Sub-Octane Conversion Letter #2 Converting your No Lead tank to a No Lead with Ethanol tank

Here is an update regarding the switch to Sub-Octane product in September.


Converting your No Lead tank to a No Lead with Ethanol tank.

Please talk to your equipment company regarding converting your straight No Lead tank to a No Lead with Ethanol tank. Below are some guidelines to follow, but it is our advice to contact your equipment company to verify you have the correct system to handle ethanol blended product.


Two main issues come to mind. The first is water in the tank bottoms. This would put you at risk for phase separation. If this occurs vehicle engines may be damaged or not run as well. The second is the ethanol acting as a cleaner or solvent as it goes through the system.


The following steps should be taken in preparation BEFORE E10 is introduced:

• Confirm that all tanks, dispensers, nozzles, hoses, valves, vapor recovery lines, etc. are compatible with ethanol blended product.

• Confirm that no outside water can get into your system. Checking seals, spill drains and fill caps is suggested.

• Run tank to the bottom before the first delivery of ethanol blended product is accepted into tank.

• Check for water in the bottom of the tanks. Remove any water in the tank as much as possible. ¼ of an inch or less is preferable. Using a water finding paste that is compatible with ethanol is suggested. Talk to your equipment company.

• It is suggested that you have extra filters on hand. Ethanol based product will “clean” the tank, lines, etc. Talk to your equipment company.

• Confirm that the proper labeling is on your pumps. If you need different octane stickers and/or ethanol stickers please let your Fauser Representative know.


The following steps should be taken AT THE TIME E10 is received:

• Verify that no water is in the tank.

• Determine the volume of product still in the tank bottom. For blending purposes it is recommended that the new delivery of E10 be 10 times the volume of the product still in the tank.

If you have 150 gallons of No Lead in the tank bottom, then you would want at least 1500 gallons of E10 delivered in (150 x 10 = 1500 gallons of E10)

• Relabel pumps with correct octane stickers and/or ethanol stickers.

• Recheck tanks for water after delivery. If water is detected, you will need to shut down that tank. Call your equipment.


The following steps should be taken AFTER delivery:

• Within 12 hours check the tank again for water for phase separation.

Phase separation has possibly occurred if:

1 – Vehicles are stalling as they pull away 2 - Product is cloudy 3 – Dispensers start running slow

• Check filters and replace if necessary.

• If phase separation happens, shut down the tank and call your equipment company.


If you have any questions, please talk to your equipment company.
We will continue to send updates regarding the Sub-Octane switch.

Sub Octane Gasoline

Conversion to Sub Octane Gasoline in September 2013

Effective mid-September, straight 87 octane gasoline will not be produced at the refineries and therefore not available at the terminals.  In place of the straight 87 octane there will be an 84 octane gasoline (called Sub-Octane or V-Grade).  You will also be able to access 91 octane gasoline (A-Grade) and ethanol.

Potential product blends are listed below.  We do caution that nothing is set in stone.  Pipeline personnel are still working on what blends will be available and what each terminal will offer. 

84 Clear                100% V-Grade   (cannot pull V-grade out of terminal without blending)

87 Clear                50% A-Grade/50% V-Grade

87 Oxy                  90% V-Grade/10% Ethanol

89 Clear                75% A-Grade/25% V-Grade

89 Oxy                  30% A-Grade/60% V-Grade/10% Ethanol

91 Clear                100% A-Grade

91 Oxy                  60% A-Grade/30% V-Grade/10% Ethanol

As you can see from above, the blending of ethanol may become more prevalent.  Fauser Energy Resources maintains its own ethanol inventory at 20 terminals as well as having third-party supply at the other terminals in the Midwest.  New locations will also be announced as they come online.

Pipelines have two options for conversion to the Sub-Octane product.  The first is a hard transition, meaning all terminals along a pipeline would shut down and reopen with the new Sub-Octane at the same time on September 16th.  The second option is more gradual.  The pipeline may opt for the terminals to convert to the new product at different points in time.  This would depend on product shipments (loading out of all 87 octane product until gone), storage at the terminals, etc.  Fauser Energy Resources has a goal of keeping you informed as each terminal makes the physical switch to the Sub-Octane product.  We will also make you aware of the product slate at each terminal as it changes.

If you have any questions please contact your Fauser Energy Resources marketer. 

Thank you for your business, we appreciate it.

Which State Pays Most In Gas Taxes?

While the current rate for federal gas tax purposes is 18.4 cents per gallon (24.4 cents per gallon for diesel), a rate that hasn’t changed since 1993, state gas taxes have much more volatility and range. In fact, the difference between the taxes paid at the pump in the state with the highest rate (New York) and those paid in the state with the lowest rate (Alaska) is more than 40 cents per gallon. If the average American drives 13,476 miles per year (as determined by the Federal Highway Administration) and if the average miles per gallon is 22.4 for passenger cars (as determined by the Department of Transportation), the difference in tax paid between states affects drivers by as much as $240.
Not sure where your state falls in that spectrum?
Here are the ten states that pay the most in state gas taxes:

1. New York 50.6
2. California 48.7
3. Hawaii 47.1
4. Connecticut 45.0
5. Illinois 39.1
6. Michigan 38.7
7. Indiana 38.0
8. North Carolina 37.8
9. Washington 37.5
10. Florida 35.5

And the ten states that pay the least in state gas taxes:

1. Alaska 8.0
2. Wyoming 14.0
3. New Jersey 14.5
4. South Carolina 16.8
5. Oklahoma 17.0
6. Missouri 17.3
7. Mississippi 18.8
8. New Mexico 18.9
9. Arizona 19.0
10. New Hampshire 19.6

(Admit it, you didn’t expect to see New Jersey on the second list!)
These rates are current as of January 1, 2013. The number beside each state represents the total state gas taxes. Note that, for purposes of the list, state gas taxes include excise taxes, environmental fees, storage tank taxes, general sales tax, and other fees or taxes.
The complete list – as determined by the always informative Tax Foundation – is here.
Of course, at the pump, you’ll also tack on that 18.3 cents per gallon federal gas tax. Since tax is included in the price you actually pay, it looks like this:

$3.49 (what I paid at the pump on yesterday in Pennsylvania) = $.183 in federal gas + $.323 in PA state taxes + 2.984 as the “price” of my gas

Total Total taxes for my gas in Pennsylvania represented about 15% of the price per gallon. Remember, however, that as the price of gas increases or decreases, the tax rates remain the same since they are generally flat per gallon taxes (if you live in one of the 7 states that impose a partial or full sales tax on gas, the math is a little different). As the price of gas increases, you would pay a smaller percentage as gas tax; conversely, as the price of gas decreases (as if this actually happens anymore), you pay a higher percentage as gas tax. Make sense?

Rising North Dakota oil production and demand spurs two new refineries

Source: U.S. Energy Information Administration.

---

One of two new refineries being built in North Dakota broke ground this week. The 20,000-barrel-per-day (bbl/d) Dakota Prairie facility is scheduled to be built in 20 months. The impetus for the state's second and third refineries is the rapid increase in demand for diesel fuel and kerosene for trucking and industrial use within the state. Much of the increase in demand has been fueled by the boom in crude oil production from the new wells in the Bakken Formation in North Dakota's northwest corner. The demand for these middle distillates rose 80% in North Dakota from 2009 to 2012, providing the incentive to invest in local refineries.

North Dakota currently has one refinery, the Tesoro Mandan refinery located near Bismarck. This refinery has a capacity of 60,000 bbl/d, and its primary products include diesel fuel, jet fuel, heavy fuel oils, and liquefied petroleum gas. The two new refineries are smaller, both rated at 20,000 bbl/d capacity, and both will be fairly simple units that focus on creating the diesel and kerosene that are needed locally.

The Dakota Prairie refinery, which just broke ground, is a joint venture of MDU Resources Group and Calumet Specialty Products and will primarily make diesel fuel.

The Trenton Diesel Refinery is also planned, but no start-up date has been announced; it received an air quality permit from the North Dakota Department of Health in early 2012.

The Trenton Diesel Refinery, whose parent company is Dakota Oil Processing, is expected to cost $200 million to build and start-up. It will have an atmospheric distillation column, hydrotreater, naphtha stabilizer, and associated process equipment. According to Dakota Oil Processing's website, the primary product from the refinery will be light gas oil, a type of distillate. Other products will be naphtha, which may be used in the petrochemical industry or mixed into heavy crude oil to make it easier to transport; kerosene that the refinery plans to blend with the distillate pool to maximize distillate yield; atmospheric gas oil, a type of heavy distillate; and heavy fuel oil, which can be sold in the bunker fuel market.

Iowa Motor Fuel Tax

Description: Tax is imposed on each gallon of fuel sold in Iowa for use in motor vehicles or aircraft. Motor vehicle fuel includes gasoline, diesel fuel, liquefied petroleum gas, compressed natural gas, aviation fuel, and ethanol blended gasoline.

Tax Rates:

Gasoline:

July 1, 2002, through June 30, 2003 - 20.1¢/gal
July 1, 2003, through June 30, 2004 - 20.3¢/gal
July 1, 2004, through June 30, 2005 - 20.5¢/gal
July 1, 2005, through June 30, 2006 - 20.7¢/gal
July 1, 2006, through June 30, 2007 - 21.0¢/gal
July 1, 2007, through June 30, 2008 - 20.7¢/gal
Effective July 1, 2008 - 21.0¢/gal

Ethanol Blended Gasoline:

19¢/gal

E85:

January 1, 2006, through June 30, 2007 - 17¢/gal
Effective July 1, 2007 - 19¢/gal

Other:

Aviation Gasoline: 8¢/gal
Special Fuel (diesel): 22.5¢/gal
Special Fuel (LPG): 20¢/gal.;
Special Fuel (aviation jet): 3¢/gal.;
Compressed Nat. Gas: 16¢/100 cubic feet.
Distribution of Funds: Road Use Tax Fund. Aviation fuel tax receipts are deposited in the state aviation fund. Watercraft fuel tax receipts are deposited in the marine fuel tax fund.

Minnesota Fuel Excise Tax Rates and Fees Product From 7/1/10  From 7/1/11  From 7/1/12 — 6/30/11  — 6/30/12  —Current (per gallon, unless otherwise noted) Gasoline 0.275 0.28 0.285 Alcohol 0.275 0.28 0.285 E-85 0.19525 0.1985 0.2025 Diesel fuel #1 clear 0.275 0.28 0.285 Diesel fuel #2 clear 0.275 0.28 0.285 Biodiesel (B100) 0.275 0.28 0.285 Kerosene 0.275 0.28 0.285 Aviation gasoline 0.05 0.05 0.05 Jet fuel 0.05 0.05 0.05 LPG (Propane) 0.20625 0.2105 0.2135 (when used as a motor fuel) LNG (Liquified Natural Gas) 0.165 0.168 0.171 Clean-up fee* 0.02 0.02 0.02 Inspection fee (as of 7/1/04) 0.001 0.001 0.001 *The clean-up fee is effective: Feb. 1 through May 31, 2009; April 1 through July 31, 2010; June 1 through Sept. 30, 2011; and Aug. 1 through Nov. 30, 2012.

For more information on how to convert Alternative fuel totals to Gasoline Gallon Equivalents (GGE's), see the tables below:

Tax rate conversion table for Alternative Fuels to GGE's- July 1, 2011 through June 30, 2012

Tax rate conversion table for Alternative Fuels to GGE's- July 1, 2012 through current

SHORT TERM ENERGY OUTLOOK

Highlights

• The weekly U.S. average regular gasoline retail price fell in early March for the first time since mid-December. The March 11 average was $3.71 per gallon, down $0.07 per gallon from February 25. EIA expects that lower crude oil prices will result in monthly average regular gasoline prices staying near the February average of $3.67 per gallon over the next few months, with the annual average regular gasoline retail price declining from $3.63 per gallon in 2012 to $3.55 per gallon in 2013 and $3.38 per gallon in 2014. Energy price forecasts are highly uncertain and the current values of futures and options contracts suggest that prices could differ significantly from this forecast.

• EIA expects that the Brent crude oil spot price, which averaged $112 per barrel in 2012 and rose to $119 per barrel in early February 2013, will average $108 per barrel in 2013 and $101 per barrel in 2014. The projected discount of West Texas Intermediate (WTI) crude oil to Brent, which increased to a monthly average of more than $20 per barrel in February 2013, will average $16 per barrel in 2013 and $9 per barrel in 2014, as planned new pipeline capacity lowers the cost of moving mid-continent crude oil to the Gulf Coast refining centers.

• U.S. crude oil production exceeded an average level of 7 million barrels per day (bbl/d) in November and December 2012, the highest volume since December 1992. EIA estimates that U.S. total crude oil production averaged 6.5 million barrels per day (bbl/d) in 2012, an increase of 0.8 million bbl/d from the previous year. Projected domestic crude oil production is expected to average 7.3 million bbl/d in 2013 and 7.9 million bbl/d in 2014.

• Total U.S. liquid fuels consumption fell from 20.8 million bbl/d in 2005 to 18.6 million bbl/d in 2012. EIA expects total consumption to rise slightly over the next two years to an average of 18.7 million bbl/d in 2014, driven by increases in distillate fuel and liquefied petroleum gas consumption, with little change in gasoline and jet fuel consumption.

• Natural gas working inventories ended February 2013 at an estimated 2.08 trillion cubic feet (Tcf), about 0.36 Tcf below the level at the same time a year ago but still 0.27 Tcf greater than the 5-year average (2008-12). EIA expects the Henry Hub natural gas spot price, which averaged $2.75 per million British thermal units (MMBtu) in 2012, will average $3.41 per MMBtu in 2013 and $3.63 per MMBtu in 2014. Current options and futures prices imply that the lower and upper bounds for the 95-percent confidence interval for June 2013 contracts at $2.79 per MMBtu and $4.67 per MMBtu, respectively.