How far would you drive to save eight cents a litre on petrol? The Quzhou Automotive Transport Group is betting that Zhejiang’s drivers are willing to go far enough to give their petrol stations the edge over those of Sinopec. The secret: lower priced ‘methanol fuel’.
Sinopec has traditionally dominated Zhejiang province’s wholesale and retail markets for fuel, so the new technology offers a new opportunity for small petrol station operators.
The new type of petrol is actually a blend of 85% regular gasoline (bought wholesale from Sinopec), and 15% methanol. The government is trying to promote the technology, which it says has less than half the harmful emissions of regular petrol.
To give sales a boost, the NDRC has set a lower price for methanol fuel than comparable grades of regular petrol. The aim is to create an incentive for price-sensitive drivers. “A driver told us that by using methanol gasoline he could save more than [$1.47] per day,” one methanol fuel company employee told China Business News.
That won’t be welcome news at Sinopec, and an employee hinted to the magazine that it wasn’t above slashing prices to compete with the upstarts: “Some [Sinopec] gas stations, in order to gain market share can reduce the price of regular gasoline by [4-6 cents] per litre.”
China gets its methanol mainly from coal. The process of blending it with petrol is not easy. Methanol is slightly acidic and too much in the blend can corrode aluminium engine parts. But Sapphire Energy Technology, the company that developed the fuel used in Quzhou Automotive’s stations, says it has spent 10 years perfecting its mix. And that it actually cleans rust out of engines.
So why doesn’t Sinopec make the same offer? Reportedly it’s waiting to see how well the new fuel works. That may turn out to be wise. Earlier this week, China Business News reported that 10,000 cars had already needed to be repaired because of damage caused by methanol-blended petrol in Henan province.
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