What's the Alternative?
As chicken-and-egg dilemma challenges growth, alternative fuels try to find a foothold.
“We commonly hear someone throw out $200,000 to $300,000 to add E85 and in some cases E15,” says White, who points out that more than 30 stations in eight states offer E15, with several soon to start—“none of which have come within a double-digit percentage point of that $200,000 to $300,000 mark.”
Final costs depend on multiple factors, such as the station, existing fueling infrastructure, the franchise agreement, government incentives and more. Building a site from new? OK, six figures. Starting with existing infrastructure? Less than $10,000 is more realistic.
The ethanol industry isn’t the only one scrapping for a market-share fight. Proponents of methanol, or wood alcohol, are hoping it will soon rejoin the fray. The fuel, which was sold in the 1990s for AFVs in the United States, and today is widely used in China, can be made from different feedstocks or natural gas. But most AFVs today are warrantied to operate only on ethanol or gasoline.
But software entrepreneurs Eyal Aronoff, co-founder of Quest Software—which was sold to Dell recently for $2.4 billion—and Yossie Hollander believe there is a fix for this. The pair founded the Fuel Freedom Campaign, Irvine, Calif., to spearhead the adoption of methanol and introduce more competition in the fuel market.
“There are three reasons why petroleum continues to dominate the market,” says Aronoff. “The first reason is car makers make cars that run on petroleum products. The second is the supply chain is used to supply petroleum-based products. It still lives under the old oil company’s mentality: one company finds the oil, drills it, ships it and then supplies the gas stations or in many cases owns the gas stations.” The third reason, according to Aronoff: Regulations that control fueling, fuel stations and emissions from the car are built with only one fuel in mind.
The foundation is pushing for multiple actions, including:
- Remove commercial and regulatory barriers to competition;
- Upgrade the software in existing and future car engines to enable them to burn methanol;
- Encourage automakers to make more FFVs;
- Deploy an infrastructure for selling methanol, which according to the group would be relatively straightforward.
“Say a gas station has a natural-gas feed coming into it,” says Aronoff. “It could install a small shipping-container-size device that can convert it to methanol on the spot. It could sell methanol for $1.50 per gallon, not including taxes. These are the kind of creative solutions we are looking at.”
The foundation hopes to have a test location open later this year, and is hoping that retailers will embrace what it considers a solid business case for the fuel.
“These fuels,” Aronoff says, “have a lower caloric content than gas,” or about half the energy of a gallon of gasoline.
“[This] means you would need to come to the gas station more often,” he continues. “Of course, for a gas station owner, who makes a large portion of profits from the c-store, if people have to come more often, that’s a great advantage.”
From the perspective of John Eichberger, vice president of government relations for NACS, such a dynamic would cripple an alternative fuel’s chance for success in the c-store channel. He cites E85.