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News: 2014

Oil Refiners Change Nebraska Fuel Components

October 23, 2013

Background: After mid-September, 2013, legal, minimum octane, non-premium grade gasoline will no longer be supplied to Nebraska fuel terminals by U.S. petroleum refiners. Refiners manufacture gasoline and ship it, usually via pipelines, to bulk fuel terminals across the country. Going forward, refiners will supply 84-octane gas to eastern Nebraska terminals in lieu of the minimum 87-octane gas required by law. In the western quarter of the state, where 85-octane is the standard because of generally higher elevations, refiners will supply 82-octane gasoline. At present, refiners continue to supply 91-octane premium gasoline to Nebraska terminals. This new product slate was initiated by refiners in response to the Renewable Fuel Standard, a federal law requiring renewable fuels in the country’s fuel mix. Nebraska and Iowa are among the last states to see the new practice implemented.

Implications: Terminal operators are prohibited from distributing the sub-octane fuels now supplied by refiners. As a result, all non-premium grade gasoline leaving Nebraska terminals must be blended with another product or products to boost octane levels to minimum federal standards. In some cases, premium grade 91-octane gas will be blended with sub-octane gas to meet the standard. In other cases, ethanol will be blended with sub-octane product to reach the standard. With a rating of 113, ethanol is the highest octane fuel component on today’s market. Prior to the introduction of sub octane gas, the most common practice across the country was blending 10% ethanol with 87-octane gas to produce an 89-octane or “mid-grade” product.

Current Products and Pricing: A recent survey of Nebraska’s terminals identifies new fuel blends offered to the state’s service stations. One example is the slate of products available at the Magellan Terminal in Doniphan, NE on October 7, 2013.

Published Wholesale Prices - Blend Components: 10/7/2013: ($ per gallon, ex State & Fed. Tax)

84 octane gasoline 2.588

91 octane gasoline 3.092

113 octane ethanol 2.537

Available Products and Prices: (Blend Formula and Pricing)

87 octane gas (90%-84 octane gas – 10%-113 ethanol) 2.493

87 octane gas (50%-84 octane gas – 50% 91 octane gas) 2.940

89 octane gas (60%-84 octane gas – 30% 91 octane gas – 10% ethanol) 2.715

91 octane (100%-premium gas) 3.092

Nebraska Fuel Terminals: NuStar/Kaneb Columbus,NuStar/Kaneb Geneva, Magellan Roca,Phillips 66 Lincoln, Magellan Doniphan, NuStar/Kaneb Norfolk, NuStar/Kaneb North Platte, Magellan Omaha, Rocky Mountain Sidney,NuStar/Kaneb Osceola

Nebraska’s Historical Fuel Usage: According to the Energy Information Agency, nearly 95% of gasoline leaving U.S. fuel terminals in the last two years was blended with ethanol. As of mid-September, 2013, 10% ethanol blends leaving terminals will be 87-octane fuel in central and eastern Nebraska and 85-octane in western NE.

During the ten year period ending in 2012, Nebraska motorists purchased 8.33 billion gallons of spark ignition fuels. Of this amount, 2.93 billion gallons (35%) were straight gasoline and 5.40 billion gallons (65%) were blended with 10% ethanol. Assuming an average mpg rating of 20 mpg, Nebraska motorists have driven some 108 billion miles with ethanol blended fuel. Since ethanol blends were introduced into the market 35 years ago, Nebraska motorists have purchased more than 11 billion gallons of the product and have driven more than 220 billion miles. (Source: Nebraska Department of Revenue, Motor Fuels Division).