WASHINGTON – “With regards to alternative fuels, let me be clear: petroleum retailers don’t really care which type of fuels they sell, provided there is enough supply and consumer demand for those products. However, converting to new fuels can present problems for many retailers,” NACS Vice President of Government Relations John Eichberger told the House Committee on Science and Technology, Subcommittee on Energy and Environment in testimony on Tuesday.

Regarding H.R. 547, “The Advanced Fuels Infrastructure Research and Development Act,” Eichberger said the proposed legislation “comes at an appropriate time” as the industry transitions to the next generation of fuels.

As Congress contemplates policies to accelerate this transition, it must also understand that there are many complicated challenges facing retailers and the distributors that serve them that must be overcome before the market can efficiently offer these new fuels to consumers, Eichberger noted.

H.R. 547, The Advanced Fuels Infrastructure Research and Development Act, initiates federal research and development projects to help the petroleum industry overcome some of these hurdles in the most cost-efficient manner, thereby facilitating the smooth transition to these the new fuels.

This issue of incompatibility, Eichberger said, carries with it potentially high costs to retailers seeking to convert their facilities to dispense these alternative fuels. A retailer must to determine precisely what equipment is involved in his system and for which fuels that equipment is certified, he noted. In some cases, retailers may need to replace an entire underground storage tank and its connected parts.

H.R. 547 seeks to develop materials that could be added to alternative fuels to make them compatible with existing infrastructure, thereby potentially eliminating the need for costly conversions.

“I must caution this Committee, and the entire Congress, that the issue of incompatibility is only one of the hurdles that impede an individual retailer’s decision to install E-85. Consequently, resolving that issue alone will not automatically result in widespread availability,” he said.

Several members of the committee were concerned by what they considered a lack of action on the part of retailers to install E-85 fueling systems.

Eichberger explained that in addition to the potential costs of equipment conversion and installation, retailers must also consider the business implications of market conditions. He noted that demand for E-85 remains limited; that not all retailers have the capacity to convert or install a new tank to store E-85; that converting a gasoline dispenser to E-85 could potentially reduce overall customer traffic, negatively affecting the store’s bottom; and that supplies must be consistently sufficient to enable a retailer to sell E-85 at a competitive price with gasoline even though the alternative fuel provided consumers with 25 percent fewer miles per gallon.

While “Section 3 of H.R. 547 could substantially improve the economic calculations for retailers,” Eichberger noted, “installation decisions will be based upon a balancing of the various market factors involved.”

Eichberger also reminded the committee that petroleum consumers are very sensitive to retail prices and he urged the Congress to keep the interests of their constituents in mind when considering policies affecting the market.

With regards ultra low sulfur diesel, NACS strongly supports research to develop an accurate and affordable sulfur test, said Eichberger.

“So far, the transition to ULSD has gone much more smoothly than anybody could have anticipated. However, consistent compliance is critical. Drivers must be able to rely upon the integrity of ULSD and retailers face fines up to $32,500 for violating the 15 parts per million sulfur cap.”

H.R. 547 seeks to develop an accurate and affordable test for sulfur that could be used by retailers and others throughout the distribution system on a more frequent basis to ensure continued compliance with federal regulations.