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Allch Chcar

Kentucky and the VEETC

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I noticed that prices for E85 in Kentucky were a bit lower than some places earlier this year. But the price at my local station jumped to $3.39! Gasoline is only $3.57. What is the deal?

Chicago Board of Trade (CBOT) Ethanol is approx $2.20 -- NYMEX gasoline is approx $3.20 --the ethanol price is roughly what an ethanol producer would be paid for delivering a contract lot into Argo IL (Chicago) and the NYMEX gasoline price would roughly be the terminal price in the NY Harbor (and right now is about what E0 is at Midwest truck terminals). Add about 45 to 54 cents worth of taxes and approx 15-20 cents gross margin and freight and you will reach approx retails. E10 at the truck racks in the Midwest is approx 10-15 cents under E0 (or roughly $3 to 3.12). So what does this tell you about either the gross margin your station is trying to make on E85 OR how poorly he is buying? I have the same problem here- E85 is $3.29 in my town and I am not buying it. Understand that where I am the ethanol plants are getting 5 cents or so less than Chicago due to rail freight costs- down your way they likely get 5 over the CBOT. Ethanol should nearly always be bought direct from an ethanol plant rather than trucking it to an oil terminal, tacking on 30-40 cents, now running it thru another wholesaler and adding more freight which puts another 5-8 cents on top of the 30-40 terminal-----see the problem?

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I noticed that prices for E85 in Kentucky were a bit lower than some places earlier this year. But the price at my local station jumped to $3.39! Gasoline is only $3.57. What is the deal?

Ethanol should nearly always be bought direct from an ethanol plant rather than trucking it to an oil terminal, tacking on 30-40 cents, now running it thru another wholesaler and adding more freight which puts another 5-8 cents on top of the 30-40 terminal-----see the problem?

 

 

Phil  is it common to have blending done right at the plant ?  For clarification the Ethanol cannot leave the Plant as E100 ..correct..it must be denatured...they aren't denaturing with gasoline to the volume to where they are making E85 are they ?

 

 

To get the the high blends like E85 has to go to the refinery ..correct?

 

 

Or are you speaking to retailers who already have blenders pumps..they clearly are ones who should be buying direct from the ethanol plant

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They were just pricing it at $3.09 last week and I was expecting it to DROP this week. The last time it was over $3.30, Ethanol was going for over $3 a gallon. >:(

 

From what I know, Ethanol is almost exclusively blended at the Oil Refinery, excluding blender pumps. The denaturant they add isn't necessarily pump grade gasoline. It could be one of a variety of Petrol based substances.

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It is less common to find E85 blended at an ethanol plant -- likely less than 1/3 AND that is in the Midwest. The reasons for the low rate of blending at an ethanol plant are:

1) the ethanol plant has to have either an extra shipment/blend tank OR a blender rack to mix natural gasoline denaturant with E100 (like the guts of a massive retail blender pump-these blend at 450 gal per minute) ----OR--a unique piping/control system to batch load the truck.

2) a billing system and knowledge to bill and handle tax collection.

3) a willingness to deal with retailers - taking credit risk or prepayments OR a quality wholesaler who is not greedy.

4) a desire to see E85 grow and to spend the little bit of time to support this function.

5) a proper long term agreement with the ethanol broker to allow such. Most here on this website do not realize that many ethanol plants- particularly small operations- do not have the contracted ability to direct sell E85 due to brokerage agreements to specify 100% of output go thru the broker.

Blending E85 in the ethanol plant does have real price advantages due to minimal handling, trucking (less than gasoline experiences typically- and really so if pipeline freights are considered), minimal middleman margines, natural gasoline (C5 pentanes) are cheaper than finished gasoline and are cleaner with no excess additive. I do not recall what the blender option costs on a high speed truck rack- I do know the turnkey complete blender system was $100,000 but at least 1/2 of that would have been for the 4" load arm, Sculley interlock, and meter required to just load ethanol anyway.

 

OH- AND BY THE WAY- I know how to do this and am immediately available ;D 

 

Quote (Dan):

 

Phil  is it common to have blending done right at the plant ?  For clarification the Ethanol cannot leave the Plant as E100 ..correct..it must be denatured...they aren't denaturing with gasoline to the volume to where they are making E85 are they ?

 

 

To get the the high blends like E85 has to go to the refinery ..correct?

 

 

Or are you speaking to retailers who already have blenders pumps..they clearly are ones who should be buying direct from the ethanol plant

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Thanks Phil that helps..

 

Now will/do Ethanol Plants advertise their ability to high blend ? like E85

 

Guess what I would like to do is work on gathering a  list of Ethanol Plants that do blend E85 and then have our members and visitors (between here and e85prices around 130,000 visitors a month) have everyone Start contatcing their local Retailers and let them know that they can buy for far less directly from so and so ethanol plant 30 miles up the road type situation.

 

I bugged a local distributor  here last week and got him to drop 20 cents a gallon..  still not enough brought the Station to a 11% spread ..still like to see them buying direct from ethanol plant

 

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Let's start with what I do know---Over in MN I know CEVC used to supply E85 from their plant so I ASSUME they have such capabilities yet. Utica in WI can blend at it's load rack.

Several ethanol plants also sell direct to a jobber who then truck blends ethanol with gasoline but this later option is rarely as efficient or cost effective. I know that Badger (Monroe WI) and the ethanol plant in Freisland sold to jobbers at times. I would think that Marquis Energy (WI and IL) plus Lifeline Foods (MO) would be supportive). Lifeline and ICM worked together on a blender pump retail program a couple of years ago.

 

A valuable resource to find out what ethanol plants are working at this are the Growth's, Clean Cities, ALAMN, State Alt Fuels coordinators, and the stations themselves.

 

I would be happy to perform a consulting role if a plant wanted something more than a few hours of advice. I have the time right now and ability to travel/move to project manage a plant blending/marketing startup if someone only needs to get it off the ground and knows of someone else who can sustain it. Once I land something else I will not be able to do this readily anymore.

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There is a station in rural Nebraska (Geneva) that is 5-7 miles from a large ethanol plant (Fairmont) that has e30 (used to have e40 but switched blends...) but does NOT have blender pumps...

 

How is this possible?  Is it possible for them to legally have the fuel splash blended in their underground tank (x gallons e0, x gallons e70/85... depending on the seasonal high blend)? 

 

Could the ethanol plant be specially blending e30 at the plant for them?  They are the ONLY station in the area, state... that does this...

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