S2:E3 Current Energy Policy & Our Local Communities
We are currently in the midst of an energy transition. Public and private organizations alike are making commitments to transition to electric vehicles. In this episode of Field Points, we discuss the implications this transition might have on our local communities who help grow and produce biofuels. Belinda Puetz, Director of Marketing with CountryMark, shares the policies that are impacting their member-owned cooperative.
CountryMark is an Indiana base oil refinery and like Ceres Solutions, is a cooperative. When they make a profit, they either invest or share that profit through patronage to their member-owners. Because of this, their profitability and ability to share that back to their owners in our local communities is significant. However, each year they are paying millions of dollars to the government through RINs (renewable identification numbers) payments.
Over the last 10 years, CountryMark has spend $135m on these renewable fuel credits or RINs. This year alone, CountryMark will spend $53m buying RINs because they cannot sell enough biodiesel and ethanol to meet the governments renewable fuel standards.
“Electric vehicles and more fuel efficient vehicles have decreased the overall need for gasoline, blended with these biofuels. At the same time, the government policies have increased the amount of biofuels required for Countrymark to sell as a refinery or obligated party.”
How it works is essentially a fuel station that is not a refinery, is not required to sell biofuels. Every time a customer buys blended fuel from a non-refinery fuel station, that station earns RINs that they can then turn around and sell to refinery companies like CountryMark if, as an obligated fuel station, they have not met their minimum requirement for biofuel sales.
All ethanol used in CountryMark’s blended fuel comes from Indiana ethanol producers and does have an impact on our local economies. Belinda encourages listeners to have conversations with their political representatives, asking them to be market driven. Together, we can work to make this energy transition a smart transition.
To learn more about Ceres Solutions Energy visit https://www.ceres.coop/fuel or reach out to your local Ceres representative.
A Glance At Our Episode
3:21 Meet our Guest, Belinda Puetz
10:10 What are RINs?
24:08 E85 vs. E15 - What's it Mean & Who Is Using It?
36:00 Renewable Diesel
Belinda Puetz has been with CountryMark since February of 2007. As Director of Marketing, Belinda manages the company’s brand, as well company sales and marketing efforts. In her tenure at CountryMark, Belinda has been involved in the development of the company’s brand promise, as well as the rebranding of retail fuel stations and fuel delivery trucks. She arranges media interviews, oversees advertising campaigns, and is accountable for the effectiveness of company sales incentive programs.
Belinda grew up on a grain and livestock farm near Crawfordsville, Indiana, and holds a Bachelor of Science degree from Purdue University in Agriculture Economics and Agriculture Communications. Prior to her work with CountryMark, she served as Biofuels Manager for the Indiana Soybean Alliance and Indiana Corn Marketing Council, was a writer and project manager for an Indiana advertising agency and was a reporter for a weekly farm newspaper. In her career, she has both led and been involved in sales management, marketing, branding, corporate communications, and public relations.
Belinda is a graduate of the Purdue Strategic Agri Marketing course, as well as the Indiana Ag Leadership Program. She is a past chairman of the Indiana FFA Foundation, has served as an advisor on the Purdue University School of Agriculture Steering Committee and as director of the Purdue University Ag Alumni Association. She is currently on the board of directors for Drive Clean Indiana and is one of two CountryMark representatives on the IN-Climate Alliance Founding Partners Board.
She and her husband, Greg, have two children and reside in Carmel, Ind.
MSNBC Recording - Pete Buttigieg (00:00):
Bottom line. We need to continue pursuing the measures that are under the control of policy makers, but also recognize that the best thing we can do for the medium and long term is make sure Americans have more options through greater fuel efficiency and greater access to vehicles that don't require gasoline at all.
Morgan Seger (00:16):
We're in the middle of an energy transition. It's predicted by the year 2030, 50% of new vehicles will be electric vehicles. This transition is gaining momentum with things like the Inflation Reduction Act of 2022, as mentioned in the MSNBC conversation with the US Secretary of Transportation, Pete Buttigieg.
MSNBC Recording - Pete Buttigieg (00:38):
I'm excited about the electric vehicle provisions because you know what this will do is reduce the price through tax credits of an electric vehicle.
Morgan Seger (00:46):
But what are the other implications for consumers and businesses that rely on these fuels every day? In this episode of Field Points, we wrap up our energy series with a discussion around fuel and biofuel production, and we spend a lot of time focusing on the policies that are in place today and how they impact people living in rural Indiana and Michigan, and how we can make this energy transition a smart transition.
Every day, we rely on food, fuel and fiber. But how much do we know about these industries we depend on? In this podcast, we dive deep into the production and processes of these everyday essentials. This is Field Points, an original podcast production from Ceres Solutions. Welcome back to Field Points. Today on the show we will be sharing our third episode of our Energy series. I'm joined again by my co-host, Eric Adair, and our guest on today's show is Belinda Puetz from CountryMark. As we've worked through this energy series, I've learned a lot about what's going on within Ceres Solutions, but today we're going to share CountryMark's point of view. Our conversation ranges from policy to electric vehicles and more. It was a really interesting conversation when it comes to learning some of the behind the scenes interworkings of this energy industry. Here's my co-host, Eric.
Eric Adair (02:08):
Our relationship with CountryMark, I believe is extremely strong. Ceres believes in partnerships. We sell probably, I don't know, 95% of our fuel would be safe, maybe a little, maybe let's say 90% of our fuel is CountryMark fuel. The small percentage it's not. It's outside their territory and that's not an option for us. Otherwise, we probably would be 100% exclusively country mark fuels. So we have an extremely strong relationship with them. They're a great partner. They provide us with a lot of resources to make our customer experience better. They provide us resources to become be more profitable. So yeah, it's very beneficial I think, for both parties. CountryMark, by partnering with us also has a very assured supply as far as who's gonna buy their fuel. So I think I'd like to think I'll let Belinda speak on that part, but I think that pendulum swings both ways, at least I hope it does.
Morgan Seger (03:10):
Sure, sure. Well, Belinda, welcome to Field Points.
Belinda Puetz (03:12):
It's nice to be here. Thanks for having me. Yeah,
Morgan Seger (03:14):
So we're super excited to dive into our conversation today. Can you kick us off first by sharing some of your background and your role at Country Mark?
Belinda Puetz (03:21):
Sure. I am Belinda Puetz. I am director of marketing for CountryMark. I've been with Country Mark for about 15 years. I came to CountryMark from the commodity industry, so I was working for the Indiana Soybean Board. I was their biofuels manager and came to work at the cooperative system. I work primarily in the area of marketing, but in the last few years, as Eric knows I have been more involved in some of the policy discussions and some of the energy transitions that we're gonna talk about today.
Morgan Seger (03:54):
Belinda kicks off our conversation by talking about the policy that's impacting CountryMark.
Belinda Puetz (04:00):
We have been watching this for a number of years so it can actually go back and we've always faced policy issues, but I can remember when I was first hired in 2009, we were looking at what was called Cap & Trade and Washington DC said, Hey, we're going to tax refineries for the carbon that they produce. And we were able to get away from that. We kind of said, "Hey, this is really not good for Americans not really good for the country." And so we were able to contain that legislation. We got it killed but it has essentially come back different name, but it's come back and they've said, Hey, we are looking at reducing fossil fuels in this country and they're doing it in a variety of different ways. And so we wanna make sure at Country Mark that is a representative of our owners companies like Sirius Solutions and the farmers that they represent, that their voices are heard both at the State House and at Washington dc and that we come up with good policies that put a lot of thought into affordability, reliability, as well as the environment.
We just, as Eric said earlier, we're really looking for those strong partnerships. We look for those opportunities to partner with Ceres Solutions with. We have a great relationship with Cummins. We're involved with a number of associations, whether it's Indiana Corngrowers Association, Indiana Soybean Associations Drive Clean Indiana, which is the old Clean Cities organizations. We look for ways that we can partner to help our policy makers make good energy decisions. Energy has such a huge impact on everybody. Certainly I think a lot of your listeners are gonna be farm based and energy impacts how they produce their crops, how they bring those crops back in. But it also impacts everybody, whether you are driving your child a soccer practice or trying to get to work what your energy costs you has an impact. And when we look at very expensive energy options we really put a strain on people who are living paycheck to paycheck. And so that's really been our passion at CountryMark, is making sure that decision makers are thinking about, Hey, what does your transition policy look like? What does your transition plan look like? And are you thinking about what the cost of that energy will be for the farmer, for the factory worker, for the trucking company that's taking products from A to B for soccer, mom, et cetera. Make sure we're thinking about those things and the complexity of it.
Morgan Seger (06:55):
Yeah, in our last episode we talked about just the complexity of going paperless. There's so many moving pieces when you make a big transition. And one thing, and maybe we'll get to this, but when we think about electric vehicles, like you think about making that shift, putting a plug in your garage or whatever that is, but you don't think about the mechanics that are used to working to those other internal combustion engines and the dealerships that are selling them and all of the downstream effects of that. So I can see how it's just way broader. And so I appreciate that there's people like you who are trying to put eyes on the entire pipeline of those changes.
Belinda Puetz (07:33):
Absolutely. It's very easy to look at the whole idea of plugging your vehicle in and saying, oh, that sounds like a great idea. How easy is that? I get home from work, I plug my vehicle in. Yeah, this is great. But we really encourage people to think about the more the complexities to it. The fact that, hey, if we're all getting home from work at about the same time and we're all wanting energy for our vehicles at the same time, what does that do to an already strained grid system? What are we gonna do with those batteries when they're no longer of any value? We gotta think about how we dispose of those. We gotta think about where are we sourcing the rare minerals that are used to produce those batteries? Because again, if we're just trading off one problem for another we really haven't moved forward towards our ultimate goal. And then it's also the convenience.
If our customers want to take a trip three hours away to Ohio to go see a business partner that can be a challenge. That can be stressful of, Hey, when I get there, will I have a charging station that I can recharge my vehicle and get three hours back home? So there's so many things to think about and I think we often think about the grand idea of, oh, it's great to plug in but for that family that maybe can only afford one vehicle that's a real challenge for families that are able to afford multiple vehicles. And they say, well, yeah, I've got an electric vehicle. It's like, well, that's great because you can also afford a gasoline powered vehicle or a diesel powered truck. But if you really are passionate about electric vehicles, think about what it's like to have that as your sole source of energy. And is that what you really wanna do?
Eric Adair (09:36):
Don't, one thing I would like to circle around on that I think is important cuz like Belinda said, a lot of these listeners I believe will be from the farm side is the small refinery exemption. And I hate to bring that up. It's been brought up a lot. But I will tell you, it was just a few weeks ago, I was out talking to somebody and they started talking about the small refinery exemption and why country Mark would get something like that. And I don't even know if it's gonna be in existence going forward, but in how CountryMark that exemption did not alter country mark's blend.
Belinda Puetz (10:10):
It didn't. And that's so such a valuable thing, Eric, and I'm so glad you brought it up. I think so many in farming and just out in the countryside are unaware of what that renewable fuel standard really does to the companies that they do business with. And to them at one level, you sit there and go, okay, country Mark is owned by Ceres Solutions and then independent farmers own Ceres Solutions. So when CountryMark is profitable, that that money goes back in the form of patronage to the member companies and to the farmers that own those companies. So when we spend money at CountryMark on the renewable fuel standard, it takes money out of rural America. It very personally, that bothers me. <affirmative> just so your listeners know Eric, since we got started with a renewable fuel standard roughly 10 years ago, country market has spent 135 million on renewable fuel credits, what they're called RINs in our world.
But essentially the government says CountryMark and Ceres Solutions. If you don't buy as much ethanol and biodiesel as we tell you to buy at the beginning of the year, then you have to buy paper credits, you have to buy a RIN. And the cost of those RINs has gone up significantly. So this year alone, CountryMark will spend 53 million buying RINs because we can't sell enough biodiesel and ethanol and we continue to go to Washington DC and say, we're your poster child. If Ceres and CountryMark can't sell the amount of biodiesel, ethanol, you think we should be able to sell? Nobody. I mean, we're as farmer friendly as it comes. And I know most everybody who sells fuel on the energy side at Ceres Solutions, and they're all biodiesel and ethanol. They will sell as much as the customer, as the farmer, as the truck driver, as the government fleet wants. But there are limitations and it's just frustrating. And I feel very fortunate. Years ago, our board of directors said, we will be customer driven cuz we said, okay, sure. If the government says, Hey, you need to be at a 15% ethanol, 15% bio blended, everything you sell, one solution is we just say, that's all we've got. Ceres, You'll buy nothing but 15% buy the diesel. Every gallon will go out the door with that blend.
But again, we're owned by farmers. So we've got farmers that sit on the board of directors and they said, no, if it's a good product, if it's the right product, we'll sell it <affirmative>. But we're not gonna sell. We're not gonna force our neighbor to buy something that they don't want to buy. And so we've said, no, we're gonna be market driven. We price our biodiesel and our ethanol to move it. We, we've said, Hey, we don't want the cost of those products. So regardless of what biodiesel or ethanol cost to country mark, we price it to be market driven. Cause we we're trying to get out as much biodiesel and ethanol as we can but it's frustrating. And so if I could leave your listeners with anything to have those conversations with their US representatives, their US senators saying, let's be market driven. Give us the freedom to be able to buy the right biodiesel blend for our farm, the right ethanol blend for our farm, for our school corporations.
We know how to manage our businesses and we're gonna do it the right way. But just every year increasing the amount of biodiesel, ethanol that we're supposed to buy really isn't really isn't helping the situation. And then you add complexity to it. From the standpoint, we've seen a contraction in gasoline demand with more and more electric vehicles, just more energy efficient vehicles. The demand for these products are decreasing. Meanwhile, our ethanol requirements and our biodiesel requirements continue to go up every year while the pool shrinks. So it's frustrating. And Eric, I think too, I think your customers also, we don't sometimes sit there and go, well, is country mark anti biodiesel, anti ethanol? And we really wanna send the message that not we source the best quality biodiesel we can get our hands on. All of our ethanol comes from Indiana ethanol producers. We want to sell that product.
Eric Adair (15:30):
I just know there's been misconception out there and there still is, and I know CountryMark is taking up ads, radio. I think you've done a lot of marketing for that. But again, it just surfaced just recently again with me. And I just thought as long as we had a listener base here, we would touch on that again, cuz there's still misconception out there. Absolutely. I mean, we'll have pumps at our gas stations that have maybe B 20 or E 85, but I can't force customers to buy E 85. So CountryMark can meet their blend wall. Right. So like Belinda said, it's customer driven and we sell as much of renewable fuels that we can sell.
Belinda Puetz (16:16):
Eric Adair (16:18):
And we would sell more if the customer demanded more <laugh>. So yeah, we absolutely want to meet the customers demands.
Belinda Puetz (16:25):
And you guys have been a great partner to us. We have started to introduce E 15. You've got it at your rent your station in Rensselaer. And we're looking for more. We'll be talking with a lot of your team here in the next few months. We'd like to be able to sell more. E 15, we've got it priced to move. We've got a very attractive price on that product. I'm amazed, Eric, that more people do not buy our E 15. We've got a good discount on it. If you think about it, it's only 5% more ethanol than E 10, which everything's an E 10. Sure. We got a heavy discount on it and we dust those pumps. The consumer does not wanna buy that. And so if I can also leave your listeners with, another great tip is, hey, look for those stations, look for thoseCountryMark branded stations that have E 15. It will be moved, it will be priced to move, and we'll be working with more of your stations to see if we can bring E 15 into more of those stations. So another way to just move a little more ethanol into our rural communities.
Morgan Seger (17:36):
So I have a couple of questions. You said that you have to buy a paper basically. So does that money then get reallocated into some other sort of sustainability effort or what happens once you make that payment?
Belinda Puetz (17:53):
That's a great question. I'm glad you asked that. Cuz you know what? To tell you the truth, if it did go into something that I felt was a good investment, I probably wouldn't grumble so much about the $53 million that we're gonna spend this year. The challenge is the way it was set up. The renewable fuel standard was set up. They have what they call obligated parties. So if you own a refinery and you're actually making gasoline and diesel fuel, you're an obligated party and you're given an assignment and it says, okay Morgan, this is your assignment. This is how many gallons of ethanol you'll sell this year and how many gallons of biodiesel. And if you fail to you're going to buy those from a non obligated party. So if you've got a fuel maybe it's a station, and I don't, I hate to name names, but if they don't own a refinery and it's station X, Y, Z, and they just buy gasoline and diesel fuel from whatever terminal they want, they're not obligated. And so when they sell E 10, they earn a renewable RIN and then they go put that on the market. And CountryMark buys that from a competitor. So essentially we help our competitors fuel their businesses because they don't own a refinery. And we do.
Eric Adair (19:13):
Okay. I don't know to say it's being used for something productive. I would say that's difficult to agree with
Because if I own my own Erica Adair fueling station and I bought clear gasoline from CountryMark and ethanol from one of the ethanol plants in Indiana and put it in the ground at my station and blended it at a blender pump put in for a small $10,000 for a blender pump and blended that fuel at my gas station, I could then sell my RINs to CountryMark or put it out on the market <affirmative>. I mean, it's giving me the money and I'm not doing anything to make it more environmentally friendly or I just think there's some loopholes there that are misunderstood.
Belinda Puetz (19:58):
Absolutely. And to add a little more color to Eric's comment, they're roughly a dollar 40 a gallon. So it's significant. Yeah, it's a significant exchange of dollars. As a matter of fact one company in their annual report that was their largest source of income. It wasn't selling gasoline, it wasn't selling diesel fuel. They ran a chain of convenience, gasoline, convenience stores. <affirmative>, their largest source of income was selling rims to obligated parties. So you sit there and go, okay, we're just moving dollars around
Eric Adair (20:40):
And it's hurting the consumer.
Belinda Puetz (20:42):
Eric Adair (20:43):
Yeah. I mean, not only in this example, like Belinda said, it hurts CountryMark, which obviously pays Ceres patronage, which pays patronage to its farmer owners. So it hurts our farmer owners. But even if you're a consumer of anyone who's consuming gasoline, I would argue that it's hurting them. <affirmative>. Yeah. It's increasing the cost of the gasoline gallon.
Morgan Seger (21:02):
So if you are a consumer and you're trying to be a smart consumer, what can they do differently?
Eric Adair (21:09):
I mean, if you're buying gasoline, I don't know if there's a loophole around, if that's what you're asking.
Morgan Seger (21:16):
Oh no, I'm saying like buying more E 15. Is that something...
Eric Adair (21:20):
Sure. I mean, absolutely. That's a good point. Absolutely. So or if they mandated E 15, if the government came out and say, Hey, we're gonna mandate E 15, so you no longer have 10% as an all,
Morgan Seger (21:32):
If that's just E 15 across the board,
Eric Adair (21:34):
You went to E 15, I believe for country market that would make your mandate.
Belinda Puetz (21:38):
Eric Adair (21:39):
And so right there, we just solved the problem,
Morgan Seger (21:42):
Except for that's not what the consumers want.
Eric Adair (21:44):
Well, again, we have it in our stations in Country Mark is committed. I mean, they've given us funds, they've assisted us with funds to put E 15 pumps in some of our sites. Well, when you do that, well, we've done that. You just do not see people saying, we're buying E 10 and all of a sudden our E 15 sales are going to, it does not happen. Same thing with it came out with E 85 <affirmative>. We still have E 85 pumps out there. Why? I don't know. Because I can tell you right now, in a month's time at one of our stations at E 85, if we moved 2000 gallons of that, I would be shocked. <laugh>.
It's a sliver, a rounding air of the amount of fuel we sell <affirmative>. And it is price, and it is price cheaper than gasoline. So the consumer could get it at a lower price. They choose not to buy it, and we can't make 'em buy it. CountryMark can't make us sell it or make the consumer buy it <affirmative>. So again, unless the government were to mandate something, like Belinda said, the consumer's gonna buy what the consumer wants to buy. We can't control that. So she started out this, I got way off tangent or something, but I think it's very important. Yeah. Because I can tell you it is misunderstood it by a lot of our listener base. I believe it would be that. That's why I wanted to hit on it. So I'm sorry for getting, we don't have to use it all if you don't want to <laugh>. I just think it's a good subject to discuss for our listener base.
Belinda Puetz (23:21):
Absolutely. And we also know that many of your listeners are very closely connected to policy makers. And it's one thing when Belinda Puetz tells Senator Young, Hey, the renewable fuel standard is not working for us. It doesn't work for Ceres Solutions. It's another thing when a farmer from from DeKalb County says, Hey, I'm worried about how this impacts a company I own. I own a refinery in Southern Indiana, <affirmative> and I'm concerned that I'm at a disadvantage. So that would be my one goal is that somebody walks away and says, you know what? I'm not sure if this is a good, I don't know if this policy is well laid out.
Eric Adair (24:08):
It takes a long time to change a culture. It changes a long time to change something that you're comfortable with or know about or wonder if it's gonna hurt your vehicle. Yeah. I mean, there's a lot of people out there that would wonder, well, I can't put that in my vehicle when that may not necessarily be the case. There are some things you can't put it in small engines, things like that. It's it, it's not acceptable for those items. You're seeing that more and more on some of those small items. But I think it's just a lot of it might be education related.
Morgan Seger (24:38):
So E 85 is 85% ethanol <affirmative>, and so E fifteens just 15%.
Belinda Puetz (24:44):
That's right. Correct.
Eric Adair (24:45):
Morgan Seger (24:46):
Just making sure I have my brain wrapped around all of this too as we go through it. Yeah. I remember E 85 coming out and your vehicle almost had to say it on the outside of, otherwise you were very nervous about it. So if, is there a general rule of thumb or how do people know outside of the small engines?
Eric Adair (25:07):
2006 or newer, I think is E 15, if I'm not mistaken. So any engine 2006, car engine pickup truck, gasoline engine 2006 or newer can run E 15.
Morgan Seger (25:20):
Eric Adair (25:21):
Yes. And E 85, I don't not believe that's true anymore. For E 85, it was for a while, they had flex fuel vehicles. <affirmative>, I believe. I'm not certain on this. I certainly would not wanna be held to that. There are newer engines today that cannot run E 85.
Morgan Seger (25:37):
Eric Adair (25:38):
Yeah. Typically they'll say flex fuel vehicles.
Belinda Puetz (25:44):
I think Eric's right. I think we preach for so long, E 85, you had to have a flex fuel vehicle. And I think now there's that perception that E 15, you need a flex fuel vehicle. And in reality, most vehicles on the road today, unless you're driving a classic car or the small engines that Eric talked about, you can run on E 15. So it's just that perception of mm-hmm <affirmative> of, Hey, can I do this? There are 125 branded CountryMark stations around the Indiana area they're in five states, and I believe it's about 40% are actually owned by our member companies. But all of them have a relationship with a member company. So when I got started, it was almost exclusively member owned stations. And when you have a refinery every barrel of crude oil is producing really almost equal amounts of gasoline and diesel fuel.
So we were always struggling with how to move the gasoline. Ceres Solutions, and the other members could sell all the diesel fuel we could ever refine. They could manage that. It was hey, what do we do with the gasoline? And so that it was at that point that we made a strategic decision and said, okay, well now the member companies will go out to rural communities and say, Hey, I see you own a nice looking station. Maybe it's branded Citgo or Valero or Shell or BP or whatever. Would you be interested in carrying the CountryMark brand? They sign a seven year contract and then they buy their fuel through Ceres Solutions. So it was a way for us to better use our refinery asset while still maintaining our relationship with our member owners.
Morgan Seger (27:38):
Okay. And this also might be a stupid question I have noticed on social media, people who seem to be like CountryMark fuel station die hards, is there something about the products there that work better? Is it a premium product or what draws that audience in?
Belinda Puetz (28:01):
Well speak a little bit to that and Eric will add anything that I missed there. But I think one of the best parts about being affiliated with Ceres Solutions and CountryMark is the fact that we're farmer owned. At the end of the day, we make product quality decisions that have to be approved by our board of directors. And so we go through those product specs with our farmer owners, and their point is, Hey, I'm running expensive equipment. I don't have the luxury of taking a day off during harvest to deal with plug fuel filters or any other issues. And so we do hold our fuels to a very high specification. Our diesel fuel has more detergents in it and a better detergency combination than anything else you will find in the marketplace. Our gasoline is top tier. It's a level that you don't have. You can sell fuel that's lesser quality. You can sell lesser quality gasoline.
But because we are so closely connected to our owners we make those fuel quality decisions. And that's why you do find a really almost religious following for our fuels. I love working trade shows where these farmers will come up and say, I've never put anything else in my equipment, but CountryMark fuel. These will be 60 year old farmers. And they'll be like, I've never bought anything but CountryMark fuels. Never have I had anything else on my farm. But, and to have that kind of loyalty, I mean, it holds people like Eric and I up to, it's like, okay, we gotta make sure every day we're on our best game, because I wouldn't want somebody who's been with us that many years to leave over something I did. So it's like, nope. Everything's gotta be to those levels to maintain that loyalty.
Eric Adair (30:05):
And I would say also that in an event that there ever is a problem CountryMark stands behind their product. And the fact that in our example, they sell to the cooperatives. Cooperatives turn around and sell to, whether it be a third party site or one that we actually own ourselves. It doesn't matter what site it's at, we will back that fuel up. So if there's a problem and we're involved with it, we stand behind it and CountryMark stands behind us and we've, Hey there, there's problems. I mean, hey, all companies have some issues. For whatever reason, some of 'em we caused had one just recently. We caused it ourself with a customer. We more, I would think if we interviewed that customer today, they are more than pleased with how we handled it, but we compensated 'em for the mistakes we made. And it's probably done nothing but strengthen our relationship. Hey, I don't wanna say we make many mistakes, but they do happen. And when they do, CountryMark backs us up. Also,
Belinda Puetz (31:05):
I think the other thing Eric is unique about the way we do business is we're a cooperative. When you're a privately held business and you're turning in your quarterly anticipated revenues and you've got stockholders who are sitting there going, Hey, I'm expecting you to make this amount of money this quarter, you make decisions based on, Hey, I really want to hit a financial goal by this quarter. Well Ceres and CountryMark are cooperatives. We're in it for the long run. So if we do stub our to, we do make a mistake. You fix it because you sit there and go, okay, our companies have been in business for a hundred years. What are we doing to make sure that these companies exist a hundred years from now? Not, Hey, will fourth quarter revenue hit projections. That's not our passion. I'll talk a little bit about, I'd also like to talk a little bit about another initiative that from a policy standpoint, that CountryMark is passionate about and love for the Ceres Solutions listeners to be aware of, and that's higher octane gasoline.
We have really looked at what's the best solution. Morgan, you talked earlier about, Hey, what fuels should I be buying? And as we're passionate about affordable fuels, reliable fuels and fuels that have the minimum impact on our environment, high octane gasoline is really such a huge win. If we could go from 87, most everything's going out the door as an 87 octane we've talked about, Hey, if we could move up to closer to a 91 or higher, if that became our base octane, when you combine that with what the engine manufacturers can do, we actually drop emissions significantly. And so our cars run with fewer emissions and we continue to maintain affordable fuels and reliable fuels. And so we've been really passionate. It's called 95 Ron is what Washington DC recognizes it as. And so we've really been passionate about, Hey, that's a solution that can be part of that energy transition.
So you've got states like California and New York who say, Hey, we're gonna sell nothing but electric vehicles by 2035. And we've said, when you make drastic changes like that, you have a significant hit to prices. And you also do really bad things to the small businesses in those states. I've tried to imagine if you're a car dealership in California, you're gonna get hit hard because they're gonna drive to Nevada or wherever else and buy a gasoline powered vehicle because that's what is affordable and reliable. So I just sit there and go, okay, I get it. If you as legislators want to have that energy transition, we'd sure love to see, Hey, let's look at what we can do on the gasoline side. If we'd look at higher octane fuels we can do a lot of amazing things with those products. I think it is that whole desire, if you're an elected official, to be able to say, Hey, I made a change.
I mandated all electric vehicles being sold in my state by 2035. I think it's that, Hey, I made a dramatic change. But for those of us who worry about affordability you sit there and go, ah, this is really, and we've been on multiple conference calls with major engine manufacturers. We're fortunate. Our CEO sits on the board of directors on the executive council for the American Fuel and Petrochemical Manufacturers Association. So that association has regular meetings with all of the engine manufacturers, and they're like, we could do that tomorrow. We can build those engines. So they run on a high octane gasoline, it'll cut emissions significantly. But they also have to do what Washington tells them. And they're like, we're being told that this is what we're going to build. And so it's saying, Hey, can our energy transitions be wise decisions? Can we say, okay, rather than go from maybe I think there's 2% of the vehicles on the road today, or electric vehicles, they're wanting these drastic changes.
They're saying, Hey, I'd like to be at 20% by 2035. Well, that's a pretty drastic change. It took us 20 years to get to 2%. And so it's like, Hey, can we continue to build, maybe put 2% more on the road every year? Meanwhile, also reduce the emissions of the gasoline that we're all using. Some other projects that CountryMark's working on looking at as a part of the energy transition is renewable diesel. That's a really interesting product from the standpoint it uses soybean oil, actually can use about any kind of fat or grease. In Indiana, we have more soybean oil than about any other kind of fat. It goes through catalyst process. So it's more like what we do with crude oil and it produces, it takes that soybean oil and the end product is now a diesel fuel that you can't tell the difference between it and petroleum diesel.
Today, soybean oil goes through what's called a transesterification process to make biodiesel <affirmative>. It's a very good product. It's only downside is it's got some winter operability issues, which we can manage. Ceres manages it, CountryMark manages it. We manage it through cold flow improves and chemistry that we add to it. But this renewable diesel technology is exciting because it takes that winter operability problem out of the equation. Downside is it's a little more expensive. So we're working on figuring out how to do it more economically. So that's one of our challenges. But we recognize there's gonna be transitions. We recognize that Eric and I will not be doing the same thing in 10 years that we're doing today. So we're sitting there going, okay, what does it look like for series in 10 years from now? So we're looking at things like renewable diesel, we're looking at the high octane gasoline. We're looking at renew digesters. Again we looked at 'em once before and didn't like the economics of it, but we'd love to look at it again. So
Morgan Seger (38:22):
Yeah. Do you see charging stations at your fuel stations?
Belinda Puetz (38:27):
Believe it or not, we do. As a matter of fact we've got four of them. We were part of a Volkswagen mitigation grant so we've got four of our stations that we'll be getting that are located on the highways. So those are getting electric charging stations if nothing else. We are excited about learning from the experience. So this is giving a farmer owned cooperative, the chance to get a electric charging station at no cost or a cooperative. And now we get to learn the economics. It's kind of getting a master's degree with on a scholarship, so to speak, <affirmative>. So we're hoping to learn from that. Right now, the economics are crazy. Those dispensers are $200,000 a piece. Wow. Yeah. Wow. And it is like a glorified socket, you know, got one in your wall. I'm point pointing to one on the wall, and I'm like, you want me to pay $200,000 so that we can charge two cars at the same time? It'll take 30 minutes to get it fully charged, but we'll have four of those, and we're applying for some additional grants to put more of them in. Hopefully, sir will be getting some of those as well. So
Morgan Seger (39:52):
Belinda Puetz (39:53):
Again, we want to learn from those experiences. We're like, okay, we want to add to that experience. I think we've come to the realization at CountryMark. We used to say we're an oil company, and we are very proud of that fact. Today we say we're a transportation fuels company. It's like, nope. If Ceres customers need these services we wanna make sure that we've got these products and services available for them. That'll be interesting. Yeah,
Morgan Seger (40:24):
<laugh> sounds to me like those fuel stations need to invest in kitchens and stuff to keep those people occupied for the 30 minutes it takes to charge their vehicle.
Belinda Puetz (40:34):
That that's been an interesting realization to get any of these grants. We can only submit our stations that have dining facilities, so it can be fairly simplistic, but it's gotta have a place where you can get a drink, a sandwich, have a place to sit for 30 minutes. So again, I think Eric brought it up earlier talking about the importance of partnerships, but it's like, okay, can we partner with somebody in our community who wants to open a Subway franchise? Or can we tack that onto our stations? Hey, Bob's gonna run the Subway franchise. We're gonna run the gasoline diesel fuel dispensers, and we're gonna learn how to run electric charging stations too.
Morgan Seger (41:26):
If we are consumers listening to this episode, how would you recommend they stay on top of all of these moving pieces you've talked about here?
Belinda Puetz (41:36):
That's a great question. And I know <laugh>, it is a challenge for it's a challenge, I won't speak for sir, but it's a challenge for CountryMark staying on top of that. Because not only are you doing your day to day, you're sitting there going, okay, how do we make sure that our gasoline and diesel fuel is as good as it can be? And oh by the way, how do we learn about, do we learn about renewable diesel, et cetera. So I think it is, it's looking for opportunities, whether it's customer meetings, making sure that you're part of these discussions. I would caution listeners, if you think that you're going to beat this whole energy transition concept, if you're gonna sit there and go, Hey, this is not gonna happen. We are not gonna do this. We are not going down this road. That may be an act of futility. I think at this point, there's so much momentum heading that way at this point. It's like, okay, if there is gonna be an energy transition, how do we make sure we're part of that discussion? How do we make sure that our voices are heard? And how do we make sure that the transition is gradual enough that it doesn't leave people behind?
Again, I think that's a company passion, and that's my personal passion, is how do we make sure that family that is struggling to put food on the table today, if you increase their energy cost, now they're putting less food on the table. And so I, I'm passionate about that and I wanna make sure that the Voices of Ceres and CountryMark are heard as policy makers are looking at those decisions. Can we create a transition that is slow enough, gradual enough, thoughtful enough that it reduces our environmental impact without causing people to go to bed hungry? <affirmative>,
Morgan Seger (43:42):
How does CountryMark make decisions that make their business maybe less profitable in an effort to meet these standards and expectations?
Belinda Puetz (43:54):
Absolutely, and I think that's also crazy. I mean, you think about where Eric and I were at the beginning of our careers, when we got started, it was our job to bring to our employers profit projects. It was like, Hey, if we take a position in Niles, Michigan and we make product available there, we're gonna make money. And the management team would look at it, they'd run the economics board of directors, everybody would look at it and go, yes, the economics match. This is a profit project. Yes, Eric, do this project. Nowadays. And CountryMark continues to have those profit projects. But now we also look at those projects and go, okay, what is going to reduce our environmental footprint? So if there comes a day that CountryMark is taxed for its carbon production we're gonna need those offset. So frankly, you look at renewable diesel and we lose money on renewable diesel, we lose money on manure digesters but as Eric pointed out earlier, we lose money on the renewable fuel standard. And so all of those things we recognize. So at the end of the day, we make our decisions on those projects saying, okay, does it still provide our customer with a product that's affordable, reliable, et cetera, and can it potentially offset any carbon taxes we may be charged in the future? So again, if we're in a denial state and say, oh, this is never gonna happen and then all of a sudden in 2024 they go, Hey, you owe another 10 million for your carbon taxes, then we're kind of in a bad position.
Again, in the case of renewable diesel, there's gonna be limited soybean oil available. So it's like, okay, we gotta get in there early enough. So we lock up contracts and say, okay, we wanna buy bean oil for the next five years. We want to secure this amount of supply so we can do these projects. Cuz if we wait until it's legislated we will be in a position where we will not be able to be able to do a neuro digester because all the livestock producers have an alliance with somebody else or the soybean oil has been sold to Marathon or Shell or whomever else. So it's an interesting time <laugh>, no doubt about that.
We could talk just a little bit about some of the decisions that have come out of Washington have had an impact on things like oil production. No surprise when Washington says, Hey, we want to see fossil fuels go away, we don't want these to continue. Obviously companies and investors are not investing in oil production and you wouldn't think in a small area like the Illinois Basin, which is where country market, all of their crude oil. It's Southern Indiana, Southern Illinois, and Western Kentucky. But it's even impacted US oil production is down in the Illinois basin because those outside investors have sure pulled out of the basin <affirmative>. So we're seeing a reduction in the amount of crude oil that we have to use, which is our feed stock. We are pulling more of it, ironically, from the Dakotas than we ever have before because we have no other choice.
The other impact that Washington's had on our country as a whole is the fact that again, when they make their decisions of, Hey, we wanna reduce fossil fuels, we've got 11 refineries that have gone out of business since COVID. So in just two years, 11 refineries and those refineries are charged with making gasoline diesel fuels. So now you're seeing a strain on the marketplace cuz there's just less gasoline and diesel fuel to go around. So there's just a number of challenges. So I just keep coming back to the whole concept of we need a good transition plan. I don't think anybody at country Mark as opposed to saying, Hey, we get it. We need more energy sources. We, we've got a growing population, more and more people on the planet every day but just cutting out fossil fuels doesn't help farmers in Indiana or any place else, you know, sit there and go, no, we need more energy, not less energy. So a lot of things that we could do to make better decisions that look at a wise transition planned to get us to where we wanna go.
Morgan Seger (49:07):
Would you say there are actual shortages right now? Is that what's causing the prices to go up?
Belinda Puetz (49:12):
Absolutely. Absolutely. Yeah, a hundred percent. Yeah.
Morgan Seger (49:15):
Do you notice consumer purchases decreasing when the prices are up like this? Or are they maintaining?
Eric Adair (49:22):
We have not hit breaking points. I'm gonna say, yeah, I don't believe mean that could be coming <affirmative> with what the federal reserves doing. So we go into recession. Obviously some of that would definitely decrease that, but there's probably a lag there. Also. I remember when gasoline went over $4 back in about 2010, 12 maybe timeframe, and there was a noticeable impact at that time on consumers <affirmative> and how much they were driving. Huge. Yeah, we have not hit that threshold yet. No. Even at the five, I don't know what the highest we got. $5 might have been, right. At least around here, I've not seen, we Ceres has not seen a slowdown, really.
Belinda Puetz (50:09):
Member demand for gasoline and diesel fuel year to date is up 3.4% <affirmative>. And you look at national figures gasoline consumption is down, diesel consumption is down. So we are seeing a contraction on the macro side of the business, but to Ceres' credit. They continued to provide a really good service and it also helps that we work with businesses that are more recession proof than some are <affirmative> it. We've been blessed to still be able to serve our customer base
Eric Adair (50:50):
And Covid affected some of that for sure, where the farm side, you would never have noticed Covid even existed. For the most part. They still farmed <affirmative>. They didn't stay in a house. No. So it didn't really impact our fuel sales a whole lot.
Morgan Seger (51:06):
But it sounds like there is a breaking point for consumer
Eric Adair (51:10):
And there was before. Yeah, I do know now if you put that on a net present value adjustment basis, I don't know what it's gonna be. $6 a gallon gas versus 2010 maybe. I absolutely believe there's a breaking point. Yeah. And plus there is probably truth that people were cooped up so long with Covid and they're going, they're getting out no matter what <affirmative>. So the consumer's stronger. I mean, nobody denies that. Jamie Diamond has just said it the other day. Yes. The consumers are still relatively flush with cash. They don't have a, the credit card levels are not as high as they were at pre covid. So we're still not back to those levels. So right now that kind of explains why people are still driving around, I think. Gotcha. But it is a huge drain. These high fuel prices on the economy, <affirmative>, and I think it will, that's my belief. I think it will catch up.
Belinda Puetz (52:03):
It is the industry is strained. So when you've got less crude production and you've got less refinery production, anytime any of these manufacturing units have any kind of hiccup, the market, the community, I say the community, the region will just, it panics. And I mean it spikes before, back in five years ago, if there was a refinery fire or there was
Eric Adair (52:39):
Belinda Puetz (52:40):
A hurricane, you know, might see some, I mean, but it had to be fairly dramatic. It'd be like, hey, bps got a unit that went down. It'd be like, eh, okay, that maybe prices go up couple cents or whatever. Now it's like anybody has any kind of hiccup, hurricane's even coming anywhere close to the car.
Eric Adair (53:03):
I had come in by New Orleans where the refiner's are at and stuff. I can't imagine what diesel prices and gasoline would've gone to this year. I think they would've been astronomical increases because we're so short on fuel.
Belinda Puetz (53:19):
There's no cushion.
Eric Adair (53:21):
It is like Bruce was here earlier, you know, would not believe how many phone calls he has gotten. Now they've slowed down some where these companies are so worried farmers that they were not gonna have diesel fuel this fall going into this winter <affirmative> and how they could secure some supply. We had big companies that called and said, Hey, how big are your storage tank? I mean, they wanted to know we had 3 million gallons of storage or something. We don't
Morgan Seger (53:47):
Have that. So is there some level of security for sir customers by partnering with Country Mark?
Eric Adair (53:55):
Absolutely. I told 'em a hundred. I absolutely, I said one, by having a partnership with Country Mark and I s, and I said this to, it was a pretty good size company too. And I specifically said this to the person. I said, listen, all I'm telling you is you talk to any of your other suppliers, ask any of those suppliers, do they own the refinery? And I'm gonna tell you right now what their answer is gonna be. No. So we have direct ownership of country Mark's sole purpose is to supply their members. I mean, that is a promise they have to us, right? Assured supply. It's in their statement. And that's one of their promises they have to us. They control their crew intake, they control their own pipeline. It's not somebody else's. And they will cut off outside individuals before they cut off the numbers. So I felt very, very confident telling our customers. I believe that, I mean, hey, there's always disasters that can happen, but borrowing any disaster, I believe if there's a shortage, we are the most likely company to be able to provide you your fuel.
Morgan Seger (55:03):
Eric Adair (55:03):
That's because of country market.
Morgan Seger (55:04):
You don't wanna have to rely on that, but it is just one of those ads. Don't
Eric Adair (55:08):
Rely on that. Yeah, it would create, I mean even, hey, you would think that's a good thing. It's not a good thing. Cause one country market's gonna price. People ask this, they say, well, if you got drone supply and stuff like this, why would Country Mart not be way cheaper? They have to price with the market. If they were 50 cents under the market, they would run out. They'd run of fuel. I'd have, we <laugh> would have more customers than we could serve it. I mean, hey, it gets back to supply and demand. That is not realistic and it's not real life. We can talk about that as an option. It's not. So even if you think that'll be a it would help us, it wouldn't. It hurt
Morgan Seger (55:45):
Us. Thank you so much for being on the podcast. Thank you for
Eric Adair (55:48):
The invitation. Oh, thanks Belinda.
Morgan Seger (55:50):
Yeah. As we wrap up this last episode, what sticks out to you?
Eric Adair (55:57):
Oh, I think what sticks out to us is the great products and services that Siri Solutions has with coupled with their partnership to offer our customers. We are, I believe, very visionary. We are proactive in trying to think about what our customers and the futures want and are also gonna need. And I just feel like Ceres financially from an employee standpoint will be and continue to be the co-op of the future that's gonna meet our customers needs and wants. I feel very fortunate about that. That's not always been the case for some cooperatives, but Ceres is in a great place and I think we are very driven to meet those needs and we are 100% interested in our customer base and employee base, and that makes me proud to work
Morgan Seger (56:54):
Here. I see that come through in all the conversations that I've had and I think that that's really, really powerful. Thanks for tuning in to another episode of Field Points. If this is the first episode you listened to in our energy series, I encourage you to go back and listen to the two previous episodes. We had Bruce Richmond on to talk about managing risk in today's energy markets and John Leadon who walked us through how they're leveraging technology in the LP business. The show notes for this episode will be available at ceres dot c e r e s dot c o o p. If you enjoyed this deeper dive, be sure to subscribe and leave us a review. Your review and feedback will help other listeners like you find our podcast and we are so thankful for that.