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.

History: A turn of events (Part 1)

I'm not sure how I got on the subject, but I was looking through pictures and articles of VeraSun, which at one point, was the largest ethanol producer in the country.

What exactly was VeraSun? VeraSun was, in my opinion, one of the most ambitious ethanol producers out there, in every sense of the word ambitious. VeraSun went on an "acquisition binge" in 2007-2008. They acquired a number of ethanol plants, and then acquired several plants from a smaller company called US BioEnergy when the two companies merged in 2008. Full disclosure, this includes the ethanol plant I currently work at - now owned and operated by Carbon Green BioEnergy, located in Lake Odessa, Michigan. What's neat is that we still have some walkie-talkies with "US BioEnergy" printed on them in the control room. VeraSun began marketing their own E85, marketed as "VE85". VeraSun struck a deal with Kroger, and Kroger began selling "VE85" at many of their fuel outlets. First, Kroger added E85 at 18 of their fuel stations in Texas. Then before we knew it, Kroger had E85 locations in nearly every state it operated in. To my knowledge, all of those locations continue to sell E85 to this day, although it is no longer "VE85". You wouldn't know that if you went to one of their stations to fill up with E85 though. Why is that? Kroger doesn't seem to be in much of a hurry to change over the pump handles and graphics. For instance, the one Kroger location in the entire state of Michigan to sell E85 still has all of the VeraSun pump labeling.

I just drove by the Burton, Michigan location last week, too. It shows what E85 is (or was, at the time: 85% ethanol and 15% gasoline, though this is rarely the actual blend you find nowadays), and directs you to www.VE85.com. Of course, an attempt at going to the site will bring up some sort of a "server not found" result.

Then I look back and I wonder, well how was VeraSun as a company, and why did the producer file for Chapter 11 bankruptcy and subsequently liquidate all of its assets?

Well for starters, it's important to revisit the ethanol news bombshell (at the time) that VeraSun had acquired a number of ethanol plants. As mentioned several times now, this company had finally become the largest ethanol producer in the country in terms of number of gallons produced annually throughout its entire portfolio... and as such had a significant load of debt. But this idea alone can't topple a company. At least, usually not. But the way I see it, it is in a way like getting a super high deductible on your insurance policy for comprehensive or collision. It's great in a short term sense, as you have lower payments (in theory)... but you are screwed if you get into an accident where significant repairs are necessary. VeraSun had in theory acquired more production capacity, and thus a wider, more diverse number of sources of income. The problem is that this left them vulnerable for something to happen - i.e. you get t-boned. Sure, the insurance company pays for it - minus what your responsibility is (the deductible).

2008 was an incredible year for a lot of reasons. This was when I had begun watching oil and gasoline prices, and the economics behind this entirely different - yet imperative - sector of our world's economy. 2008 was a heck of a year for it. This was when we saw oil soar above $100/barrel, and gasoline prices made no hesitation to follow suit. This was the first time when gasoline prices spiked above $4/gallon here in mid-Michigan, and when we saw a skyrocketing demand for Toyota Priuses. Economists who follow the effect of oil and gasoline on our economy learned one important lesson from 2008: $4/gallon is that magical number at which people stop buying fuel. Seriously, it's uncanny; more people will buy gasoline at $3.99/gallon than would at $4.05/gallon. 6 cent/gallon difference.

I digress, as I am beside the main point here. Coinciding fairly well with the rise in oil prices was the rapid rise in diesel prices. Many trucking companies were crimped, forced to lay off employees, or go out of business altogether. It doesn't hit the trucking industry too well when it's nearly impossible to find diesel below $4.80/gallon. So to match these rising prices, the price of corn rises as well. Recall that a bushel is 56 pounds. Corn rose to nearly $8/bushel. Obviously, this would make margins razor thin enough to make any ethanol producer uneasy. But VeraSun took a risky approach. VeraSun bought futures contracts for their corn at around $6.50/bushel. This isn't anything out of the ordinary for any industry - buy contracts now to lock in a lower price, or sell them off if the price rises in order to make a profit. However, the reason this was a bad decision for VeraSun was because the price of corn didn't stay above $6.50/bushel for long.

2008 is a year that will live in infamy to so many millions of people across the globe. It would be easier to list folks and economic sectors/businesses that were not adversely affected in some way, shape, or form. Leading up to the landfall of hurricane Ike in September 2008, oil prices once again skyrocketed. After Hurricane Ike became history, and had scooted off into Canada faster than a car on the interstate, oil prices fell off a cliff. Gasoline prices followed. As did corn prices. Reading this, you might ask, "well wouldn't this help VeraSun's profit margins"? Not really. Again, they locked the price of corn in at around $6.50/bushel. This protected them against further price increases, but since it guaranteed farmers $6.50/bushel for their corn, VeraSun was not able to pay a lower price.

Adding salt to the wound was the fact that the oil prices took ethanol demand with them. Ethanol demand also fell off a cliff. Even though gasoline prices were far lower than anyone could have imagined they would ever see again, the amount of driving largely fell as well, until we had some signs of economic recovery after the new year in 2009. Not to mention the fact that E85 prices eventually stopped falling - sooner than gasoline prices did. Check out this screenshot of archived prices from the site e85prices.com, around November 2008.

See all the negative spreads? At some stations, gasoline was around $1.50... while E85 was up near $1.90! I would without a doubt continue my commitment to E85, though I would obviously be disappointed. Of course, I am quite an outlier when it comes to that! I have said many a time that I would use E85 even if it was $2/gallon MORE than gasoline.

Now to put the proverbial nail in the coffin on VeraSun, this was the time of the financial collapse. Washington is debating the merits of bailing out the banking system and other sectors of the economy, while debate ensues over whether or not these lenders gave loans that they shouldn't have. As such, the lending portion of the financial sector had nearly come to a screeching halt. No creditor was willing to lend VeraSun money so that they could borrow their way through this crisis. That may have been possible if the financial collapse hadn't happened, or if VeraSun wasn't already in so much debt.

Come October 2008 though, the damage had been done. VeraSun had initially announced filing for Chapter 11 bankruptcy around Halloween of 2008, with the intent to come out of bankruptcy stronger than ever. Unfortunately, this did not happen. Not long after their filing, VeraSun was forced to go through liquidation. All of their assets were wiped out from the company, and VeraSun virtually ceased to exist. Looking back at this admittedly with hindsight bias, had I been doing much the same type of advocacy work then that I continuously embark on today, I don't know how I would have handled it. 2008 was depressing to so many people just because of the events of the final four months, and I can't imagine that ethanol enthusiasts and supporters were any more fortunate. Many ethanol companies survived, not least of which include the Anderson's and Poet, which is now the largest ethanol producer in the country by production capacity.

While some of VeraSun's plants were sold off to other ethanol companies, a handful of them were sold to AgStar Financial, who then dealt with selling these ethanol plants. Most of them went to Valero, who ended up paying about 30 cents on the dollar. Valero is now able to blend their own ethanol into their own gasoline. Valero is now directly responsible for roughly one in 12 gallons of ethanol produced today in the United States.

From a business standpoint, this was an incredibly wise financial decision.

Thankfully, Valero was unable to buy the plant I work in today. A company that was little known at the time, Carbon Green BioEnergy, agreed to purchase the idled Lake Odessa, Michigan plant from AgStar in May 2009. While Carbon Green BioEnergy is not VeraSun, Carbon Green is being aggressive in getting their product out there. Carbon Green BioEnergy has a program called yellow hose, where participating public retail fuel stations are sold low-cost, pre-blended E85 on the condition that they maintain a minimum of $1/gallon price difference between E85 and regular gasoline.

The sales numbers, comparing the numbers before yellow hose began in October 2013 to the numbers following the launch of the program, are like night and day. Some stations have seen sales increases upwards of 400% year-over-year, and the rate of E85 sales continues to go up. Carbon Green management has talked with a number of fuel retailers and franchisees, has begun working with various public (and private) sector agencies across the state of Michigan, and has also embarked on working with the national ethanol firms and automakers. Carbon Green BioEnergy even decided to install a retail fuel pump right at the plant. It is located on the south side of the property, open to the public 24/7, and accepts most major credit cards. We have now seen folks from numerous walks of life and sources of employment fill up at the station. In fact, the sales volume has been so high, that we had to shut down the pump on July 6th because the E85 tank had run empty! The only accessible side of this lone pump is selling upwards of 1,400 gallons daily of E85... and this is not accounting for the E15, E30, and E10 regular sold. The word of mouth is continuing to get out, and we have folks coming from as far away as Lansing to fill up at this station. It is a guaranteed outlet for the company's product, and it is increasing awareness of the ethanol plant. Folks are learning more about E85. Why no other ethanol plant/producer has emulated this idea is beyond me.

So we circle back to the original topic of discussion. Where would we all be today if Valero had bought this idled ethanol plant? Where would we be if VeraSun had not acquired US BioEnergy? What would have happened had VeraSun made different business decisions and had been able to survive the 2008 financial meltdown? Answers to these questions result largely out of speculation... but there's a reason I've always passed my history classes with flying colors. History has always fascinated me personally, and no era is more interesting than World War II to Watergate, or 2007  to present. The way my mind works is that while I don't have all of the answers to these questions, I'm very curious about how a little change in events could completely change where I am personally, or where many others are. If you were completely unaffected by the 2008 financial crisis, please do not hesitate to contact me and tell me your story. Up until I learned more about VeraSun, I thought I was unaffected. In 2008, I was only 15, and was still nearly two years away from even being allowed to begin segment one of driver's ed. I had no need to work, had no car, and both of my parents had (and still have) jobs with an enormous amount of job security. I'm lucky. Not so many people are as fortunate. But up until recently, I thought I had been largely untouched by the financial collapse of 2008. Moral of the story is appreciate what you have, what you have accomplished, and where you are in life. You should never take any of these things for granted, and always appreciate how events of times past have led to the successes and positive moments you have had and continue to have.

Low-level ethanol blends: Where do I come in?

Ever since the Renewable Fuel Standard came under fire last year largely due to an "issue" known as the blend wall (I'll explain this near the end of this post), we've had heated debate about the use of ethanol, where we feel it has a place in our society (some believe it doesn't have a place at all), and the importance of lower-level blends such as the common E10 and relatively new blend E15.

Years ago, it became publicly known that Methyl Tertiary Butyl Ether (MTBE) was causing severe cases of polluting groundwater. There are even accusations that refiners such as BP and ExxonMobil knew about the environmental consequences of widespread MTBE use decades before. Now I will admit that it was good timing on part of the ethanol industry and representatives to suggest ethanol as an additive to replace MTBE. What many don't know is that the 87 octane we see at the pump is the final product. This is with the 10% ethanol content added. Refiners commonly blend in 84 sub-octane gasoline, and mix it with the 10% ethanol amount to bring the octane up to 87. The same is true with other blends like midgrade and premium (just with higher starting octane levels). For that reason, if you ever hear the oil folks claim that the Renewable Fuel Standard is costing them money and causing refineries to shutter, please don't take them seriously. With the constant global conflict and unrest, it's apparent that we have to have an oxygenate. 84 octane gasoline can not legally or safely be used in any motor vehicle (unless outfitted for it, which most aren't), and so we need a cheap additive to bring the octane up to 87. Yes, 85 octane is legally sold in some states with higher elevations in the rockies and the foothills in southwest South Dakota. I will admit that I don't see how this is legal or safe, as the level of engine knock would be significantly higher - but also that I don't know enough about it. Any rate, if we just used pure gasoline without an additive/oxygenate, you can bet that gasoline prices would never again dip below $4/gallon in most regions of the country.

For the reasons I stated in the first paragraph, I absolutely view ethanol as an additive as imperative to keep the cost of transportation down. Ethanol used as an additive is typically sold at rack (wholesale) price, and is as such more profitable for the ethanol industry than higher level blends like E50 or E85. I agree with E15 and willingly throw my support behind it, because it is for sure one heck of a start in transitioning our economy off of so much dependence on petroleum. I mean come on, petroleum is in EVERYTHING! Does it have to be in our cars too? I digress. I view E15 as a bridge, of sorts. E15 is starting to spread like wildfire in Iowa and Minnesota, states that are known for their high levels of friendliness and openness to ethanol as a whole. E15 is now sold at 4 stations in my home turf of Michigan, and is gradually coming to other states such as Ohio and Kansas. I believe that E15 is a great way to get folks who are on the fence or slightly against ethanol on board in using ethanol. Many folks are using E15 in Minnesota and Iowa, and finding that there is absolutely no damage to their engines or issues with compatibility, and they find that other factors such as driveability or performance don't even change a lick. Folks in flex fuel vehicles might try this, find that it doesn't harm their vehicle as they're told it would, and then try higher level blends like E30, E50, or E85.

However, with all that being said, I've made it abundantly clear that I advocate for ethanol as an alternative fuel, NOT an additive. Ethanol is definitely important as an additive, and it is clear that this is where much of the profitability is for ethanol industry nowadays. I'm concerned that if more ethanol is used for E10 and E15, we'll have less for high blends. My concern is that this would increase the prices of higher level blends, and make these blends less attractive to consumers. Remember that our current ethanol capacity is below 15 billion gallons/year. Assuming that every one of the 16.3 million flex fuel vehicles (FFVs) in the United States would use about 2,000 gallons a year, that's about 32.6 billion gallons a year of E"85". Now assume that E85 is actually E78 as a year-round average (adjusting for seasonal and regional differences in actual ethanol content). We multiply the 32.6 billion number previously mentioned by 0.78, and we get just over 25 billion gallons per year of ethanol consumed, just for E85. This is the reasoning for my lack of understanding on why we are having this ethanol "blend wall" debate, but this is a different story for a later time. This 25 billion number is about 10 billion gallons/year above the current ethanol production capacity as a whole. This would completely negate the need for blending ethanol into gasoline to satisfy the Renewable Fuel Standard. Now I understand this isn't possible, but the point is that we do not have enough ethanol capacity to go around - and it is imperative that we add more. DuPont, Poet-DSM, and Abengoa are examples of companies that are doing just that. We all owe them a very big thank you for the level of investment they've put into ethanol production. Between the three plants they're building (one for each), this will add approximately 75 million gallons per year of ethanol capacity to the market.

Moral of the story, I most definitely throw my support behind E10 and E15, and by no means have any desire to attack them. However, I think we need to focus more efforts on making high level blends economical for all parties involved - the ethanol producers, the fueling stations, and the consumers that these blends are marketed to. It is vital that the ethanol industries and lobbies shift more of their focus to these high level blends. I will admit that I don't agree with the ethanol industry and representatives on everything... but I've said that one of my largest goals in life is to personally see ethanol succeed. I have no intentions of falling short. Attacking low-level blends is not the answer.

Now as promised, I will briefly discuss the "blend wall" for those readers who are less versed on this subject. As a disclaimer, I will always refer to the "blend wall" in quotation marks, because I do not recognize any validity with this argument. I personally view it as an excuse to resist change. The ethanol "blend wall", by definition, is the amount of ethanol that the market can absorb into E10 Regular Gasoline, before higher blends like E15 and E85 become imperative to be sold. This is, in my view, the main reason we've seen the RFS come under fire lately, and why we went nearly a decade without loud criticism about "engine damage" and "low mileage" to the extent we often hear it now. I would like to make it crystal clear that the Renewable Fuel Standard does not specify where exactly the ethanol must go, but simply requires certain amounts of ethanol (called Renewable Volume Obligations, or RVOs) to be used in our transportation fuel supply. This is why I bring up the issue of capacity. The more E85 and E15 we sell, the less we have to worry about ethanol going into boating engines or lawn equipment. So let's focus more on higher level blends!

The Black Nozzle Pledge

Last year, we actually grew corn here in Lansing. It was only two maize plants, but we still don't know how they got there. We do some gardening, but we haven't grown corn in years. I managed to squeeze 8 ears of corn from the two plants - which sprouted in August! One grew to be 6 feet tall; the other, only 3 feet. 

Back in November last year, I was driving these 8 ears over to the Carbon Green BioEnergy ethanol plant in Lake Odessa. Halfway there, I ran out of fuel in the "E85 dead zone" know as Portland, Michigan. 20 miles from E85 in Lansing, and 20 miles from the public ethanol pump at the plant in Lake Odessa. I was furious. Unable to get E85, I was forced to break down and buy an overpriced fuel container at the Speedway there, and fill it with tar sands, er uh, gasoline.  Due to my clumsiness, only about 1.1 gallons of the original 2.3 made it into my car's tank. A state trooper gave me a ride to my car (I should have taken notes - the Charger he gave me a ride in would end up being the type of car I'd get the next summer!). I had barely enough fuel to get to Carbon Green BioEnergy, and put in the absolute minimum to get there. With gasoline all over my hands, I finally made it. 

That day, I began beating myself up over how irresponsible I felt. I knew the fuel tank was low, but decided to chance it so that I could fill up at the plant in Lake Odessa. This could have been avoided. It took a while to get over it - even though it was only two gallons of gasoline, compared to the millions sold every day in the United States. I then made a pledge. Thanks to a battery-powered lawn mower, and a battery-powered weedwacker, I had no need to ever touch a black nozzle for any reason. To this day, 238 days later to be exact, this remains the case. I have not purchased an ethanol blend lower than E50 since. 

While in Florida for the 2014 National Ethanol Conference, I ran out of fuel again. This time on the side of Florida 408 on the east side of metro Orlando. While waiting for a triple A dispatched driver to come, I had a Florida Highway maintenance vehicle stop by. He verified that I had run out of fuel, and offered to give me the gallon of gas he had in the back. I wanted nothing to do with gasoline, so I just said I'd wait for the driver to come. Three hours and one infuriated, irritable dad later, I finally got to fill the Sebring with E85 at a Shell station on Florida's Turnpike. 19.1 gallons into a 16.9 gallon tank.

I hope that battery technology improves for lawn equipment, and I hope that I can get as many people as possible to take the same pledge I have. It's not rocket science finding E85. We have the E85 station locator app from e85prices.com, we have the "Flex Fuel Locator" and "FlexFinder" apps. One of my personal favorites is "Alternative Fuels" by William Moffitt (iPhone/iPad only: https://itunes.apple.com/us/app/alternative-fuels/id655668911?mt=8). 

www.e85prices.com is an awesome site to find E85. What even more awesome is that this site tracks ethanol-free (E0) prices and stations, E10, E15, E20, E25, E30, E40, and E50 too. It has an interactive map to show where stations are, and as mentioned, you can see user-submitted prices! All it takes on my end is knowing when the fuel tank is low, and filling up ASAP. I should never again go into an "E85 dead zone" with a low amount of fuel. 

Speedway buys out Hess fuel station chain: What does this mean for E85?

I've recently learned about the bombshell in the fuel business known as Speedway LLC's acquisition of Hess Corporation's convenience store/fuel station chain. This $2.87 billion deal between Speedway parent Marathon Oil Corporation and Hess, will add up to 1,256 stations to Speedway's portfolio.

Speedway currently has approximately 1,480 stations, with new stations currently opening down in Tennessee and in West Virginia. Approximately one in eight of their stores carries E85 Ethanol (by definition 85% ethanol and 15% gasoline) as of this posting. Doing some digging, I found eight additional locations that opened with E85 available, including one in the Interstate 69 town of Imlay City, Michigan - not too far from the border. I've learned that as is the case with the midwest grocery giant Meijer, all newly-built Speedway fuel stations - and Speedway stations that undergo construction or renovations which do work with the tanks and pumps - will add E85. Numerous stores are receiving renovations to keep up with the modern convenience store model, and are adding the successful Speedy Cafe, where you can order specialty food and drinks through a touchscreen POS and pay for your food as you would any other purchases at Speedway.

When the transition of all of these stores over to the Speedway chain is complete, Speedway will nearly double their number of stores. To my knowledge, none of the Hess stations carry E85 (please correct me if I'm wrong on that one)... but we're dealing with a much different Speedway company than we had in 2012, when Speedway acquired the lower Great Lakes chain Gas City. At that time, Speedway yanked E85 pumps from most of the stores they acquired, either replacing the fuel with racing fuel, or leaving the tank unused altogether. Times have changed since 2012. In 2013, Speedway went on a massive adding "binge", if you will. In addition to new builds, and an announcement of expansion into the Nashville, TN and Pittsburgh markets, Speedway converted one of the two underground diesel tanks at many of their stores over to E85. This filled in a number of gaps in E85 availability! I'm hoping that the same will occur to the Hess locations that are being converted to Speedway stations.

This would bring some much needed E85 availability to the eastern seaboard, which is currently severely lacking.

Yes, there is limited ethanol production in this region. But this is about to change. I will divulge into this in a later post.

I commend Speedway for their commitment to adding E85. This is a huge step in further bringing ethanol as an alternative fuel to the market, and we couldn't be more grateful!

A little bit about where I come from

So I am known as a very vocal ethanol advocate. This is nothing that I can, nor want to, deny. As part of this advocacy work, I regularly comment on newspaper and opinion articles that both support, and attack, ethanol.

On Friday, I commented on a story found on a statewide Michigan newspaper called Mlive. You can find the article here. I wrote a response to Nicki Polan, the author of the opinion article, who is the executive director for the Michigan Boating Industries Association. Scroll down if you would like to read my comment. In response to what I stated, I read a comment that admittedly got to me. Again, I can not, nor do I want to, deny this. 

The comment reads, as follows:

People are on to your corn/ethanol lobby misinformation, Aaron.
You and the other corn/ethanol lobby shills are going to 'up your game'- everyone from the restaurant owners to environmentalists to food security advocates to boat owners are done with your lobby's worn out attempts to 'baffle them with bullspit'   

End of quote.

When you join a fight this contentious, over something as controversial to some as ethanol, stuff like this is bound to be said. Internet trolls will come out against what you are saying and do so repeatedly.
What I don't understand here is that on the interwebs, ethanol activists like myself can be automatically grouped into "shills"... whereas the folks who do the same advocacy for oil don't, at least as much. Not every issue solely has folks who are paid to do and say what they do.

It calls into question why I do what I do. To be blunt, it's because I give a darn. I give a darn about climate change, economic security, those who work for a living, lower fuel prices, the virtual glut in the market created as a result of the radically explosive growth in fracking and Canadian tar sands development, etcetera, etcetera. Whatever you say about my views, and the bias I may now appear to have, no one, and I repeat, no one, is feeding words into my mouth. I joined this fight on my own, and without any connections to anyone anywhere in the ethanol industry. 

I drove 1,600 miles all the way to Washington, DC (round trip) to testify in front of the Environmental Protection Agency in regards to proposed volume reductions in the Renewable Fuel Standard (RFS) back in December. I did this on my own time, and my own money. Admittedly, the two free hotel nights from the dad certainly helped. However, no one reimbursed me for my trip, nor did I request for assistance. I actually quit my job at Rite Aid the week prior to the hearing, which was my primary source of income. Because I did not find out about this hearing until the week before, I was unable to give the traditional one month notice of a request for time off. Even though I had others who were willing to shift their schedules around or fill in for me while I was gone, and even though it was only two days I was requesting off, I still had my boss bluntly say "no" when I asked for the time off. With lawn mowing season long since having ended, and with snow yet to fall, I did not have any additional income coming in until later that month. I've talked to numerous folks at the pump about ethanol, and I've done a lot of work for the ethanol industry on my own behalf. 

Full disclosure, I am now employed by Carbon Green BioEnergy, a company that owns the ethanol plant I work at in Lake Odessa, Michigan, and manages two others. I have been employed there since December. Continuing with full disclosure, I am compensated for some of the advocacy work I do (by a different employer). Yes, I was incorrect in stating that I am not paid for this on the Mlive article. However, this has only been a recent source of income. I have been a staunch ethanol supporter since late 2012 after I bought my first car. This work that I am now being paid to do, is not completely replacing work I did on my own time, and is to no extent any different than the work I was doing before. Nothing has changed in that regard. Yes, because I clean pipes and floors in an ethanol plant, and am paid by another ethanol company to do activist work, I no longer have the appearance of total nonbias in my views, opinions, statements, or actions. But let me make it absolutely clear: my views, opinions, statements, and actions, have not changed since I began advocating for ethanol in 2012. They will not change in the future, either. 

Intelligence is the ability to hold two very different ideas or beliefs, and still be able to function. And it's hard for me to say that I have not rejected the arguments that I am combating through this advocacy work. But this is where doing your research and actually going out and talking to people come into play. Actions speak louder than words. However my bias may happen to appear, I am going into a career with ethanol because it's what I'm good at and it is where my passion is. The only "influence" I have is a father who uses E85 in his state vehicle and mentions it from time to time. I have no agricultural background aside from the folks who I've met in Ohio, Michigan, and Iowa, and I have no prior background in ethanol before my activist career began in 2012. I did not get any of this work with the industry until after I made myself known. That's what you call self-made.

The difference between the folks on the side of the debate that I argue for, and the folks on the side who are vocal against ethanol, is that the ethanol industry does not spend all of its time attacking the oil industry. Yes, obviously there is some of that going on. But the true factor that sets ethanol and the folks who represent and/or advocate for it apart from those who argue against it, is that we spend time educating the public about our product. Yes, talking down the competitor's product is a practice that virtually anyone in the advertising business has participated in - to which the ethanol industry can not take exception. But after a while of someone simply saying "oil is bad for the environment", and "oil has contributed to wars" (both of which are true), you are no longer doing your product a favor. A large part of why I jumped into this debate is because I believe that it isn't good enough to just complain about the problem.  You have to do something about it. The United States was not built on this sense of morality (or lack thereof), but rather by those who realized that actions speak louder than words. It's only right that we combat climate change and economic security amongst a myriad of other issues with that mindset. I will elaborate on why I believe in ethanol specifically to combat these growing concerns in later posts. 

With the explosive growth of fracking and development in Canadian tar sands, the long-standing argument that so much of our oil is imported from overseas is beginning to weaken. But that does not eliminate the fact that some of it does still come from overseas; nor does it discredit the fact that, forgive my cynicism here, gasoline prices will jump on even the smallest hint of tension in the middle east. With Michigan being known for gasoline price hikes from 20 cents to as much as 50 cents in a matter of hours, you don't have to tell us twice about how easily gasoline prices are affected by middle east tension. 

I am not fed words, and am not told what to say and what not to say. Whether it is believed or not, my views, opinions, words, and actions are mine and mine alone. I do not take pride in simply repeating what someone else says. That's not what a leader does. It's not what I do.

All things ethanol - a brief introduction

Hello all, and thanks for checking out this blog. You will see opinions, links to other ethanol articles, discussions of news updates in the ethanol industry, and much more! Having been raised by a very pro-ethanol state-of-Michigan-employed Dad, I have no other influence on my views of ethanol, or background in agriculture. I care passionately about the environment, the economy, and many other factors that have shaped my support and activism for ethanol.

I will try to post here daily. As a disclaimer, I should note that my opinions and views are my own, and no one is telling me what to say. After all, it isn't hard to research this stuff on the interwebs and gain experience by talking to folks on every step of the ethanol line, from the growing of the corn (primary feedstock for ethanol currently, though this is slowly changing!) all the way to the sale of the finished product. If you have any questions or comments, post them here! But please, keep it civil.