(Bloomberg) — BP Plc and Royal Dutch Shell Plc are exploring adding more ethanol in gasoline in top corn state Iowa to take advantage of how cheap the biofuel has become.
The oil majors are gauging driver interest at a small number of stations in 15% ethanol blends, up from the current state standard of 10%, after the Trump administration in May allowed an increase nationwide.
Adding more ethanol to gasoline may help Midwest farmers who have been struggling to find markets for corn after biofuels demand plateaued last year. Ethanol futures slumped to the lowest in more than a decade in 2019, making it unprofitable to make the biofuel that accounts for about a third of demand for the U.S. corn crop. But cheap ethanol won’t save drivers much money: At current prices, filling up a Ford-F150 would only cost about a quarter less.
The BP-branded Elliott Oil Co. has for about two weeks been selling some E15 in the small town of Osceola, CEO Andrew Woodard said. BP spokesman Michael Abendhoff said the company does not comment on marketing strategy.
John Reese, downstream policy and advocacy manager in the Americas for Shell, said at the National Ethanol Conference in Houston that Shell offers higher ethanol blends, without offering specifics.
Shell spokesman Ray Fisher said the company is working to add E15 in Iowa, Indiana and Illinois. “Prior to implementing E15, there is due diligence to ensure we can deliver a quality product and meet state regulations.”
Benchmark Chicago cash ethanol traded at a one-year low in January, with the price decline generating interest in adding more to the mix. But that’s less than a penny per gallon below pump prices.
Efforts to boost ethanol have an edge because the U.S. is sending only trace amounts of it to China, and Mexico is…
Source: FuelFix
