Self-Imposed Industry Barriers

  • Thursday, 25 May 2017 10:22

t rudnicki

By Timothy J. Rudnicki, Esq

The Minnesota Bio-Fuels Association is working to facilitate the rapid adoption of E15 by consumers as the new regular fuel across Minnesota. Given MBA’s work, we often engage with the many minutiae that go into advancing the use of E15. When it comes to related advocacy issues, communication messages and fuel supply chain projects, those many details we work on and how they are handled can often make the difference between obtaining or not obtaining funding for biofuel infrastructure, converting or not converting consumers to E15 use and having or not having an availability of E15 in the marketplace.

By working on the many minutiae in these three key areas, we can often identify those artificial barriers that do indeed substantively impact and matter to producers and consumers. And from our vantage point, we can often identify barriers the industry imposes upon itself.

Those self-imposed barriers are actually ones we, as an industry, should be able to easily and effectively manage for more productive outcomes. For instance, from our vantage point in the trenches, so to speak, we sometimes wonder whether those who proclaim to speak for the renewable biofuel industry actually understand how educated and informed consumers make fuel purchase decisions at the retail level.

In the last few months MBA completed more than 40 retailer promotions, building upon the success we have had with these outreach initiatives for more than two years. Included among these promotions are field events where we literally engage with consumers onsite at a retail fuel station.We have built our outreach projects upon sound field research, the provision of training for retail staff, carefully listening to consumers and ramping up social media.

We take some preliminary steps before we directly engage with a potential E15 consumer at a retailer’s fuel station. First, we make some observations. Is the person approachable? Can the vehicle use E15?  Only then do we approach the person in a respectful and professional manner. Based on these direct observations of and engagement with potential E15 consumers, we have learned a few things over the last couple of years.

One thing we know is this: the suggestion that if only E15 or E30 were available, then consumers will automatically use it as the new regular fuel is wishful thinking. In our estimation, this is an example of a self-imposed industry barrier because it prevents the industry from actually wrestling with the reality on the ground. That Lexus owner who wants to speak with the dealer before trying E15 or the VW Golf GTI owner concerned about the effect of E15 on the turbocharger have concerns that are valid to them. And these examples are just a few of the real concerns, whether technically valid or not, that many consumers still have.

Given sales of E15 in Minnesota breached the one million gallon mark in March, people are indeed buying E15. Greater availability of E15 in the marketplace and some price differential, typically 10 cents per gallon, between E15 and regular certainly have helped to increase sales. But only when E15 sales reach approximately 166 million gallons per month can we say E15 is indeed the new regular fuel in Minnesota.

To reach this target, it’s time for the industry to let go of some self-imposed barriers.

In addition to the fuel retailer events, the Minnesota Bio-Fuels Association also provides training services for fuel retailers and their staff. This training helps the fuel retailer team understand E15 so they can be comfortable and competent in answering consumer questions. We also help fuel retailers simplify required labeling at the dispenser. Our work with fuel retailers in this area has helped to give consumers some certainty, clarity and consistency so they can purchase E15 with confidence. 

Interestingly, just as consumers are coming to learn and expect that E15 is 88 octane or Unleaded Plus, now some retailers are adopting "eblend88" as a new product name. While there may be some business reason for this change, it certainly creates confusion in the mind of consumers. And for those consumers who want a simple purchase experience rather than go through another learning exercise, they may simply revert back to E10.

Certainly there are artificial barriers to E15. Some are very tangible and can have profound adverse effects on consumer purchase decisions. Examples of these barriers include the summer RVP constraint and the many dispenser labels which can scare a customer away.

We can do more advocacy around some of the external barriers. But the self-imposed barriers to how we think consumers consider biofuels and make a purchase decision can only be addressed internally. Let’s open up our thinking and use more consumer research and science to tackle the difficult issues so E15 and higher blends of renewable fuel can indeed displace more carbon intensive, finite fossil fuels. We will all benefit when we cross this bridge together.