Gas prices spur E85 expansion

Alternative power looks to be a more attractive option for consumers looking to save money at the pumps in Michigan. The price of ethanol across the state is $2.15 a gallon, up two pennies from a week ago, but still cheaper than the $2.27 average for conventional gasoline, according to AAA of Michigan.

This comes a day after General Motors Corp. said it is partnering with the state of Colorado to build 40 new E85 ethanol fueling stations in the Rocky Mountain state.

"Ethanol is essentially a substitute with conventional gasoline already," said Pavel Molchanov, energy analyst with Raymond James in Houston. "They are cost competitive, once the federal tax credit is taken into account. We feel that as oil prices begin to rebound then the economics of ethanol relative to gasoline should get better."

E85 is a mixture of 15% conventional gasoline and 85% ethanol. All passenger vehicles sold in the United States can use the E10 blend of gasoline, which is 10% ethanol and 90% gasoline.

In Michigan, ethanol is gaining momentum as a viable alternative to conventional gasoline. There are three stations already pumping out ethanol with one currently under construction.

Meanwhile, Gov. Jennifer Granholm recently announced plans to build 1,000 ethanol and biodiesel pumps across Michigan by the end of next year.

Nationally, there are over 100 ethanol refineries online and nearly as many under construction, according to www.e86fuel.com. In addition, the site says there are more than 1,100 ethanol fueling stations across the country, which is still a small portion of the estimated 170,000 gas stations in the United States.

A story in the Free Press online version on Thursday incorrectly said there was one ethanol plant operating in Michigan and there were about 800 E85 fueling stations across the country.

Nevertheless, E85 ethanol-powered vehicles have grown in popularity and have become a bigger part of the fleets of the domestic automakers. There are around 6 million flexible fuel vehicles on U.S. roads today.

"Right now, ethanol is a bargain when compared to gasoline," said Jim Rink, a spokesman for AAA Michigan in Dearborn.

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