Gary Howey loves his 2006 F150 super-cab flex-fuel pick-up truck. He fills 'er up with E-85 -- a fuel that's just 15 percent gasoline and 85 percent ethanol -- as often as he can find a pump. The truck can also run on regular unleaded gasoline.
Howey, of Hartington, Neb., travels about 26,000 miles a year throughout Nebraska, South Dakota, Iowa and Minnesota producing an outdoor show for television. He's usually pulling a boat or an ATV on a trailer. For him, the flex-fuel vehicle, or FFV, and the fuel it burns are business expenses. He chooses E-85 for the cost savings.
Corn-based fuels and the cars and trucks that run on them are in the national spotlight. President Bush is pushing for more ethanol and other home-grown fuels. Iowa Gov. Chet Culver plans to create tax incentives for drivers who buy FFVs. And Bill Forsling, manager of new car sales at Knoepfler Chevrolet, said the company sold nearly 250 FFVs last year. Not only are ag supporters asking for them, but veterans returning from Iraq want them, too, saying they'd rather support Iowa corn than Middle East oil.
Even as lawmakers map out incentives to buy FFVs and fill them with E85, obstacles stand in the way:
-- E85 is not readily available, even in the corn belt.
-- While E85 costs less per gallon than regular gas, its fuel efficiency delivers 15 to 23 percent fewer miles per gallon than E10 or regular unleaded gas.
-- Despite state incentives to install E85 fuel pumps, some station owners are concerned about the high cost of installing the appropriate equipment and about possible environmental and property damage liabilities. One station owner even quit selling E85.
Those concerns don't damper Howey's enthusiasm, however.
"Flex fuel (E85) is unbelievably inexpensive compared to regular gas. There is a little difference in gas mileage," he admitted, "but performance-wise I don't see a difference."
Those with a stake in the E85 industry say they're working to overcome the obstacles, but that won't happen overnight. And, time itself will help the market to grow.
Why so few outlets?
Howey, whose truck is one of 6 million flex fuel vehicles sold in the U.S., said he doesn't have much trouble finding E85 as long as he sticks to the interstates or to towns where co-ops' gas stations sell it. But his experience is a bit unique, even in the Midwest.
Of the 170,000 gas stations in the United States, just 1,138 of them sell E85. And nearly a quarter of those are clustered in Minnesota alone. Iowa has 60 stations, South Dakota has 54 and Nebraska has just 29 stations selling E85 or planning to soon make it available, according to the National Ethanol Vehicle Coalition.
Of course, there's no way to know how many of the 6 million FFVs on the road use E85, but likely not many, or at least not often, given its limited availability. Culver said 45 percent of the country doesn't even have E10 yet.
In Iowa, most of the E85 pumps are in rural areas. Sioux City has none. Its nearest sources are in Sergeant Bluff, North Sioux City and Hinton, Iowa.
There are other practical and legal reasons for the sparsity.
Scott Mulder started selling E85 at his Sinclair gas station in Orange City, Iowa, 18 months ago, wanting to support the young industry. "I didn't learn until six months later that the DNR had a problem with it," Mulder said. He then took E85 out of his station.
"For me to get a system the DNR would accept I'd need new pumps, new lines and there's a question whether my tank would be acceptable," said Mulder, a six-year board member of the Petroleum Marketers and Convenience Stores of Iowa, a trade association that is paying considerable attention to E85 issues.
Retailers such as Mulder estimate it would cost between $50,000 and $80,000 to install the new tank and dispenser needed for older stations to sell E85. Costs could be considerably lower for stations with newer underground tanks, depending on their composition.
A leak is much more likely with older tanks, Iowa Department of Natural Resources spokesman Kevin Baskins, explained. The soft metals such as zink, aluminum and brass, and some nonmetalic materials such as rubber and polyurethane adhesives commonly found in conventional tanks and dispensing systems corrode much more quickly under the higher alcohol content of E85.
And, Baskins said, because ethanol blends with water, an underground plume of leaked E85 would be even harder to contain and clean up than one of gasoline.
The DNR has issued E85 infrastructure and testing guidelines in conjunction with the State Fire Marshal's office. All of the equipment, from tanks to 0-rings, must be compatible with E85; some parts must be approved by Underwriters Laboratory, or UL; and testing for water must be done on a set schedule, among other requirements.
One big piece retailers are waiting for is a UL approval dispenser, (commonly called a gas pump, although the actual pump nowadays is in the underground tank).
UL graduate engineer John Drengenberg said the lab has made E85 equipment "a very high priority" for public safety and environmental reasons, although industry requests for it came only recently.
It's a long journey from determining criteria for the parts to testing manufacturers' products, he said, declining to say how long it might take.
UL held a forum of industry experts a few months ago to collect known data. It will soon begin "harvesting" and studying ethanol dispensers from Brazil and Sweden, where high-ethanol fuels have been in use for much longer than in the United States.
Another liability concern for retailers is that unwitting motorists will see the lower price of E85 and automatically fill up with that, despite not having a flex-fuel car. E85 won't ruin the engine, said Sam Silacci, the service manager at Knoepfler, but it will damage the oxygen censor and perhaps other parts, too. He seen a couple of those towed in for repairs.
Some stations have an E-85 warning on the filler handle, warning drivers to be sure theirs is a flex-fuel vehicle.
Show me the money
In addition to infrastructure costs and liability concerns, most retailers won't stock E85 unless they can make a profit.
Mulder, who also wholesales ethanol through another business, said in addition to the cost of getting into the E85 business, there is little or no profit in it right now after taxes, insurance and delivery costs, despite the government's 50-cents-a-gallon subsidy for unblended ethanol.
He said coop gas stations will carry it at break-even prices or even take a little loss to show support for their corn-grower members, but few independent retailers will. Jim Harskamp, who manages the Coop Gas & Oil station in Sioux Center, Iowa, agreed.
"You probably break even with the price when all is said and done," he said. But he said he thinks the state legislature is on track, using various incentives to grow the sector.
The Cenex Ampride gas station in Hinton, Iowa, also sells E-85. Roger Price, general manager of the Farmers Cooperative Co., which owns the station, said the switch to E85 there was "relatively simple." Largely because the gas station was new, it involved changing only a few mechanical parts. He substituted E85 for the super unleaded and sales at those dispensers doubled.
"The problem is, the volume (15 percent of sales right now) isn't enough to pay the fixed costs," Price said. "You've got to have a threshold of gallons to cover the fixed costs. We expect to get there. But it isn't there today.
"What drives E85 sales more than anything is the spread between E85 and the regular unleaded gasoline." Price said ethanol's price is high right now because of the huge demand for it as a gasoline oxygenate, helping gas burn cleaner. As more ethanol comes onto the market over the next three years or so, he predicted E85 will have a better chance to compete head-to-head with gasoline.
Although ethanol gasoline blends had their start in the early 1970s as "gasohol," then died out quickly, Price believes today's ethanol is a much better product and is here to stay.
"There's too much momentum," he said.
http://www.siouxcityjournal.com/articles/2007/02/11/news/top/d9d9c9ce23e75ad28625727f0015e7c6.txt
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