I was not able to post last night as we were without power for the post 24 hours. Those in the New Orleans metropolitan area may have seen on the news that a grocery delivery truck delivering product at a supermarket behind the shopping complex on Airline Hwy knocked down 7 power polls, transformers were on fire, power lines were knocked atop the supermarket.......one huge mess.
You may recall that in a post on Wednesday (see August archives) August 31st, I posted a proposed resolution that I presented to the St. John Parish Council on August 23rd. The proposed resolution requested our Parish's State and US Congressional Delegations to help us in getting our State refineries to produce ethanol free gas. In another post on Thursday, September 8th, I posted a letter from Marathon Oil in Garyville opposing my resolution. I mentioned in my last post after posting the Marathon letter, that I would post my rebuttal letter to the St. John Parish Council, the Parish President and the Plant Manager of Marathon's Garyville refinery.
To all St. John Parish readers of this blog, I strongly suggest you give serious consideration to who you cast your vote for in the upcoming elections for Council and Parish President. As you saw at the Council meeting when I made my presentation, they are not interested in what is important to you......not one bit! Read the following rebuttal letter which I sent to each Councilman/woman, Parish President and the Marathon Plant Manager.........it is a little lengthy because I replied to each and every paragraph in his letter. If his letter were a book, it would be filed under "Fiction" in the library catalogue. Here's the letter (if you have any comments to my rebuttal letter, e-mail me at way2gopete@yahoo.com):
Alton J. Landry, Jr.
39 Holly Drive
LaPlace, LA 70068
August 31, 2011
Mr. Lucien J. Gauff, III
670 West 2nd Street
LaPlace, LA 70068
Mr. Steve Lee
38 Muirfield
LaPlace, LA 70068
Mr. Haston Lewis, Sr.
117 Lewis Court
Edgard, LA 70049
Mr. Danny Millet
296 Annex Drive
Reserve, LA 70084
Mr. Charles Julien
P. O. Box 2489
Reserve, LA 70084
Ms. Jaclyn Hotard
1801 W Airline Hwy
LaPlace, LA 70068
Ms. Darnel C. Usry
500 Palm Street
LaPlace, LA 70068
Mr. Ronnie Smith
1801 W Airline Hwy
LaPlace, LA 70068
Ms. Cheryl Millet
1925 Ridgefield Drive
LaPlace, LA 70068
RE: Followup to August 23, 2011 Council Meeting
Ladies and Gentlemen of the St John Parish Council:
You may recall that I addressed you at your Tuesday, August 23rd Council Meeting in LaPlace to seek your support in passing a resolution regarding giving St John Parish consumers a choice between ethanol and ethanol free gasoline.
I was informed by the Council Secretary shortly before the meeting that a letter from Marathon was received regarding my proposed resolution. She told me that she thought it was in support of my proposal. I spoke with Council Chairman, Mr. Ronnie Smith in the Council chambers a few minutes before the start of the meeting. He too told me it was his understanding that Marathon’s letter was in support of my proposed resolution, although he had not yet seen it.
So, you can imagine my surprise and shock after I completed my presentation to you when Mr. Smith read the letter from the Manager of Marathon Oil’s Garyville Refinery, Mr A.J. Anderson, in staunch opposition to my proposal. I was caught totally off guard and felt like I had been “blind sided”! I obviously didn’t have enough time to provide a factual rebuttal to Mr. Anderson’s letter, not having the benefit of reading it before the meeting. In hindsight, as I told Mr. Ronnie Smith later, I wish I would have asked the Council to postpone a vote on the proposed resolution until I was able to get a copy of the Marathon letter and have sufficient time to investigate Mr. Anderson’s claims and re-address the Council. What bothered me even more was when I later did obtain a copy of the letter to find that it was addressed to the St John Parish President and was dated August 22, 2011, the day before the Council meeting. I would have thought that someone in St John Parish government, being fully aware of the contents of my proposed resolution, would have had the courtesy to make me aware of the contents of Mr. Anderson’s letter before hearing it read at the Council meeting. That is shameful!
Attached is a copy of Mr. Anderson’s letter. I’d like to address the reasons why Mr. Anderson claims Marathon is opposed to the proposed resolution. I’ve hi-lited the sections I’ll address.
Paragraph #1: Mr. Anderson claims that the proposed resolution, while well intended, is in direct conflict with the Federal renewal fuel requirements.
The proposed resolution does NOT ask refineries to stop blending ethanol gasoline, but rather blend a portion of their gas as ethanol free gasoline. Currently, all the major refineries in Louisiana are blending ALL of their gasoline as ethanol gasoline, even though the Federal Environmental Protection Agency (EPA) only requires them to blend a mere 8.01% of their total gasoline sales as ethanol gas in 2011. You can read the EPA’s RFS standard for 2011 on the EPA website here:
http://www.epa.gov/otaq/fuels/renewablefuels/420f10056.htm#3
Many believe that major refineries are blending all of their gas as ethanol gas because of the extremely attractive VEETC tax credit of $0.45/gallon they have been getting from Washington since 2004 to blend ethanol gasoline.
Mr. Anderson also claims that blending both ethanol and ethanol free gasoline would increase the “fuel supply complexity and has the potential of increasing the cost for consumers”. I have spoken to two different area gasoline distributors who tell me that they have been buying both ethanol and ethanol free gasoline from Marathon’s Garyville refinery for over two years. So, why all of a sudden would blending both types of gas be more complex than it has been for the past several years? Regarding the potential for increasing the cost to consumers, many gas stations, convenience and grocery store owners have told me that they receive between 4.5 – 5 cents/gallon tax credit to sell ethanol gas. So, theoretically, the price of ethanol free gasoline, in the same grade and brand should not cost greater than 5 cents/gallon more than ethanol gasoline. However, nearly all stations that sell ethanol free gas are selling it at 10-20 cents/gallon more and sometimes as high as 50 cents/gallon higher than ethanol gas. Why is that I wonder? All the consumers I’ve spoken with are very willing to spend 5-10 cents/gallon more for “real gas”, without ethanol. Most tell me that the cost of constant and recurring repairs to lawn and garden tools and marine engines is way above the cost of a marginal cost increase of ethanol free gasoline. Also, the loss is gas mileage on 10% ethanol of between 6-8% on highway driving (much higher on city driving) more than offsets the marginally higher cost of the ethanol free gasoline.
Paragraph #2: Mr. Anderson references the 2007 Energy Independence and Security Act. I am very familiar with this regulation. I am fully aware that it requires refineries to sell 14 billion gallons of renewal fuels (nearly all ethanol) in 2011 and 36 billion gallons in 2022. He additionally suggests that “the U.S. is rapidly approaching the day when nearly all gasoline contains 10% ethanol”.
The EPA has calculated the percentage of total U.S. gasoline consumption in the Country that must be ethanol blend and determined that to achieve the 14 billion gallon ethanol target, refineries would have to blend 8.01% of their total gasoline sales as ethanol gas in 2011. Reference the EPA’s website link I provided in response to paragraph #1.
I spoke with a gentleman from the U.S. Energy Information Administration (EIA) today.
The U.S. Energy Information Administration (EIA) is the statistical and analytical agency within the U.S. Department of Energy. The total US consumption of gasoline in the U.S. in 2010 was approximately 140 billion gallons. Basis that volume, which he predicts will not change substantially by 2022, for the EPA to meet their target of 36 billion gallons of ethanol sold, refineries would have to blend only 26% of their total gasoline sold in 2022, WELL BELOW the 100% Mr. Anderson is predicting in his claim that “the US is rapidly approaching the day when nearly all gasoline contains 10% ethanol”. The information I explained here can be viewed on the EIA’s website here:
EIA Website: http://www.eia.gov/tools/faqs/faq.cfm?id=27&t=10
So, as you can see from this information, it is NOT necessary for refineries to blend ALL of their total gasoline sales as ethanol blend. The maximum they will be required to blend to meet the EPA’s 2022 target is ONLY 26% , or just slightly over one fourth of their total gasoline sales.
Paragraph #3: Mr. Anderson claims that “most gasoline-powered vehicles and engines can operate efficiently on E-10; however, E-10 may not be appropriate for certain applications, such as marine engines, vintage vehicles and some small engines”.
While most passenger vehicles and light trucks perform adequately on E-10 gas, except for the 6-8% mileage loss, that is NOT the case for the other applications Mr. Anderson references. Marine engines and lawn and garden tools experience considerable trouble with ethanol gas and routine maintenance is necessary. If Mr. Anderson is not aware of this, I’d be happy to give him the names and phone numbers of several marine repair shops and at least one lawn and garden tool repair shop here in LaPlace who will explain the serious issues with E-10 in these engines.
Furthermore, by Mr. Anderson’s own admission, ethanol gasoline is not appropriate for all engines, so then why does he not blend ethanol free regular gas to alleviate this consumer issue?
Paragraph #4: Mr. Anderson references that when “the company converts to an E-10 slate of fuels in a market, we also offer a mid grade gasoline (90 octane minimum) that is not blended with ethanol”.
Mr. Anderson is NOT giving the consumer a reasonable alternative in this offering. First 99.9% of all marine engines and lawn and garden tools are designed to operate on 87 octane regular gasoline and operate quite well on this grade. The “recreational gas” he refers to is not mid grade. All stations in our area offer: 87 octane regular, 89 octane mid-grade, and 91 octane premium (some ethanol blend premium is 93 octane). The 90 octane ethanol free his refinery offers “upon request” from Garyville is an “odd” octane level. Where do stations put this gas? Those that have three tanks in the ground have them in regular (87 octane), mid-grade (89 octane) or premium (91-93) octane. There is no place for storage of 90 octane gas.
Then there is the price issue. A 90 octane grade ethanol free gas will cost consumers a whopping 35-40+ cents/gallon or higher than E-10 (it will likely be priced like premium gas. I was told this by a Marathon Oil PR person at their Findlay,Ohio office). And, as I mentioned above, there is not one of the affected engines that have problems with ethanol gasoline that requires anything higher than 87 octane regular gas (except the very new 300 hp marine engines which require premium gas). Why don’t you blend your so called “recreational ethanol free fuel” as 87 octane regular Mr. Anderson? Marathon has blended 87 octane non ethanol gas for several years, so why can’t they continue to do it?
Paragraph #5: Mr. Anderson claims that “imposing an additional mandate requiring all refineries to supply gasoline without ethanol would further complicate fuel-supply logistics and impose additional, unnecessary costs”.
If Marathon has been supplying both E-10 and non ethanol gasoline for several years according to several area gas distributors I’ve spoken with, what is different today?
I would ask Mr. Anderson how a State like Nebraska, which has not one refinery in the State, can offer consumers a choice of either ethanol or ethanol free gas at all gas stations in the State? I know this from personal experience.
A close friend and I attended the baseball College World Series in Omaha, Nebraska (the heart of corn country and ethanol plants) in 2009. We were there for two weeks, during which time we fueled our car several times. At each station we used (including a Shell and Exxon/Mobil station), the consumer was given a choice to buy either ethanol free gas or E-10 gas, on each pump. We checked many other stations while in Omaha, including all the majors and several independents, and all stations gave consumers the same choice of buying either ethanol or ethanol free gas. If refiners, particularly major refiners, blended ethanol free gas, and provided Louisiana consumers the choice that Nebraska does, consumers would not have the problem they are experiencing today and there would be no need for this resolution. I called the Agriculture Commissioner of Nebraska upon returning home from our trip to Omaha and asked him if there was a law in Nebraska that required all gas stations to sell both ethanol and ethanol free gas. The Commissioner told me that there was not such a law, but that all stations in Nebraska did that voluntarily. The regular, non ethanol gas sold for 5 cents/gallon higher than 10% ethanol gas at each station we checked.
So, if Nebraska can do this without having one refinery in their State, how is it that doing this in Louisiana would present such a complexity and increased cost as Mr. Anderson asserts? I’d really like to hear his explanation on this issue.
Ladies and gentlemen of the Council, I have presented you with facts to rebut Marathon’s reasons why it would not be practical and more costly to offer Louisiana consumers with a choice of either ethanol blend or ethanol FREE gasoline. The current availability of ethanol free gasoline is becoming less and less. Since Marathon Oil has discontinued the sale of ethanol free regular gas from it’s Garyville refinery on June 21st, I have had to remove 60 stations from my website’s ethanol free gas station list (PeteLandrysRealGas.com) that previously sold ethanol free gas, but had to switch to ethanol gas as their distributor was no longer able to supply them with ethanol free gas. As I explained to you at your meeting on August 23rd, when the newest ethanol blend, 15% ethanol gasoline starts showing up in stations as early as late this year, this will offer consumers an even smaller choice as this new fuel cannot be used in any of the following equipment according to the EPA in their announcement of the new E-15 gasoline blend:
• All motorcycles.
• All vehicles with heavy-duty engines, such as school buses, transit buses, and delivery trucks.
• All off-road vehicles, such as boats and snowmobiles (includes four wheelers and jet skis).
• All engines in off-road equipment, such as lawnmowers and chain saws.
• All 2000 model-year and older cars (and light trucks).
(Gasoline powered home generators cannot operate on E-15 gasoline either)
So, Council members, what are consumers to do if all current E-10 stations convert to the new E-15 gas and if a source of ethanol free gasoline is not readily available in their communities? This is the MAJOR issue facing us soon, which could affect millions of consumers in Louisiana. Only by refineries blending ethanol free gasoline can this potential crisis be avoided. I’m not sure if Mr. Anderson, or for that matter, any other major oil company management fully understands this potential dilemma.
In Mr. Anderson’s final paragraph, he indicates that “MPC opposes adoption of any resolution that could lead to additional fuel mandates. Instead, we believe free-market competition will best serve the needs of consumers”.
If Marathon and other major refiners “manipulate” and manage their gas offerings by manufacturing ONLY ethanol gasoline, for whatever reasons, such that there is NO COMPETITION, since none of them offer ethanol free regular gas, how can consumers possibly be best served with what they want and need if they are not offered ethanol free regular gas by any major refiner? Is that “free market” competition? I think not.
In closing, I would urge you to re-consider the draft resolution I offered to you at your Council meeting on August 23rd. I am willing to meet with you at another meeting, and offer Mr. Anderson an invitation to also appear at the meeting to clarify our positions on this matter and answer any questions you may still have on this subject. While I understand your attention to Marathon’s concerns, I would also remind you that you represent the St John Parish constituents who elected you to your office. Their concerns should be heard also. I don’t feel that they were at our meeting in considering the proposed resolution since not even one Councilman would offer a motion to bring the draft resolution to a vote.
Sincerely,
Alton “Pete” Landry
Attachment: August 22, 2011 Letter from Marathon Petroleum Company
cc: Ms. Natalie Robottom, President
St John the Baptist Parish
1801 W. Airline Hwy.
LaPlace LA 70068
Mr. A.J. Anderson, Manager
Marathon Louisiana Refining Division
P.O. Box AC
155 Sugar Cane Road
Garyville, LA 70051
