It could be harder to find “clear” gasoline next month in the Oklahoma City area. Or it just could be more expensive.
Federal requirements are forcing refiners to produce growing amounts of fuel blended with ethanol, endangering the supply of pure gasoline in the central part of the United States, including Oklahoma.
Major pipeline operators are preparing to move to shipping sub-octane gasoline that must be blended with ethanol or premium gasoline before it can be sold to consumers.
Gasoline sold at Oklahoma service stations must meet a minimum octane of 87.
OnCue Express CEO Jim Griffith said the lack of ethanol-free gasoline coming from refineries likely will increase the price of that product.
Griffith said most of the Stillwater-based retailer's customers prefer “clear,” or ethanol-free, gasoline. Some call it pure gasoline.
“We try to have the product our customers like,” he said.
That product could be getting more expensive.
Griffith said he expects the spread between pure gasoline and the 10 percent ethanol blend to grow to 25 cents a gallon or more.
“The bottom line is the spreads are just going to get bigger,” he said. “It's not a good situation for me or my customers.”
Tulsa-based Magellan Midstream Partners LP operates the longest pipeline system in the country for refined products. Its customers include refiners, petroleum traders and petroleum marketers.
Spokesman Bruce Heine said Magellan will no longer transport 87 octane gasoline, beginning Sept. 15, due to increased renewable fuel requirements.
“Magellan is doing what our customers want us to do,” he said. “We're supporting their needs.”
Heine said Magellan is modifying its Oklahoma City fuel terminal to enhance its ability to load “clear” gasoline for its customers.
A spokeswoman for Oklahoma City-based Love's Travel Stops and Country Stores said it is difficult to know what will happen with pure gasoline at this point.
“The supply situation for pure gasoline is still fairly speculative at this point,” spokeswoman Jenny Love Meyer said. “The supply at terminals in the central Oklahoma area may decrease in the future. I am not aware of a specific timeline though when this might occur.”
Oil and natural gas industry groups like the American Petroleum Institute have urged the U.S. Environmental Protection Agency to reduce the ethanol mandate, without success.
“The program is outdated and needs to be repealed once and for all,” said Bob Greco, director of the institute's downstream group. “Under the current RFS (Renewable Fuel Standard) regime, ethanol requirements will continue to increase while gasoline demand continues to decline.
“That's why we need a full repeal by Congress.”
Ethanol advocates maintain the renewable fuel mandate has increased the country's fuel supply, while keeping the price of gasoline from climbing further.
“It is as if the U.S. oil refining industry had found a way to extract 10 percent more gasoline from a barrel of oil,” Iowa State University professor Dermot Hayes said in a statement released by the Renewable Fuels Association. “This additional fuel supply has alleviated periodic gasoline shortages that had been caused by limited refinery capacity.”
Hayes said the mandate has reduced fuel prices by an average of 29 cents a gallon.
Adam Wilmoth, Energy Editor