The January 2014 issue of EAA’s Sport Aviation includes an article titled “Avfuel Takes on Fuel Challenges” by J. Mac McClellan that deals with the never-ending saga of a replacement for leaded avgas.
While Avfuel’s president and CEO, Craig Sincock, deserves great credit for building the company into a leading aviation fuel supplier, his comments and those from the article’s author show that some of the vast information archived on this blog has not yet reached the good people in Oshkosh and in Ann Arbor, Avfuel’s home base.
For instance, quoting from the article:
“What Craig knows is that well-performing unleaded avgas that can be created in test quantities may not be economically practical at useful volumes. About 10 refineries make avgas now.”
While it is nearly impossible to get the fuel industry to admit how many refineries still make avgas, the best we have heard from industry insiders is that about a half dozen refineries are still equipped to make the fuel, and they can produce their entire year’s supply in only a few days, since avgas represents less than 0.2% of the total refined fuel created annually in our country.
We’d love to know from Mr. Sincock who these 10 refineries are. More importantly, we’d like to know where they will obtain their Tetra Ethyl Lead (TEL) when the world’s last producer, England’s Innospec, stops making the additive.
From the article: “Many have speculated that an unleaded avgas would be less costly to ship and store because without lead it could move through the normal distribution system. Craig says that won’t happen. Avgas quantities are too small to ship by pipeline, which would be the only way to make measurable reductions in shipping cost.”
This, of course, is not the case for mogas, which is already distributed long distances and in huge volumes, cheaply, by fuel pipelines. Mogas can be transported from fuel terminals to airports in low-cost, conventional fuel trucks, the same ones used to deliver fuel to 110,000 gas stations in every corner of the country. This provides substantial savings for those selling mogas at airports.
“And Craig isn’t worried that avgas will be outlawed, grounding the piston fleet. Never in the history of environmental regulation has a chemical or activity been banned without a viable replacement.”
Avgas won’t need to be banned to disappear. Its use has been dropping by 3%-4% annually for many years, as former large consumers of the fuel switch to Jet-A powered turbine aircraft, older recreational aircraft disappear and are replaced by aircraft with more efficient, mogas-burning engines (Rotax, Jabiru, ULPower, AeroVee, etc.). Eventually the last few avgas producers will leave the market, or raise their prices so high that the fuel is effectively gone.
This chart from the DOE’s EIA suggests that is precisely what is already happening, as $9 or higher avgas becomes more commonplace and aircraft remain parked in their T-hangars or on ramps across the country. Eventually Innospec too will leave the business, ending supplies of TEL, which would be the death knell for avgas, without a single action on the part of the EPA, Friends of the Earth or other environmental groups.
“Though many, even a majority, of piston airplanes could fly on an unleaded avgas of less than 100 octane, the majority of all avgas is burned by airplanes that require 100 octane.”
As was accurately determined from FAA data and reported in 2012, the exact figure is over 80% of all piston-engined aircraft can safely and legally use lead-free mogas, today, either through type certificates or an STC from Petersen Aviation. Furthermore, the new INPULSE water-injection system from AirPlains has been certified for a number of high-performance aircraft including the Beech Baron that Mr. McClellan flies.
On the second half of this statement from the article, “the majority of all avgas is burned by airplanes that require 100 octane,” this too is one of those urban legends that just refuses to go away. If Mr. Sincock or McClellan have hard evidence to prove this figure, we’d sure like to see it.
Our repeated attempts to determine the factual basis behind this myth from those who like to repeat it has resulted in a weak admission from the FAA that it is based solely on anecdotal information from the past.
Since Europeans were faced to deal with the end of avgas at least a decade ago — mainly for cost reasons — a good indicator of who really uses which fuel should come from there. Based on what we have learned from repeated attendance of the AERO Friedrichshafen, Europe’s largest GA trade show, at least half of all aviation fuel consumed in piston aircraft there is mogas, and the fuel is widely available at airfields.
“And only a single avgas can be supported by the aviation fuel network. It just isn’t economically viable to make, ship, store, and sell two versions of avgas.”
Another urban legend. There are already two, FAA-approved fuels for piston engine aircraft in production, avgas and mogas. Well over 100 airports in the U.S. sell mogas alongside avgas, currently at a price advantage of $1.30 (according to AirNav) yet FBOs who sell both tell us their net margins are the same for the two fuels.
The infrastructure to produce and ship mogas is enormous relative to avgas, the result of fuel suppliers servicing the nation’s 110,000 gas stations. Why is it that a large GA airport in the U.S. claims it is incapable of selling two kinds of avgas, yet small rural airports do it, and most airfields in Europe — modest in comparison to the U.S. — offer mogas, avgas and many also Jet-A? The evidence contradicts the statement from the article.
“What does worry Craig about the future is the decline in activity at so many airports. Fuel sales are the only revenue source for nearly all FBOs now that new and used airplanes sales, maintenance, rental fleets, and flight schools have largely gone away as income streams.”
We share their concern, but wonder about their grasp of basic economics. Income streams from “used airplanes sales, maintenance, rental fleets, and flight schools” have disappeared precisely because of the high cost of avgas and lack of alternatives. Over 80% of all piston aircraft and virtually 100% of all training and recreational airplanes do not need a more expensive, high-octane fuel. Imagine how long a gas station would remain in business if it only offered Super? Most sell two or even three grades of fuel. They continue selling the highest octane, even though it accounts for only 10% of gasoline sold, because the margin on the higher octane fuel makes sense. Consumers like choices — at most airports, pilots get only the most expensive one.
Furthermore, basic economics tells us, that if a business wants to sell more of something, it must provide consumers with an incentive to buy more of it. Price is, of course, the most important incentive, and the largest part of a pilot’s annual operating expenses.
That pilots remain sensitive to price was demonstrated in superb fashion by Redbird’s Dollar-A-Gallon ‘experiment’ last October.
This article from the EAA described how pilots react when aviation fuel prices come down: “The number of pilots and amount of fuel sold wildly exceeded Redbird’s expectations. In the first week of the experiment Redbird Skyport pumped 30 times its normal fuel volume.”
FBOs will only start restoring income streams from used airplanes sales, maintenance, rental fleets, and flight schools when they provide lower cost fuel, it is that simple. Only mogas currently provides this option.
“A question I hear often is why can’t suppliers make auto gas available at FBOs for those airplanes approved to use it, or experimentals that require no approval. The reason is that auto gas is not a specific fuel. It varies in characteristic from season to season, and even by geography.”
This is simply not true. All mogas TCs and STCs require the fuel to meet ASTM D4814 standards, be of a minimum octane (AKI) rating, and -— in most cases — contain no ethanol. All automotive fuel in this country meets ASTM D4814; otherwise fuel makers would have huge problems with the tough legal departments of car manufacturers.
Tests of aircraft engines use fuel with various additives, none of which have negative influence on the behavior, otherwise they would never be certified for mogas use. There have been exactly ZERO reported incidences of problems implied in this article since the first mogas STC was issued by the FAA 32 years ago.
“Fuel suppliers couldn’t get liability insurance to sell a fuel not specifically created for aviation use. Without insurance the risk would be huge but the sales volume tiny.”
Can the authors explain how 100+ airports in the US, and most GA airports in Europe, are able to obtain fuel liability coverage if this statement is true? We discussed this particular myth at some length in this blog posting.
“I can’t believe some executive at big oil is going to see a profitable business in general aviation. You need to fly into the business and love it to figure out how to make it work.”
Last summer, AVweb editor Paul Bertorelli wrote a two-part article on aviation fuel that appeared in Kitplanes. His survey of FBOs on their profit margins confirmed what many pilots suspect — they are high. Bertorelli reported average margins of $0.75 – $1.50 per gallon — that’s 20% or more of the sales price. By comparison, gas stations make only a few pennies per gallon of gas sold -— but of course they sell a lot of it as well as $4 a cup coffee.
Clearly, oil company executives have determined that they can make high profits on the sale of avgas; the question is how long this will remain before pilots stop flying altogether and buy a motorcycle or a boat, two vehicles that — like the vast majority of most piston aircraft — run just fine on mogas.
Since, according to Mr. Sincock, less than 10% of Avfuel’s business is avgas (presumably over 90% is Jet-A), why not lower margins on avgas and also distribute a high-quality, aviation-grade of mogas at even lower margins to put some life back into sport aviation? Who will buy his Jet-A if the once large and vibrant sector of recreational flying disappears? Avfuel, with its independence from branded oil companies and its expertise in fuel storage and distribution, is in the best possible position to bring mogas to our airports. They might even displace a few of their competitors in the process, who knows?