FEATURED SPRING 2015 ISSUE
Priming the Pump
The E15 movement is gaining momentum with its expansion into Sheetz convenience stores in North Carolina.
As another domino falls in the drive to bring E15 to consumers across the nation, the ethanol industry is working to prime the pump for the next game-changing success story.
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In January of this year, Sheetz, Inc., announced its plans to begin offering E15 at its convenience stores throughout North Carolina. Based in Altoona, Pa., the innovative family-owned chain predicts it will complete installation at 60 of its North Carolina stores as early as spring 2016.
Considered a mover and shaker in its industry with more than 1.5 million customers a day, Sheetz was founded in 1952 and today lays claim to 500 stores across six states.
“When it comes to retailing gasoline, Sheetz is considered to be a high-volume retailer that relies on narrow margins and high sales volume,” explains Michael Lorenz, Executive Vice President of Petroleum Supply at Sheetz, Inc. “The reason why we decided to move ahead with E15 is that it has the potential to be high volume.”
Lorenz says the process of converting 60 existing North Carolina stores to offer E15 and E85 is already under way, with the first on track for completion by May of this year. “We deliberately decided to do a high enough concentration of stores to have critical mass,” he explains. “That will make marketing efforts more efficient and customer awareness easier. At this point, we plan to clearly label it as E15 and price it below the E10 87 grade.”
The U.S. Environmental Protection Agency has approved the use of E15 in vehicles of model year 2001 and newer. “That constitutes 75 percent of vehicles on the road today – and growing!” Lorenz points out. “Furthermore, blending ethanol into gasoline makes money. So blending more ethanol makes more money.”
The company also sees its E15 venture as a way for consumers to get a higher-octane fuel for a price lower than they were paying for 87-octane fuel currently available.
The addition of E15 also fits with the company’s business model. “We have a huge menu of made-to-order food and beverage items. Likewise, we want to provide a variety of fuels,” Lorenz explains.
According to Growth Energy, E15 can be found at more than 119 stations across 18 states. Pivotal to the effort to bring E15 to consumers around the country is the aptly named Prime the Pump fund.
Formed in February 2014, this nonprofit works to pool industry resources for the advancement of E15 and higher ethanol blends. Prime the Pump provides retailers the chance to take advantage of cost-share programs that enable the necessary changes in infrastructure for E15 fuels.
“We were thrilled about the partnership that Prime the Pump was able to put together with Sheetz,” says Jeff Broin, POET Founder and Executive Chairman and Growth Energy Co-Chairman, Sioux Falls, S.D. “They are one of the top companies in the industry.”
“Sheetz is offering E15 in 60 stores in North Carolina. Obviously, they are doing this for proof of concept reasons, to see the volume of E15 that is sold through these retail outlets. We are hoping to see their efforts spread and to see other retailers install E15,” says Broin.
“Back in 2006, we saw several new potential alternatives fuels on the horizon,” recalls Lorenz. “We wanted to be prepared to offer whichever fuel emerged as the biggest winner. So, we started pre-piping stores nine years ago. What that means is we have installed a baffled tank so we can add a new additional fuel without having to break concrete.”
Mike O’Brien, Vice President of Market Development for the Washington, DC-based Growth Energy, agrees with Broin that the announcement by Sheetz is a major boost to the E15 movement.
“Sheetz competes directly with branded oil and continues to generate success against branded oil sites,” he adds.
Broin is hopeful the marketplace will embrace a better, cleaner fuel, including oil-backed retailers. “They’ve certainly done everything in their power to slow or stop E15 from getting to the pump. But over time, we’ve overcome those hurdles.”
Over the past six months, the Prime the Pump program has been able to penetrate six of the top 25 retail chains in the country with partnerships for launching E15. O’Brien says the momentum of E15 is being watched, and is starting to garner recognition from various trade groups and media outlets.
That momentum is helping to fuel the Minnesota Independent Oil Company (MINNOCO) brand developed for members of the Minnesota Service Station and Convenience Store Association (MSSA). The brand allows independent retailers the chance to own and control their own brand of fuels while offering alternative renewable fuels like E15, as well as E85, E30 and of course, E10.
Lance Klatt serves as Executive Director for the organization, headquartered in the Twin Cities suburb of Little Canada, MN. His primary focus is to provide legislative representation and legal assistance for the independent retailers in the Minneapolis and St. Paul marketplace. Nearly 70 percent of the fuel sold in Minnesota is sold within the 10-county metro area of the Twin Cities.
“A lot of what we’ve been able to do has been because of funding from the Minnesota Corn Growers and the Minnesota Department of Ag. Prime the Pump has been a huge driving force in the state as well,” notes Klatt. “But as important as that has been, it isn’t just about funding. It’s about seeing a fuel that a lot of people in the marketplace do not have. It’s about competitive advantage.”
Klatt says his organization markets the fuel not as E15, but as Unleaded Plus.
“It’s higher octane and – at 5 to 10 cents a gallon cheaper – it’s a less expensive alternative to gasoline,” Klatt adds. “We also make sure consumers know we are a local brand. We want them to know they are supporting their local economies at both the retail and farming level.”
Klatt says customers are further encouraged to try the new alternative fuel through various targeted marketing programs, including coupon savings.
He says that E15 fuel marketed as Unleaded Plus makes up about 20 percent of all fuels being sold through the MINNOCO brand. While some consumers are reluctant to try a new fuel, most are appreciative of the lower cost and the ability to help out the local rural economy.
Broin says that the advancement of E15 to a growing number of fueling stations across the country is more than just good news for the ethanol industry and consumers. It’s also pumping new life into rural economies. He says that absent the ability of E15 to grow the market for ethanol and commodities, the future could be highly challenging for the agricultural sector.
“It basically took 30 years for E10 to blanket the country. We’re hopeful that with enough funding, Prime the Pump will shorten that number significantly,” Broin sums up.
Lorenz is optimistic that Sheetz, Twin City retailers and other companies will continue to expand their E15 installation in the future. “The biggest challenge ahead of us is in trying to educate the consumer,” he says. “By making it available, consumers can do their own research and decide for themselves if it makes sense for them. Honestly, we’re not sure what to expect but we are going to find out.”
