November 13, 2019

Big jump in gasoline prices

By Chad Besch, MaxYield Energy Team Leader

I have sent out a couple different notifications and talked about it in a couple different meetings but I wanted to make sure everyone was aware of the upcoming changes in the gasoline available to us at the pump.

Here is the simplest recap I can do:

Today we offer 2 grades of gas in most of our pumps and through our bulk trucks. 87 octane UNL and 89 octane gasohol (90% regular UNL 10% ethanol). In the very near future regular 87 octane UNL gas is going away, pipelines in this part of the country will no longer ship that product.

In its place they will ship 84 octane gas. State law does not allow sale of any gasoline under 87 octane. Lucky for us when you blend 84 octane with 10% Ethanol you get 87 octane gasohol. That will be change number one, gasohol will go from 89 to 87 octane.

That’s the easy part. From there is where the noticeable change will come. At this point in time it is my intention for our second grade of gasoline to be what they call a “clear 87”. This product will be 50% 84 octane and 50% 91 Octane (premium) gasoline. As we all know premium gasoline is higher priced than regular gas. Because of that price spread we are going to see the difference between gasohol and “clear 87” widen.

If we were to make those blends today this is how things would look:

87 Octane Gasohol $3.59

87 Octane Clear UNL $3.94

There is also an option to blend 84 octane, premium gas, and ethanol that would give you an 89 octane gasohol. This will be used by some retailers as well. In reality there will likely be several different blends out there at a wide variation in price.

The big wild card in all of this is the availability of premium (A grade) gas. Right now supplies are extremely tight and will only get worse when this comes into effect. In time things will likely balance out but for a while supply will be tight. It might not be uncommon at all to see places only offering 87 octane gasohol if premium is unavailable.

The change will start to take place in the next couple of weeks, we think. As more information comes available I will pass it along.

For more information, you can contact MaxYield’s Energy Central, or myself at 1-800-383-0003; cbesch@MaxYieldCoop.com.

 

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