How to Start an E85 Gas Station

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More than 98 percent of gasoline in the United States contains some ethanol, a renewable fuel made from plant material, such as corn, sugar cane or grasses. Ethanol use is widespread, and the most common blend of ethanol and gas is called E10, which is 10-percent ethanol and 90-percent gasoline.

Ethanol is also available as a flex-fuel called E85. This is a high-level fuel blend that contains 51-to-83 percent ethanol for use in flex-fuel vehicles, which are vehicles with an engine designed for a combination of fuels in a single tank, usually gasoline and either ethanol or methanol. In the warmer months, E85 blends can contain more ethanol than they can in the winter months.

Using ethanol can be beneficial to the environment. It reduces oil dependence and greenhouse gas emissions. You'll get more miles per gallon using E85 in a flex-fuel car, but other than that won't notice much difference in how the car drives.

E85 Gas Stations

The popularity of and demand for E85 gas stations are growing, so it may be the right time to consider starting an E85 gas station. Currently, there are more than 3,100 public E85 stations in the U.S. and they provide ethanol blends to the nearly 20 million flex-fuel vehicles on the road. In 20-plus states, the U.S. Department of Agriculture's Biofuels Infrastructure program provided $210 million to fund the installation of new ethanol infrastructure at more than 1,400 stations. These installations began in 2016 and will significantly increase the number of stations selling both E15 and E85. There are several ways to find E85 gas stations, including GasBuddy. Just search for GasBuddy E85, then you can look up E85 stations close to you.

Research Your Market Area

To figure out whether an E85 business will be profitable in your area, examine the traffic patterns, locate competitors and determine the level of demand for fuel blends like E85. Pick a location and spend a day watching and taking note of how many flex-fuel vehicles drive by. Talk to local car dealerships to determine the popularity of flex-fuel vehicles being sold. Also, research the initiatives for ethanol stations in your state on sites such as the United States Department of Energy.

Location Is Key

After doing your market research, it's time to select a location. If you visit the National Ethanol Vehicle Coalition website, you can see where the E85 stations are located in your state. Based on that and your traffic-pattern research, determine a few spots that might work well for an E85 station. The next important step will be ensuring that local zoning regulations permit gas stations at your selected locations. You can check this with the local municipal authorities.

Create a Business Plan

Your business plan should clearly state your objectives, costs, resources, management structure and future-earning projections. Some other elements to consider when creating a plan for an E85 station are hours of operation, whether or not you'll offer diesel and gasoline in addition to E85 and if you will have a convenience store or car wash.

Secure Your Financing

There are many different ways to fund your business. You can verify whether funding for E85 stations, in particular, is available in your state by visiting the website of the U.S. Department of Energy. Incentives and loans may be available through the state or city. Also, look into a Small Business Administration Loan, or a personal or business loan from a credit union, bank or online lender.

Some other funding options might include seeking investors, such as angel investors or venture capitalists. Also, consider borrowing from a family member or crowdfunding for at least a portion of the startup costs.

Find Your Suppliers

You will need suppliers for E85, gasoline and diesel, depending on the decisions you made when creating your business plan. Speak with oil company representatives for traditional gasoline or diesel and ethanol producers. Major ethanol producers are listed on the website of the Clean Air Trust, which is at www.cleanairtrust.org.

Register and Become Official

Register your new business with the Secretary of State where you are located. Apply for an employer identification number or EIN from the Internal Revenue Service. You will also need to decide if your E85 gas station is going to be registered as a partnership, a limited liability corporation or LLC, a sole proprietorship or as a professional corporation.

Understand the Regulations

Gas stations are more complex than many other types of businesses. Check with state and municipal authorities to make sure you will be in compliance, particularly regarding environmental concerns such as emissions. Also, research the necessary licenses or permits required in your state and apply for them.

Purchase Your Equipment

E85 gas stations need special ethanol blender pumps. These differ from the pumps used for gasoline and diesel. So, if you're planning to sell all three types of fuel, you will need to purchase the correct pumps. A convenience store and car wash will come with separate needs. And of course, don't forget to purchase fuel from your supplier.

Benefits of E85

Advertise the many benefits of using E85. Buy ads in local papers and online. Offer specials and spread the word about using this type of fuel and how it can benefit both the buyer and the environment.

Here are a few key perks from using E85 in flex-fuel vehicles:

Miles per gallon: Flex-fuel vehicles using E85 get roughly 15-to-27 percent fewer miles per gallon than when operating on regular gasoline, depending on the ethanol content. In general, regular gasoline typically contains only about 10 percent ethanol.

Performance: You shouldn't feel any difference in performance when using E85. Some flex-fuel vehicles have more torque and horsepower running on E85 than on regular gasoline.

Availability: There are more than 3,100 filling stations in the U.S. that sell E85 and its easy to look up where they are located, using GasBuddy or other alternative fueling locators.

Security: Unlike much of the oil used in the U.S., ethanol is domestically produced and consumed. By using E85, you are supporting the U.S. economy and reducing the use and impact of international supply disruptions. This is good news for our nation’s energy security.

Jobs: Ethanol production creates jobs, especially in rural areas where they are often most needed. According to the Renewable Fuels Association, 71,900 jobs in the U.S. were created as a result of ethanol production in 2017.

Lower emissions: Another great benefit of ethanol is that the carbon dioxide released by a vehicle when ethanol is burned is offset by the carbon dioxide captured when the feedstock crops are grown. Gasoline and diesel do not have this advantage because they are refined from petroleum extracted from the earth and no emissions are offset when these products are burned. Emissions are reduced by 34 percent on average using corn-based ethanol produced from dry mills, compared with gasoline and diesel production and use.

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About the Author

Heather Skyler is a business journalist and editor who has written for wide variety of publications, including Newsweek.com, The New York Times and Delta's SKY magazine. She has a bachelor's degree in English from Miami University and a master's degree in writing from the University of Washington in Seattle. Before writing for a variety of publications, she taught business writing in Seattle.