40 years of advocating for ethanol: Looking back at RFA’s early challenges

ELLISVILLE, Mo. — The Renewable Fuels Association is celebrating its 40th year of advocating for the ethanol industry and its early struggles were many.

RFA’s roots began on the heels of the 1973 oil embargo and 1979 oil crisis, and Ron Miller, now president of Agresti Energy, was there during those early days when “gasohol” tried to gain traction in the marketplace.

Miller reflected on his early career, RFA’s beginnings and the eventual passage of the Renewable Fuels Standard in a recent RFA podcast produced by AgNewsWire. This is the first of a series of RFA podcasts looking back on the organization’s history.

“Back in the early 1980s it was a real challenge to get (ethanol) in, particularly into the major oil companies.”

—  Ron Miller, Agresti Energy president

Miller’s career started with Texaco, a company where his father held various roles for 37 years, and led to his first job after college in sales and then on to logistics.

“I was in Chicago and we had just gone through the second oil embargo and of all of the oil companies Texaco seemed to be the hardest hit by the embargoes. We had a big stake in Saudi Aramco, so when they shut us off we seemed to feel the tightness more than anybody else,” Miller recalled.

“Plus, we had not upgraded our refineries to handle the coming premium unleaded gasoline. We sold leaded gas and Amoco was the big player with their super lead-free Amoco premium in Chicago.”

In order to compete, Miller was part of a Texaco group that began introducing ethanol into Chicago area gasoline stations.

“We had made an 88 octane unleaded that we could then add (10%) ethanol to and get to that magic 90 octane number that the sales guys wanted,” he said.

Miller was promoted to head of the refined products group in the Chicago area and one of his duties was to buy ethanol from ADM.

“At about the same time Texaco and Corn Products got together. Corn Products had a surplus facility in Pekin, Illinois, and they decided to produce ethanol there. That was in 1980 when they formed Pekin Energy Company, built the ethanol facility on the back end of the corn wet milling plant,” Miller said.

“It was a joint venture with members of both Corn Products and Texaco that headed it up and the president of Pekin Energy, who was Corn Products guy, asked if I’d lead their marketing department. I asked how many were in the department, and he said, ‘If we get you, we have one.’”

Early Challenges

He began at Pekin Energy in 1981, the same year RFA was formed.

One of the first challenges facing the ethanol industry of the early 1980s was when the oil crisis of the 1970s had been resolved; oil companies began to lose interest in the corn-based fuel.

“Once the embargoes passed and the oil began flowing again there was a question if we really need ethanol. It was being marketed back in those days as lead-free gasohol actually and with the refinery side, and particularly Texaco, originally we were going to use ethanol across the nation,” Miller continued.

“By the time we began operating Pekin Energy Company, the refinery group had pretty well solved their issues with lead-free. A lot of BTX (benzene, toluene and three xylene isomers) components were used back then until that became an environmental issue. MTBE (methyl tertiary butyl ether) was used later on and that became a problem.

“Back in the early 1980s it was a real challenge to get (ethanol) in, particularly into the major oil companies. The independents embraced it because of the economics around it. It was mostly driven by the federal government tax credit which is worth 40 cents a gallon and a lot of states had state credits that kind of helped us develop a patchwork of markets to try to utilize all of the regulatory tax exemptions that were there back then.”

The Carter administration in 1979 stared the exemption for 10% ethanol from the 4 cents a gallon federal excise tax and that was the driver. Ethanol incentive programs varied in each state. Some offered rebates, Illinois had a benefit on the sales tax, and Iowa reduced their motor fuel tax.

“It was just mishmash, but it was mainly a reduction of tax on 10% ethanol blends,” Miller said.

Few Players

There were only five renewable fuel companies in RFA’s early days.

“ADM was by far the largest with a couple of plants. We were coming up with the second largest plant at Pekin. The South Point plant was almost the same size as ours. Then there was New Energy of Indiana and A.E. Staley had a plant in Tennessee that I think came up in 1982,” Miller said.

“It was easy to get into (RFA) leadership. My predecessor (at Pekin) was chairman, and I think every one of the guys except for the ADM representative was chairman of RFA at one time or another.

“I think our biggest concern starting out is what’s the burn rate this month, we have to make sure we’ve got enough money to keep the doors open. All we had for staff was a president and a secretary. Most of the organizations supplied support people for the lobbying effort.”

Miller became involved in RFA when his predecessor started the organization’s Technical Committee of which Miller chaired.

“We had really great participation from all of the players. We were trying to deal with all of the problems that we were facing from a competitive standpoint where all the oil companies said this is really not a good product or we have a problem with ethanol and it really shouldn’t be part of the gasoline standard and all of that,” Miller noted.

“So, we had to work really hard on the technical side to really find a place there and it took us a few years, but we were successful in that and it was an enjoyable experience with a lot of support.

“I do believe that the RFA by far is the most technically-focused of the trade associations just because we had to be. We were the first out there. We had to make sure that consumers were happy with the product and so that meant making sure from start to finish we had all of the technical information we needed. And if we needed to make changes we would learn that and make sure the consumer experience was as positive as possible.

“Very few people have an opportunity to see an industry grow from birth to success and by the 2000s we had worked our way into where we were now finally embraced by oil companies that could figure out how to best utilize ethanol.”

Leadership

Miller would go on to chair RFA twice — 1997-2001 and 2006-2007 — making him the organization’s longest-serving chairman.

“When you think of where we started in 1981, after the oil crisis was over, nobody really cared about it. So, being part of that whole effort and the RFA really did have and still today has a leadership role, it’s still very exciting. I just happened to be at the right place at the right time to get it started,” he continued.

“It wasn’t going to be a long-term commitment for me, but I think that’s one of the reasons I stayed. Even when Texaco and Corn Products decided to exit the business in the 1990s I could have very easily gone back into Texaco. I was still employed by them and there was no chance I was going to do that because of what we had been able to accomplish as an industry and we were still on the cusp and finally got to the Renewable Fuel Standard and things like that. It was continuous growth all along and it’s just fun to be part of that.”

Miller left Aventine, formerly Pekin Energy, in 2009 to become president of Agresti Energy. The Indianapolis-based company develops and operates facilities that convert agricultural waste into energy using a proprietary pressure hydrolysis processing technology that takes animal manure, plant waste and other cellulose materials to produce a range of biogas and liquid biofuels.