February 19, 2019 | Vol. 69, No. 4
Dear PEI Member:
For openers, the American Petroleum Institute (API) and the American Fuel and Petrochemical Manufacturers (AFPM) all but promised litigation if, as expected, the U.S. Environmental Protection Agency (EPA) grants a fuel volatility waiver that will allow the year-round retail sale of E15. In a Feb. 8 letter to acting EPA Administrator Andrew Wheeler, API and AFPM stated the EPA has no legal authority to issue such a waiver. A decision by the EPA to grant a waiver would “invite litigation,” the letter added.
Even as API and AFPM threatened legal challenges, the two major U.S. ethanol advocacy groups hosted their annual conferences — Growth Energy, with its Growth Energy Executive Leadership Conference in Palos Verdes, California, and the Renewable Fuels Association (RFA), with the National Ethanol Conference (NEC) in Orlando, Florida.
Both conferences discussed the state of the worldwide ethanol market, the negative impact of tariffs on ethanol producers and the upcoming reset of the Renewable Fuel Standard. But, for me, most interesting of all was a presentation at the NEC on focus group research recently conducted by public affairs firm The Locust Street Group. (The Washington, D.C.-based firm takes its name from the street in Des Moines, Iowa, where many presidential candidates launch their campaigns.)
The RFA-sponsored research was designed to gauge how the public perceives ethanol, in general, and E15, in particular, so the ethanol industry can better position future branding campaigns. The demographically and politically balanced focus groups included 54 registered voters (and drivers) in St. Louis, Missouri, and Alexandria, Virginia.
Key findings included the following:
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Those findings would seem to suggest trouble for ethanol, but the focus groups also showed the right messaging can sway consumer opinion. In fact, nearly two-thirds of the participants viewed ethanol more positively by the end of the sessions.
The focus groups tested a variety of consumer messages. Not all resonated. For example:
The messages that did work? Pitching ethanol as an environmentally friendly fuel seemed to play well. Even people who don’t consider themselves particularly “green” like to support the environment, especially when doing so doesn’t come at an extra cost.
As for E15, the focus groups responded most positively when the blend was presented as a “higher value” fuel option. The key was E15’s octane rating. Most drivers don’t understand what octane is, but they assume it’s a “good thing.” When The Locust Street Group pointed out that E15 has a higher octane than E10, the consumers were impressed.
Another panel at NEC — this one composed of fuel marketers who are selling E15 — gave additional context to the E15 price-value relationship. The retailers said customers begin to wonder when E15 is priced 5 or 10 cents a gallon below E10. The thinking seems to be: “If this fuel is so good, why is it so cheap? There must be something wrong with it.” The sweet spot for E15 pricing appears to be at or just a penny or two below E10. At that level, consumers think “I’m getting a great value on this because of the higher octane.”
Look for auto mechanics to star in future ethanol industry promotional campaigns. Why? The focus groups revealed that when an auto mechanic says ethanol fuels are good, consumers listen. Unlike fuel marketers, mechanics don’t have a profit interest in selling higher ethanol blends. So, consumers will give more credence to mechanics’ assurances that E15 is safe, reliable and a good value.
C-STORES SELL FUEL
The study’s authors attribute the dip in fuel sales to new business models that focus on foodservice and new store formats, including urban, walk-up locations. Convenience stores still sell 80 percent of the motor fuels purchased in the U.S.
AGRICULTURE DEPARTMENT GIVES E15 ASSURANCES
TO END EV SUBSIDIES INTRODUCED
Belize maintenance company. Petroleum Equipment Services Ltd., 2051 San Martin Road, Belmopan, Cayo District, Belize, has applied for service and construction division membership. Armis Hernandez Jr. is maintenance technician and operation manager for the firm, which was established in 2006. Petroleum Equipment Services Ltd. performs preventative and corrective maintenance, calibration for dispensers, and installations of aboveground and underground tanks and forecourt controllers. Sponsored for PEI membership by David Fiala, FMG-LLC/SFICO, Maitland, Florida.
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The TulsaLetter (ISSN 0193-9467) is published two or three times each month by the Petroleum Equipment Institute. Richard C. Long, Editor. Opinions expressed are the opinions of the Editor. Basic circulation confined to PEI members.