Here's the Big Reason Blender Pumps Haven't Caught On

Prairie Gleanings

Fuel retail sales are not a high-margin business. You can't blame station owners for ignoring higher blends of ethanol.

Published on: February 25, 2014

A week after the National Ethanol Conference wrapped up in Orlando, I keep coming back to two things.

First, it was 80 degrees F down there! It was still in the 50s when I flew back to St. Louis. And, now it’s back to winter. I think most everyone will agree – spring can’t get here soon enough. 

The second thing is this little fact. The average fuel station proprietor only makes a 3-cent-per-gallon profit on gas. That means on an average fuel transaction, the proprietor may net around 50 cents profit.

And we wonder why we can’t get fuel station owners to put up the money for a new blender pump that incorporates the latest and greatest blends of ethanol.

Gas station owners only make an average of 3 cents per gallon on fuel sales.
Gas station owners only make an average of 3 cents per gallon on fuel sales.

The Renewable Fuel Standard is less than 10 years old. In that time, the industry has pushed hard for three blends of ethanol – E10, E85 and now E15. With so many parties pushing for different fuels, it’s no wonder fuel station owners aren’t chomping at the bit to invest in new pumps.

What if a leap in battery technology makes a quick-charge electric station a better investment than an ethanol blender pump? 

Put yourself in their shoes to better understand this scenario. Most of these stations are locally-owned, mom-and-pop outfits – another little factoid from NEC. Sure, they may be selling a branded fuel line. That doesn’t mean the station is owned by big oil.

So, you had a good year last year and you’ve got $50,000 to reinvest in the business. Do you go out and replace a functioning fuel pump with a new blender pump? Or, would the money be better spent inside the convenience store? Maybe a new cooler for additional beverage options, or an oven for a new line of hot pizzas? And, what if the pump they’d be replacing still has a good 10 years of life left in it?

Point is with such scant profit margins in fuel retail sales, it’s no wonder blender pumps are slow to catch on. One of the farmers I spoke with at NEC noted the industry needs to invest if they really want to bolster infrastructure. I agree.