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Apr. 25, 2011 Des Moines Register reports: Ethanol producers are lobbying Congress for incentives to get consumers to fill up on higher blends of the biofuel. But the relatively slow sales of E85 even in the Midwest show motorists whose vehicles can use ethanol often don't buy it, critics say. E85, a blend of 85 percent ethanol and 15 percent gasoline, was seen as a promising way for the industry to boost its market share. But the fuel is supposed to be burned only in cars or trucks especially equipped to run on ethanol, and most of those vehicles on average use just a few tankfuls a year in states such as Iowa and Minnesota where the fuel is the most available. "Even in states where E85 pumps are concentrated, actual sales of E85 have been stagnant," Shane Karr, a lobbyist for the auto industry, told a Senate committee this month. Cars and trucks get significantly poorer mileage when using E85 - about 25 to 30 percent less, according to the government - so sales typically fluctuate according to swings in gasoline and ethanol prices. The bigger the price spread between gasoline and E85, the more likely motorists will opt for E85. When the spread narrows, E85 sales drop. "It's hard to get any consistency in E85 sales," said Rick Cummings, vice president of CHS Inc., which sells E85 through 290 Cenex dealers in the upper Midwest. Automakers are fighting legislation sponsored by Sen. Tom Harkin, D-Ia., and others that would require all automakers to ramp up the production of ethanol-capable, "flexible-fuel" vehicles. Only 8.2 million of the 250 million vehicles now on the road can run on higher grades of ethanol, and they are mostly Chrysler, General Motors and Ford products. The number of ethanol vehicles increases about 10 percent a year. Under Harkin's bill, 90 percent of all new cars and trucks would have to be ethanol-equipped by 2016. Mandating ethanol-equipped vehicles could cost consumers as much as $2 billion and do little to reduce oil consumption unless motorists "actually use biofuels in a significant quantity," said Karr, who is vice president of government affairs for the Alliance of Automobile Manufacturers. Minnesota has by far the most E85 stations with 365, more than twice as many as No. 3 Iowa, but sales of the fuel there slid from 22.5 million gallons in 2008 to under 16 million in 2009 as the price of wholesale gasoline fell below that of ethanol. Minnesota's E85 sales rose to 16.6 million gallons last year, according to the American Lung Association in Minnesota. Minnesota has an estimated 225,000 flex-fuel vehicles, the group says. Iowa had its best year ever for E85 sales in 2010, at just over 10 million gallons. Sales had fallen in 2009 to 5.9 million gallons from 7.7 million in 2008, according to the Iowa Revenue Department. Iowa has 169,000 flexible-fuel vehicles, according to the Iowa Renewable Fuels Association, so last year's E85 sales averaged about 59 gallons per car or truck. When the price of oil and gasoline plunged starting in 2008, sales of E85 also dropped, said Robert Moffitt, a spokesman for the lung association's Minnesota clean fuel program. "As gas prices go up, the price break between E85 is more attractive and a lot more drivers start to use it." In the Minneapolis-St. Paul area this past week, Holiday stations were selling E85 for about 20 percent, or 75 cents a gallon, less than regular gasoline. At some Kum & Go stations in Iowa, E85 was selling for around 90 cents less. Knowing that the volatility in E85 sales can discourage dealers from offering it, Monte Shaw of the Iowa Renewable Fuels Association urges them to install so-called blender pumps, which can dispense a variety of mixtures, from ethanol-free gas to E30 or E85. Many Cenex stations already are switching to blender pumps from the less expensive E85-only dispensers, Cummings said. Blender pumps are a tough sell, though, given it can cost stations as much as $120,000 to install the necessary equipment. The Agriculture Department is offering grants and loans to entice stations in rural areas to install up to 10,000 of the pumps. But Harkin's bill would go much further, requiring major fuel distributors to start installing the pumps at their stations. Kum & Go, which is the largest E85 retailer in Iowa, declined to discuss its E85 sales or marketing plans. "Since the mid-1970s, Kum & Go has been a leader in distributing biofuel to our customers. Due to increasing consumer demand, we have added more E85 locations," Randy Meyer, the company's vice president of fuels, said in a statement. Tweet |
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