my next post. For now, here are screenshots of my Lansing, MI flyers. Please, by all means let me know if you'd like to use them for your area. I do not have any desire to copyright them. But yes, I came up with these templates on my own.

Ethanol and E85, resilience and more.

I've been thinking on and off about the events that have transpired in recent years with energy. As I may have mentioned, my interest in ethanol simply began because I wanted an alternative to gasoline, and electric cars were well out of my budget.

2008 and 2012, years that I actually look back on fondly for other reasons, were actually horrible to the ethanol industry. In both years, we saw corn prices skyrocket. That's horrible for ethanol plant margins, and then to add salt to the wound, demand for ethanol starts to decline as high-level blends like E85 are priced too high. In 2008, we saw astronomically high oil prices, and middle eastern tension really began to force us to look at how we are getting our energy. The immediate solution for many people was to get a hybrid vehicle. Only a bit more expensive, but cheaper than buying a flat out electric car, and not enough people were aware of ethanol. As such, anyone who wanted a Toyota Prius had be wait-listed. Dealers couldn't keep them on their lots. In 2008, even that recently, ethanol had made very little progress thus far. We only had 3 stations in the Lansing metro carrying E85 (now we've tripled that), and we only had a handful of stations statewide. According to a graph put together by e85prices.com member James48843, there were only 1,890 E85 retailers nationwide. Now, we've nearly doubled this at 3,355 stations as of this morning.

However, I haven't even mentioned the elephant in the room when it comes to how 2008 impacted the ethanol industry. As I mentioned in my last post, while oil prices had skyrocketed during the summer of 2008, likely helping to increase E85 sales, oil prices (and subsequently gasoline prices) then took a trip down to the basement beginning in September of 2008. With gasoline down near $1.50 in many areas, demand for ethanol had plummeted. Then of course, there was VeraSun. Having bought corn futures contracts at an excessively high price only to see corn prices also plummet, VeraSun eventually was forced to go bankrupt. This nearly crippled the ethanol industry. I'm sure some stations yanked their E85 as a result of the widespread financial difficulty in the fall and winter of 2008.

Lo and behold however, the ethanol industry recovered - and rather nicely, I might add.

2009 through 2011 hold some contention over other political issues - i.e. the Affordable Care Act, troops being pulled out of Iraq nearly altogether, but little contention in the energy sector. That is, at least to the extent we saw in 2008. According to the same graph I alluded to above, the United States went from 1,890 E85 retailers to begin the year in 2008 to 2.904 retailers to start the year in 2012.

But then, here comes 2012. 2012 was a very interesting year on many fronts, not least of which was in meteorology. Here in Michigan, the 2012 warm season started with a bang. All of a sudden, we go from talk of "when will our first 70 degree day be?" in early March to day after day of record warmth that following week. Every day for nearly 10 days saw highs above 70 degrees, with several high temperatures above 80 degrees here in Lansing. In fact, we set a record - ironically on the first day of Spring - for the warmest temperature ever recorded in Lansing in the month of March. Only to beat it the next day, taking the temperature all the way up to 86 degrees. Truly unprecedented for the month of March. Then, in what seems like the most predictable turn of events in meteorological history, we had numerous frosts and freezes. Frost after frost after hard freeze after frost after freeze. It was crazy. The warm weather was fantastic for my lawn mowing business, which had never been started so early in the year before. Thankfully for my case, the numerous frosts and freezes did nothing to hurt the lawns I was responsible for mowing. But unfortunately, this warm weather also got crops going very early. For example, the cherry trees in the scenic Traverse City, Michigan area, had already begun to blossom. Once the hard freezes hit though, the blossoms were destroyed. Come July when it was time for the region to have its annual cherry festival, there were hardly any cherries available! Ironically, a festival intended on celebrating the northwest Michigan cherry crop instead used cherries that, if I recall correctly, we're actually imported from Poland!

Then of course, comes summer of 2012. Here in Lansing, we had seen several attempts just in June at cracking the magical 100 degree mark. On July 4th, 2012, it finally happened. The mercury reached 100 degrees in Lansing, not only making that the warmest Independence Day on record here - but also the first time we had seen triple digits in nearly 24 years! 99 the next day, and then 103 degrees on July 6th - the hottest temperature in 145+ years of record keeping here. I've come to realize though, that heat like this is rare in the Great Lakes state for a reason. If you want boring weather, Lansing, Michigan is your place. Lake Michigan blocks much of the bitterly cold arctic air from reaching us, and also keep temperatures cooler in the summer. So it takes a lot to break this pattern. The drought of 2012 was the key.

The drought was widespread, and in many areas, devastating. The worst of the drought, called "exceptional", was right in the heart of corn country out in Iowa and Nebraska. At one point, the category of drought considered moderate, or higher, had covered some 76% of the country. Think about that for a second. Much like 2008, we saw corn prices go through the stratosphere. As such, ethanol followed. September of 2012 was when I bought my first car (a flex fuel Chrysler Sebring), and was when I began paying attention to ethanol prices. At the time, I had never seen E85 below $2.99/gallon, so I assumed that $3.55 was high, but normal. When I bought my car in September 2012, I began running only E30 in it. I did not begin running E85 until just before Christmas. By then, E85 had finally declined in price, and my first fill of E85 was for $3.09/gallon.

I remember seeing an article at the beginning of 2013 that categorized 2013 as a "make-or-break" year for ethanol. As difficult as it was for me to admit it, I agreed with that assessment. Then 2013 proved to be a "make" year in every sense possible. Despite a rather soggy start to the growing season in the Midwest, 2013 saw an absolute bumper crop of corn. Some states, including South Dakota, saw record crops! Then in October 2013, yellow hose began. Now retailers in mid-Michigan and west Michigan are selling E85 at $1/gallon below gasoline. E85 sales immediately begin to increase. Before long, we had hit 3,100 E85 retailers. Then 3,200. Shortly after 2014 began, we hit 3,300.

Also, look at the regulatory hurdles that any fuel has to go through to get to the marketplace. All stations have to be inspected regularly, and this includes all fuels sold at that station as well as all dispensers located there. Ethanol blends have their own labeling, and E15 even has it's own label! Ethanol dispensers have to be specially labeled and colored. Then you have the costs of installing it. If there is already a spare tank underground, or a tank underground dispensing a product you don't sell, great. Conversions still aren't cheap, as you have to have an engineer inspect the setup, you have to have the tank drained and cleaned, and then you have to have a new dispenser installed. However, it is far cheaper than a brand new tank install, which can run you up to $100,000. That's a lot of cheddar for a station barely breaking even on gasoline sales. Then there is the cost of putting E85 in the sign. This is why a handful of stations who carry E85 don't advertise it on their street sign.
E85 and other ethanol blends had to go through thorough and extensive testing to be able to run in any automobile, and then be approved for sale to the public. Talk about expensive and time consuming. You also have to create vehicles that can run on this fuel, mass produce those, and then mass produce this fuel.

Yet somehow, E85 has managed to do all of this. Despite opposition, regulatory hurdles, hurdles beyond human control, and costs, E85 and ethanol have made substantial gains. As I said in front of the EPA back in December, a fuel that doesn't work for the American economy, harms the consumer, and has no promise, does not grow like [E85 has].

This alone is why I have so much faith in ethanol and why I've made it my personal goal to see it succeed. Ethanol is as resilient as it gets, and the fact that it has overcome all of these hurdles means it is never leaving. Ethanol is here to stay, and it has an enormous amount of promise for the American consumer, the American economy, the global economy, and the environment.