Volume 14, Issue 10: June 27, 2008

The Glenville Mobil Mart in Glenville, NY, is the proud 1,600th E85 fueling facility in the country. The station, a member of the NEVC, is located at 245 Saratoga Road in Glenville. The milestone was recently achieved when they began selling the alternative fuel.

“We decided to sell E85 to help reduce America’s dependence on foreign oil,” said Stephen Weekes, president of Glenville Mobil. “We need E85.”

The station currently sells regular unleaded gasoline as E10 and diesel. They are open 24 hours and offer a full convenience store and 24 hour Dunkin Donuts. The 5,000 gallon E85 tank supplies four E85 nozzles.

“We are excited to see the number of E85 locations exceed 1,600,” noted Executive Director of the NEVC, Phil Lampert. “The NEVC has been leading the national efforts to establish E85 fueling sites for the past 14 years. It has taken some time to achieve this level but we are convinced we can double this number within the next 18 to 24 months. The NEVC and our partners look forward to assisting thousands more stations in becoming E85 retailers. Congratulations to Glenville Mobil Mart in being part of this milestone!”

Glenville Mobil received a grant provided by the New York State Energy Research and Development Authority which contributed to half the cost of the E85 infrastructure.

At this time last year, only 1,230 stations were providing E85. For a complete listing of E85 fueling locations, visit www.E85Refueling.com.

Orlando’s Mayor Fuels Up at the County's New E85 Station
- Source: Orange County Office of Emergency Management, Press Release, June 12, 2008

Florida ’s Orange County Mayor Crotty (seen left) supports E85! He recently fueled up with the alternative fuel at the new fleet fueling center available for the 92 vehicles in the county.

“Nationally, the price of E85 is 15-20 percent less than unleaded gas.” Mayor Crotty stated, "We're not quite there yet, but we expect that to improve as the supply increases in our area."

The new station is part of Mayor Crotty's Orange to Green initiative, which marked the beginning of a strategy to place Orange County in the forefront of the worldwide movement to reduce greenhouse gases.

Currently, there are fifteen E85 fueling facilities in the state of Florida, including this fleet-fueling facility. For a complete listing, go to www.E85Refueling.com.

DOE and USDA Defend Renewables Mandate
- Source: E&E Daily Senior Reporter Ben Geman, June 12, 2008

Two Cabinet secretaries defended the recently expanded biofuels mandate against charges that it is driving up food costs while touting ethanol's role in moderating gasoline prices by as much as 35 cents per gallon.

The defense by Energy Secretary Samuel Bodman and Agriculture Secretary Ed Schafer came ahead of today's Senate Energy and Natural Resources Committee hearing about links between biofuels and food prices.

Livestock producers and other food industry groups are pressing lawmakers to scale back the renewable fuels standard. Biofuels have also come under attack by some anti-hunger advocates, who say increased use of crops for motor fuel in various countries is boosting global food costs.

But in a letter to Energy and Natural Resources Chairman Jeff Bingaman, which can be viewed here, the two secretaries say repealing the mandate would hinder efforts to reduce oil import dependence and greenhouse gas emissions.

The letter also states that questions about food and fuel prices are complex. "We would again caution, therefore, against hasty judgments driven by highly questionable, agenda-driven calculations, some of which have been featured prominently in the popular press," the secretaries wrote. The letter is a response to an inquiry by Bingaman last month.

But the letter goes on to state that preliminary analyses shows U.S. biofuels demand plays only a "small role" in global food supply and prices, while prices at the pump here would be 20 cents to 35 cents higher if ethanol were not blended into gasoline.

Ethanol moderates costs because it reduces gasoline demand somewhat, and because current tax credits help make the costs of ethanol for refiners lower than the production costs of gasoline, the letter states.

Biofuels are responsible for only a small amount of increases in U.S. food prices, but the effect is growing, an analysis attached to the letter states. The agencies estimate that ethanol and biodiesel consumption accounted for about 3-4 percent of the overall increase in domestic retail food prices in 2007, and about 4-5 percent during the first third of this year.

The analysis also looks at the effects of U.S. biofuels consumption on global commodity prices. "From April 2007 to April 2008, in the absence of any growth in biofuel production in the United States, we estimate that the International Monetary Fund global food commodity price index would have risen by 40.6 to 42 percent as opposed to 45 percent," it states.

Last year's energy bill expanded the national biofuels mandate to 36 billion gallons by 2022, including 15 billion gallons of corn ethanol. The law calls for at least 9 billion gallons of biofuels, nearly all ethanol, to be blended into the motor fuel mix this year.

A spokesman for Bingaman, in a statement, said the DOE-USDA analyses "gives Congress a solid start in addressing some tough questions."

ICM, Inc., Guarantees Food AND Fuel Production in 2010
-Source: ICM, Inc., Press Release, June 16, 2008

ICM, Inc., announced that ethanol biorefineries investing in the company's new, proprietary and innovative technology before the end of this year will be capable of commercially-producing both food and fuel in 2010. The announcement was made during ICM’s customer meeting at the annual Fuel Ethanol Workshop (FEW) in Nashville, TN.

“We are talking about the ‘ethanol biorefinery of the future’…and very near future at that,” said Dave Vander Griend, founder, president and CEO. “Fifty years ago, the U.S. fed the world. We will be able to do that again with a food supply brought about by the evolution of ethanol production.”

Since the company’s founding, ICM’s mission has been to sustain agriculture through innovation. Recently, the company’s mission expanded to researching ways to deliver much-needed protein to the world, by way of ethanol processing. At the same time, the corn-to-ethanol industry is maturing, and a changing economic outlook is prompting existing biorefineries to explore means of maintaining financial success in challenging tightethanol, high-corn price markets. ICM recognized this changing outlook and is delivering on its mission by developing technology to create "new renewables" which can be built upon the existing ethanol biorefinery—the key facilitator of the new technology is a process called dry fractionation.

In addition to new food-processing capabilities, ICM’s new technology offering also provides several other advantages for biorefineries:

ICM installed their first Food AND FuelTM technology package at a biorefinery in St. Joseph, MO. This facility, LifeLine Foods, is the proving ground for ICM’s “ethanol biorefinery of the future” package, which includes the technology to transform corn fiber to cellulosic ethanol.

“Our situation is a little different than that of the typical ICM customer, because we were a food processor first,” says Mike Sobetski, vice president and COO of LifeLine Foods. “Prior to partnering with ICM, more than 70 percent of our revenue came from food production. Co-products, such as livestock feed and germ, accounted for the remaining nearly 30 percent. Today, two-thirds of our revenue is generated by ethanol and its co-products, and higher quality food products comprise the remaining one-third. Even with this shift, we are generating more revenue from the now-30-percent food production than we were with 70 percent, because of the increased capacities and the synergies of the new processes brought to us by ICM.”

Based on the implementation and output happening at LifeLine, ICM has created a preliminary economic model to outline the adoption of the new six-part Food AND Fuel TM technology package. By opening new markets for various co-products, there is the potential for $1 billion in additional revenue over 10 years.

“We have always believed ethanol is part of the solution to our economic, energy and environmental issues and this is what we are doing to make ethanol better. We now can make food during the ethanol process; we can process ethanol in an efficient and more environmentally-friendly way; and we can help retain more of our energy dollars in the U.S., while creating new markets for diversified global agriculture” said Vander Griend.

ICM, Inc., is a member of the NEVC. Greg Krissek of ICM is past chairman of the NEVC.

NEVC Attends Fuel Ethanol Workshop

A ribbon cutting by ethanol industry representatives kicked off the 24th Fuel Ethanol Workshop & Expo (FEW) in Nashville, TN, on Monday, June 16. This year’s workshop provided sessions with cutting-edge information on technology, equipment, services and research, along with new ideas for improving plant operations, yield and profitability.

Mike Bryan, CEO of BBI International, kicked off the event by introducing Ron Fagen of Fagen, Inc., and Alexander Machikhin of JSC Tambovskiy Plant in Russia. Machikhin, who is also president of the Russian Biofuels Association, invited participants to visit the International Networking Pavilion at the trade show, which featured 32 different countries with an interest in biofuels. “Next year for your 25th anniversary, hopefully you will all be here, and probably another couple thousand people will come,” Machikhin said.

The tradeshow area, where the NEVC sponsored a booth, hosted more than 600 exhibitors throughout the industry.

"The 2008 Fuel Ethanol Workshop was an excellent opportunity to communicate Pioneer Hi-Bred's commitment to the biofuel industry. We are working aggressively to increase corn yield per acre and to continue to bring corn hybrids to market which offer additional value to ethanol producers,” said Brian Buckallew, key account manager—biofuels for Pioneer Hi-Bred (one of the newest members of the NEVC and pictured here to the right with Shane Frantum).

NEVC Staff members Michelle Kautz and Stacy Rzepka are featured in photo above left in the NEVC-sponsored booth.

McCain Lays Out Plan for Fuel Economy
-Source: Free Press Washington, June 24, 2008

Below please find comments made by Senator McCain, Republican Nominee for President in an Energy Policy speech in Fresno, CA, on June 23. Senator McCain calls for mandatory production of Flexible Fuel Vehicles by both domestic and imported automakers, but at the same time discredits the existing production incentives which are available for ethanol and calls for elimination of the tariffs on imported ethanol.

E85 Is the Answer, Or Is It?

McCain said ethanol offered the best chance to reduce oil consumption quickly, pointing to Brazil, where he said automakers moved from five percent of their new vehicles being flex-fuel to 70 percent within three years. Detroit automakers have pledged to make 50 percent of their new models capable of running on 85 percent ethanol by 2012.

"I am confident they can do more, and do it faster, in the interest of our energy security. And if I am elected president, they will," McCain said. "Whether it takes a meeting with automakers during my first month in office, or my signature on an act of Congress, we will meet the goal of a swift conversion of American vehicles away from oil."

Only Detroit's automakers have made pledges on flex fuel vehicles—which they've sold about 6 million of during the last decade to help meet federal fuel-economy standards. Foreign automakers have opposed attempts in Congress to require ethanol-capable models; Honda Motor Company has none for sale today, while Toyota Motor Corporation and Nissan Motor Company offer E85 versions on two models each.

And the industry as a whole has said such vehicles will do little to help oil consumption without more fuel stations selling E-85. There are only about 1,500 public stations nationwide out of 170,000, with just three in California, the largest vehicle market.

"In order to achieve energy independence, we need a comprehensive approach which addresses autos, fuels and consumers," said Alliance of Automobile Manufacturers Spokesman Charles Territo.

NEVC Note: The National Ethanol Vehicle Coalition remains nonaligned in the 2008 Presidential election.

Majors Attempting to Shut Out Independents From Growing Ethanol Blending Market in the Southeast
-Source: Tom Waterman, reprinted with permission

New York, NY — The accusations are flying as independent marketers and dealers in the Southeast are concerned that Big Oil is squeezing them out of a potentially lucrative market—the growing E10 blending market. Sources tell us that marketers at least 15 states are rapidly trying to get legislation passed that would provide access to unblended gasoline that they say the majors are seeking to monopolize and keep blending credits for themselves.

Already one law was passed by a state legislature when South Carolina passed S. 1143, with the following amendment related to splash-blending:

Article 3, Chapter 28, Title 12 of the 1976 Code is amended by adding:
“Section 12-28-340.   (A)   A terminal, as defined in Section 12-28-110(56), located within the State must offer for sale a petroleum product that is not already pre-blended with ethanol and that is suitable for subsequent blending of the product with ethanol.

(B)  A person or entity must not take any action to deny a distributor, as defined in Section 12-28-110(17), or retailer, as defined in Section 12-28-110(52), who is doing business in this State and who has registered with the Internal Revenue Service on Form 637(M) from being the blender of record afforded them by the acceptance by the Internal Revenue Service of Form 637(M).”

S. 1143 contained a tax break holiday for buying energy-efficient products. The House amended the bill to add certain firearms to the annual tax free holiday. But when the bill returned to the Senate, certain members of the upper house decided to by-pass the legislative process and tacked on an amendment relating to “splash blending” of ethanol in gasoline. The governor vetoed the bill stating that sales tax holidays aren’t an effective way to promote energy efficiency.  With respect to the splash-blend amendment, the Governor said: “Splash blending entangles federal energy policies with state laws.

Giving local retailers and distributors preferential treatment over out-of-state sources for blended gasolines could be unconstitutional by discriminating against interstate commerce. The addition of the splash blending amendment violates the single-subject rule for laws in our state constitution.”

It’s not clear what the state legislature will do, or if it has the votes to override a veto on this issue. More likely, according to sources we spoke with was a stand-alone amendment, with no other issues onboard, but it remains clear based on the governor’s explanation that he will need to be convinced that the major oil companies are trying to monopolize the ethanol market, and exclude South Carolina marketers and distributors from participating.

What is happening in other parts of the Southeast is that the majors are bringing in waterborne cargoes of “sub-grade” gasoline (CBOB) into Tampa and then around the horn and up the East Coast. This movement, reportedly started by BP in Tampa, Taft, Port Everglades, Jacksonville and Charleston and sets up a move even further north into Virginia. Sub-grade gasoline means it lacks a point or two of octane which the majors then insist requires them to add the ethanol to bring it up to spec.

The contention among many independents in the Southeast is that the majors refuse to sell the CBOB unblended to (a) control the ethanol market, and (b) capture all of the blenders credits without any pass-through to the marketer.

One source told us that “refiners market less than 10% of the gasoline sold directly, and while they are certainly entitled to the blending credits on those gallons, the balance of the market is served by marketers who are being deprived of a product which can be competitive with their own suppliers. This is the most high-handed example of restraint of trade and stifling of competition in my memory.”

The independents claim that refiners did not join the parade to produce ethanol because they could sit back, control the industry, keep the subsidies and eliminate it at their own pace and their time of choosing.

Many independents pinned hopes on the South Carolina legislation as a symbol of what should be done throughout the region, but it’s back to the drawing board.

In a memo sent to independent marketers, Executive Director of the National Ethanol Vehicle Coalition Phil Lampert said: “The concern we have is twofold.  First, it was the independent sector which provided the initial leadership and entrepreneurial skills to consider entering into the ethanol market.  Now that they are not allowed to splash blend, a major oil company is essentially removing their ability to continue selling ethanol altogether.  These actions appear to be predatory and ultimately harmful to our early adopters.

“Secondly, as major oil companies were the last to embrace E10, their actions regarding E85 are no more progressive.  We have some concern that, unless BP and others also begin to offer E85 at their terminals, there will not be a supply of regular unleaded available with which to blend the ethanol to offer E85.

We will continue to monitor these developments and report to our valued members as additional information becomes available.”

In a letter to jobber back on April 1, Liza Clechenko, BP’s East and Gulf Coast sales VP said “BP is now the largest purchaser of ethanol in the U.S.” She went on to revoke jobbers’ temporary splash-blending waivers that permitted them to blend and sell ethanol fuels at BP sites.

We first reported about the southeast blending markets opening more than a year ago, and noted this was the next frontier for increased discretionary blending outside the Midwest. It has proven to be just that, but we would be remiss if we did not note that most if not all of the expansion of ethanol blending in the region was spearheaded and financed by independent marketers.

There are currently 1,621 E85 stations available across the United States. For a complete listing, go to www.e85refueling.com.