Zarco stations begin selling E-15 product again after ending 28-year relationship with Phillips 66

For an hour today, you’ll get to be a part of a fight, and you’ll get a discount to do it.

The Lawrence-based Zarco convenience store chain is offering $1.99 gasoline from 11:30 a.m. to 12:30 p.m. at its location at 1500 E. 23rd Street. . But here’s the catch: The $1.99 price is only for the E-15 brand of gasoline, which is fuel that contains 15 percent ethanol rather than the more standard 10 percent blend of ethanol. (Previously I reported the special was at all of his locations, but station leaders and I miscommunicated. My apologies.)

And E-15 is what the fight is about. Zarco leader Scott Zaremba last year became the first gasoline station owner in America to begin selling the E-15 product. But as we reported in June, Zarco stations had to stop selling the blend after the company found itself in a battle with its marketing/distribution partner, big oil company Phillips 66. Phillips was requiring Zaremba to install new pumps in order to sell E-15.

Well, you have perhaps noticed that the signs have changed at Zarco stations in the past few weeks. Zaremba confirmed he’s bought his way out his contract with Phillips 66 — a company he’s been with for 28 years — and has converted the stations over to a true independent operation. He’s rebranded his eight stations in Lawrence, Ottawa and the Kansas City area as American Fuels stations. With the change, he’s brought back the E-15 fuel.

“We are back to where we were 29 years ago, a complete independent,” Zaremba said. “We will still guarantee all of our products like we always have.”

But Zaremba certainly is bucking a decades long trend of gasoline stations affiliating with a major refinery company. Zaremba said he no longer felt that was possible for his company if it wants to truly promote alternative fuel products.

“We feel like we’re not in the gas station business anymore,” Zaremba told me. “We’re in the transportation energy business. That’s a big deal to us, because we really believe we can’t just rely on gasoline anymore.”

Zaremba, who has been trying to work a deal with city leaders to build a compressed natural gas fueling station that would allow the city to convert some of its fleet to natural gas, said he believes Philips 66 was trying to make the sale of E-15 gasoline unnecessarily difficult.

A Phillips 66 spokesman previously has said that’s not the case. The company required the changes in selling standards to ensure that the E-15 product wouldn’t mistakenly be used by motorists who have vehicles that aren’t rated for E-15 use.

The EPA recommends that only vehicles 2001 or newer use the E-15 blend.

But Zaremba said the end result was the new changes made it next to impossible for his company to sell the product. That’s because Phillips’ new regulations would force him to install new pumps for the E-15 product under a separate canopy away from the main set of fuel pumps. He’s convinced Phillips 66 and other big oil companies simply don’t want E-15 to gain marketshare in the U.S. because it would significantly cut into their oil sales.

“Change can be difficult, especially for companies that are making billions of dollars off of us,” Zaremba said. “They saw something that was going to threaten their income, and they responded.”

Zaremba declined to give details about how much it cost his company to end its contract with Phillips 66, other than to say, “it was very expensive.”

Nationally, E-15 hasn’t gained traction with consumers. Zaremba said only a fraction of gasoline stations currently offer the product, and he said he expects big oil companies to run a negative publicity campaign against the ethanol product.

You’ll have to decide for yourself what statements you want to believe about the product. The EPA has deemed the product safe for vehicles 2001 and newer. But some auto manufacturers say use of E-15 will void warranties on vehicles 2012 and older. AAA, the auto club, also issued a statement late last year urging gasoline retailers to halt the sale of E-15 until greater safeguards against vehicle damage can be put in place.

For his part, Zaremba said the EPA testing of the product’s safety for vehicle engines was extensive, and he said none of his customers has reported a problem.

“We had the same deal when we went from leaded gasoline to unleaded gasoline,” Zaremba said. “People thought nothing was going to work, and everything ended up working just fine.”

The fight continues, and Lawrence once again is on the frontlines.

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