Predictions: Aviation fuel in 2013

Early January is a time to review what transpired in the past year and make plans for the coming one. Fuel being consistently named by aircraft owners as their number one concern, it’s appropriate to review trends in recent years and make some predictions for 2013. The U.S. Energy Information Administration provides a wealth of statistics on all sources of energy, including the fuels we use. For instance:

  • Since 2009, avgas consumption increased somewhat to 681.2 thousands of gallons per day at the end of 2011.  Whether this increase will continue, or we are seeing a return to the long-term decline of around 3% annually, is impossible to say at this time.
  • By comparison, Jet-A consumption has dropped since 2009, having reached 53,459 thousands of gallons per day at the end of 2011. Note, though, that avgas consumption is only about 1.3% of Jet-A consumption, which includes all of GA and the airlines (it is not clear whether these numbers includes military aircraft, however).
  • By contrast, the total consumption of gasoline was 354,952 thousands of gallons per day at the end of 2011.  Jet-A is 15% of this figure, and avgas only 0.19% compared to gasoline, a miniscule amount and the reason that avgas is often called a “boutique fuel.”
  • Premium gasoline, the best source of mogas, accounted for 31,846 thousands of gallons per day at the end of 2011, about 9% of total gasoline sold. While a small portion of overall gasoline sales, this is still a figure 47 times greater than for avgas at the same time period.

While no statistics are yet available for total sales of these fuels in 2012, by switching the “View History” to “Monthly” for each of these charts, it appears that little changed between the end of 2011 and 2012. Numerous recent articles forecasting 2013 GA aircraft sales for 2013 paint anything but a rosy picture for the coming year. We’ll likely being doing well if we simply hold our own in the coming months, given widespread uncertainty over the U.S. and foreign economies, employment, regulatory and tax reform, etc.

The outlook for the oil & gas (O&G) industry is one of the few areas that provides some encouragement that aviation fuels could drop in price. According to this recent article from the O&G industry publication RigZone, Canada is already seeing a rapid drop in the sales price of its crude oil, bad news for the oil industry but great news for consumers. As reported in this blog a few weeks ago, the U.S. is already a net exporter of refined gasoline and we’re predicted to be the world’s largest producer of crude oil by 2020, due in part to the amazing technology of hydraulic fracturing and directional drilling.

For users of mogas, this is good news, since a large portion of the refined products from crude oil goes to fueling highway vehicles. Jet-A is also relatively easy for refiners to produce, and in large demand, so we should expect to see downward pressure on its price, too.

Avgas, being a boutique fuel that requires a lead additive (TEL) with all the costs and regulatory issues this brings, is another story. With the last major overseas users of leaded fuels for highway vehicles switching to unleaded gasoline in 2013, demand for TEL will be limited to avgas users, which are primarily found in North America and Europe. This map from the EPA shows where leaded fuel was still in use in February 2009.

The first $50 question remains: How long will the last producer of TEL, England’s Innospec, remain in a dwindling business? This statement from the company’s website shows that the company is planning for this now: “… as a responsible organization, we recognize the importance to the environment of reducing lead in automotive fuel so we are supporting the global phase-out program for TEL in two important ways. Firstly, we recognize that the economies of some countries continue to depend on this product. They do not have cars with catalytic converters capable of running on unleaded fuel, so TEL remains by far the most cost-effective octane enhancer available. With our extensive market knowledge, built up over many years, we are in a great position to help these countries make the transition to unleaded fuel smoothly. We will ensure the continuity of tetra ethyl lead (TEL) supply during their phase-out period and provide comprehensive advice and guidance on how best to manage the changeover.”

The second $50 question pertains to the availability of mogas at airports and ethanol-free, aviation-grade mogas at gas stations for those who self-fuel. As this blog has frequently reported, while still small, the number of airports offering mogas continues to rise, as can be seen in the table at the bottom of this list of airports with mogas, and shown on this map, both from GAfuels blogger Dean Billing. (Note here the recent addition of E95, Benson Municipal Airport in southern Arizona, the first airport in the state to offer mogas in recent years.)

According to Dean, one of the nation’s foremost authorities on avgas and ethanol policies, we can expect the following in 2013:

  • 1 in 4 chance that Innospec will stop making TEL, but there will be up to a two-year supply salted away in their tanks or in our tank farms.
  • 1 in 10 chance that our refiners stop making 100LL because their accountants make the case it isn’t worth it.
  • 1 in 3 chance 100LL will go over $10 a gallon. This is actually the one we should be betting on.
  • The hard one is when we hit the ethanol blending wall, because as I found out this year when we should have hit it there is the 20% RIN carry-forward loophole, so we are about 15-18% below it. On top of that, the EPA hasn’t published the quotas for 2013. They are required to do that in November of each year, but I can find no record of it and without that you can’t tell where we are. We should be through the blending wall now into no man’s land. If, as I believe, demand is continuing to fall for auto gasoline across the U.S., then the blending wall is going to come this year.

Add to this the sudden departure of EPA Administrator Lisa Jackson in late 2012, and all bets are off on what, if anything, will be done about the unattainable RFS2 ethanol production mandates in 2013.

In summary, the outlook for lower prices for Jet-A and Mogas in 2013 is positive, while the future of avgas remains uncertain. Very little new news has been seen on the unleaded 100 octane development effort, and we do not expect anything significant in 2013. Unless something is done about the RFS2 ethanol mandates, it will become more difficult to find aviation-grade mogas at gas stations, although recent trends in the listings at Pure-Gas.org appear to indicate that retailers see a growing market for an ethanol-free option, despite the mandates.

Encouragingly, an increasing number of airports are making the extra effort to add mogas to their fuel options.  We are also aware of one major unbranded avgas supplier that is planning to start offering mogas in 2013, which would be a first. This should send a clear message to General Aviation that mogas is a serious future aviation fuel, already the case outside North America and, as your blogger reported in the spring of 2012, the primary targeted fuel for virtually all new piston aircraft engines.

The GAfuels Blog is written by two private pilots concerned about the future availability of fuels for piston-engine aircraft: Dean Billing, Sisters, Ore., a pilot, homebuilder and expert on autogas and ethanol, and Kent Misegades, Cary, N.C., an aerospace engineer, aviation sales rep for U-Fuel, and president of EAA1114.

Comments

  1. I really don’t see the reluctance to use Mogas as much as it is the uncertainty of it’s being ethanol free and it’s limited availability.
    Fuel prices are high due to institutional speculation. Unless that changes, fuel prices, automotive and avgas, will not significantly drop. Neither will avgas prices. Fuel pricing is at the whim of speculators, refineries and distributors/dealers. Despite a glut of fuel, enough that we export, they all still come up with the same old excuses to keep the price artificially high. For instance how can they claim a lack of refinery capacity will cause higher prices when we produce so much we are exporting it?
    If the FAA wants to get 100LL and the pollution it causes out of the pipeline or at least reduce it, then make it economically feasible for airports to put in the tanks and equipment to fuel the aircraft. I can’t see many airports spending upwards of $100,000 to put in tanks and pumps for an “uncertified” product. Add a reluctance due to economic uncertainty of how much they will sell. As one airport manager told me, “why carry mogas? If they (aircraft owners) want fuel they will buy the 100LL and we make real good money on that!”
    They just don’t see the profit margin in selling mogas vs avgas, while at the same time discounting all the aircraft that self fuel with mogas brought in. That is the real problem in my eyes. Can’t sell what you don’t have!
    Years ago when lead was taken out of fuel there were gloom and doom forecasts for high compression marine engines. There are additives that were developed to replace the lubrication and cushioning effects of the lead. Funny thing is the marine industry did not see the catastrophic engine failures that were predicted. I would surmise that the vast majority of all aircraft that can use mogas will do fine on any ethanol free fuel.
    So it becomes a matter of distribution and availability, not whether there is a viable alternative.
    I understand some engines can’t use today’s mogas. For this an alternative would have to be found. But for the vast majority of small piston engines, mogas will work, if we could get it.
    Fuel is my #1 monthly expense. It is the only thing holding me back from flying more. I hear the same from many other pilots. Fix the fuel problem and you brighten the GA future.

    • Kent Misegades says:

      Jeff, nice reply, thank you. A few comments:

      1. Do not confuse a lack of ethanol-free at your local gas station with a lack of aviation-grade, ethanol-free gasoline at a fuel terminal . Ethanol may not be shipped by fuel pipeline (corrosion) so must be added to ethanol-free gas at a terminal. Mogas should be purchased at a terminal where its properties can be verified, then shipped and stored in aviation-grade equipment to airports. Self-fueling for individuals is fine if you are careful to check the fuel. Best is to buy premium fuel from a branded seller and always check for ethanol, regardless what the seller claims.

      2. Gasoline and Jet-A prices are going to come down as a result of all the new shale fields coming on line. Natural gas prices are already coming down. Avgas, as a tiny boutique fuel with dwindling demand, will likely not drop as its producers will depart the market. Same reason TEL lead additive remains expensive – there is only one producer of it left.

      3. At least 115 airports now sell mogas, and they report that their margins are the same as for avgas, 50 cents to $1 per gallon. If it makes sense, an FBO that is run as a profitable business will sell mogas, just as many have added Jet-A despite not having any Jet-A consumers based at their airport. Without it, they never will. Keep however avgas as the only, costly fuel for piston planes and airports will continue to die. Even if the margin on avgas is higher than mogas (not what FBOs tell us), if you sell none of it, it really does not matter what its margin is.

      4. Mogas has been an FAA-approved aviation fuel since 1982. There is no need for further certification. Anyone with a valid STC or TC for mogas may use it, period. Virtually all new piston engines, including those from Conti and Lyc, are designed to operate on 91 or 93 AKI ethanol-free mogas, not some new unleaded aviation-only fuel.

      5. The new water/methanol injection system INPULSE from AirPlains allows high-compression engines in Cirrus, Bonanzas, Barons, Mooneys, etc. to operate on Premium, ethanol free mogas, all with technology proven on tens of thousands of aircraft in WWII.

      Kent

      • I agree with almost every point you make.
        From talking with airport managers they just don’t want or can’t underwrite the expense of putting in the tanks and pumps. It isn’t the lack of mogas it is the equipment.
        From what I have seen the margins on avgas are very high.
        In my area “marine” gas is sold at a premium, about $.75 to a $1 higher than ethanol fuel. Just because they can.
        Despite oil shale deposits, I don’t see any fuel costs going down. Those that set the prices will continue to raise prices, no matter what the supply is. Just look at fuel prices compared with 10 or 15 years ago. Despite less demand, better fuel efficiency, etc. prices still continue to raise.
        When prices reach a tipping point prices drop, then creep up again until even higher and a new tipping point is reached, and on and on. Next thing we know $3.50 gas is the norm. 10 years ago it was 1/3 that.
        Until either the government or public puts their collective feet down, or speculation in oil ceases, it will continue to raise.
        The aviation community isn’t the only ones being hurt. The marine community is in the same boat. Pun intended. Loss of sales, pricing for boats have fallen, sales way off, even repairs are down due to lack of use. Sound familiar?
        Avgas is a very small part of that. As such, as you say it is a boutique fuel, and will continue to command premium pricing.
        We both agree many piston engines can run perfectly well on regular, ethanol free mogas. My plane was designed for 80 0ctane and has a STC for mogas. The nearest airport with mogas is 35 miles away. So I am somewhat stuck with avgas and it’s high prices, which in turn limit the amount of flying I do. I’m not going to haul in fuel.
        In talking to other pilots of small piston aircraft, fuel prices are one of the determining factors as to how much they fly. All of our other costs are pretty much fixed costs.
        If the aviation community or governmental, associations, and owners really want to get more planes in the air and revitalize GA to a degree, fuel is one thing they can do to help.
        But unless someone helps the local FBO with the purchase of the tanks and pumps to sell mogas on their fields, it just won’t happen.

        • Kent Misegades says:

          Jeff,

          Many FBOs think you must spend $100K or more for a fuel system. My company, U-Fuel, sells small self-service systems for under $40K, and we provide financing for up to 100%. Even at low sales rates of 20K-30K gallons a year, they can be paid off in a few years, so they are excellent investments. In some cases, airports have obtained surplus military fuel trailers to get started with mogas. You can buy them for pennies on the dollar, for instance from govliquidation.com

          At some airports, one or more pilots have invested their own money and set up fuel sales businesses when FBOs are unwilling to do this. Why not give this a try if your own FBO is not interested in lowering the cost of fuel and thus helping get more pilots flying?

          Assuming yours is a public airport, it is forbidden by law to grant exclusive fueling rights to any one business. In principle anyone can sell fuel if they meet the fire safety and environmental rules.

          Personally, I feel that speculation is a good thing. Speculators are willing to risk their money when others won’t, resulting in more exploration, which leads to greater supply and thus lower costs. Oil and to a lesser extent gas are global markets, so it is impossible to see this as a purely U.S. issue. If foreign demand for gasoline rises while demand in the U.S. falls, prices will still remain high in the U.S. But this will lead to more refinery capacity (as it has the past 5 years) which lowers costs for everyone. It works both ways, but for sure, more exploration, more pipelines, and less government intervention will help us all – a rising tide raises all ships. Just look what is happening with natural gas to get an idea how cheaper crude could dramatically affect things for the most popular fuels, gasoline and Jet-A.

  2. Andrew Grant says:

    Kent:

    Attempts to get the pilot population in Northern Ohio interested in mogas generally founder on fears of the unknown “it’s not avgas – the engine will fail” etc. Even though we have two tanks / pumps for 100 LL at 15G. So, as a combustion chemist and power plant engineer, I compared the specs for Avgas with 93 UL autogas. It appears that Reid Vapor Pressure, RVP, is the only parameter that prevents a supplier certifying ethanol-free 93, or 91, UL as Avgas. Furthermore, a colleague of mine who has been in the gas station business for years responded to my request for an ethanol-free 93 UL supplier here, and says that Lykes Petroleum in Youngstown is happy to supply it,

    I would therefore like to get you on the phone with the VP at Lykes Petroleum. to see what they could do. My goal is to make ethanol free 91 / 93 UL available as certified Avgas – this would overcome the reluctance of all the old farts in the back of the hangar, and would get the training fleets of 152′s and 172′s, plus our 182′s, saving perhaps $1.50 per gallon.

    As a marketing tool, the supplier can offer Avgas to pilots, AND can sell more premium gasoline to performance-minded motorists by branding their super-premium as Avgas – “Pilots use it – You can too!” etc, etc. Same fuel – same certification by the supplier.

    Please let me know if you can get on a call with us, Kent.

    Andrew Grant
    330 607 – 4648 Cell.

    • Kent Misegades says:

      Andrew,

      I am glad to help but it will really come down to local pilots making a convincing argument to the airport / FBO manager and the airport commissioners. If you have a mogas supplier lined up, you have the biggest problem solved.

      As in my comments above, there is no need for more certification – mogas has been an FAA-approved aviation fuel since 1982. All one needs to do is follow the guidelines in the airplane’s TC or STC covering fuel. No lead, no ethanol, correct AKI, that’s all. Modern quality fuels have low RVPs so vapor pressure too is not much of a problem anymore.

      The ideal mogas is 91 (93 is better) AKI, ethanol-free, low RVP, a branded fuel (versus unbranded el-cheapo fuel), shipped directly from the terminal in quality fuel trucks and stored in aviation-grade fuel equipment. This is not rocket science – over 115 airports now sell mogas and it is a no-brainer for them.

      Our biggest impediment to more mogas is ignorance among our own pilots and people who run our airports. Thank you for working to change this.

      Kent

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