Rock Hill gas station owner sees future in E85 fuel
Manoj Nampoothiry hopes the oldest business adage - location, location, location - pays off for his latest investment.
He spent about $8,000 to retrofit three diesel pumps and their tanks at a Rock Hill Exxon station off Interstate 77 to sell E85, a blend of ethanol and gasoline. His supplier, Protec of Boca Raton, Fla., invested $10,000 in the project.
Nampoothiry hopes another business adage - have the lowest prices - pays off too. He started selling E85 Thursday for $2.29, 20 cents cheaper than his price for regular gasoline.
He knows it is a gamble. E85 only can be used in "flex-fuel" cars, vehicles that can run on either E85 or regular gasoline. Automobile makers are increasing flex-fuel car sales each year. Fifty percent of the cars made by General Motors and Chrysler in 2011 are projected to include flexible fuel vehicles.
Protec estimates there are about 2,000 flex-fuel cars now within a 10-radius of the station. Nampoothiry hopes soon-to-be-installed signs on the interstate will attract traveling customers.
The Exxon station, at 1055 S. Anderson Road, is one of at least three E85 stations in the region. The Fairway Station at 1010 Carolina Place in Fort Mill - also off I-77 - began selling E85 in 2006. Brownie's Sales, 3864 York St. in Sharon, started selling it in 2008. There are about 80 stations selling E85 statewide, according to industry estimates.
To meet federal air quality guidelines, gasoline sold in the area is 10 percent ethanol and 90 percent gasoline. All vehicles can run on this blend.
E85 gets its name because it is 85 percent ethanol and 15 percent gasoline. It has its pros and cons. It produces less energy per gallon that gasoline and you get fewer miles per gallon. The price is less and it has a higher octane rating, about 95. E85 burns cleaner and more completely due to its higher oxygen content than gasoline.
When you consider all these factors, it is still 2 cents to 3 cents cheaper than gasoline and better for the environment, Nampoothiry said.
The fuel Nampoothiry is selling got its start on Midwest corn farms. Most of the ethanol Protec is selling regionally comes from Michigan and Indiana, said Steve Walk, Protec's director. The ethanol is shipped by rail to Charlotte where it is mixed with gasoline. Protect is one of the larger E85 suppliers in the country. It supplies E85 to about a dozen stations in South Carolina and about 24 in North Carolina.
Nampoothiry has modest expectations for his E85 sales. His goal is 100 gallons a day, compared to the 2,000 gallons of regular gas he sell daily. If he meets his goal Nampoothiry will recoup his investment in 15 months. Walk said Nampoothiry should easily hit that mark and daily sales could top 300 gallons.
Herschel Brownie, owner of Brownie's Sales, said he sells between 100 and 200 gallons a day. His price Thursday was $2.349. His price of regular gas was $2.559. He gets his E85 from Thomas Petroleum of Shelby, N.C.
He said the low price of gasoline and his rural location, affect his E85 sales.
Nonetheless, he projects increased sales. He said people call him, asking if he still sells E85. They will go out of their way to buy it, Brownie said.
For retailers, there is an economic incentive for more E85 sales. Brownie said his profit margin on a gallon of gasoline is less than 10 cents - or less. Credit card companies take 2 percent of a sale, meaning he sometimes sell gas at loss. The profit margin on E85 is slightly higher, he said.
"It is one of the fuels that will propel us into the future," he said. "I'm fairly committed to this. We want to be as green as we can."
It also lessens the country's dependence on foreign oil, Nampoothiry said.
And, said Protec's Walk, E85 prices are not as sensitive to influences of weather as gasoline is. Typically, when weather disrupts the delivery of gasoline, pump prices rise.
Still, Nampoothiry, an immigrant from India who holds a computer science degree from the University of North Carolina at Charlotte, is cautious.
"Ideas are only good when they pay off," he said.
