MADISON, Wis. -- Wisconsin Governor Jim Doyle said earlier this month that ethanol-based fuel is not subject to minimum markup law enforcement and directed the state's Department of Agriculture, Trade & Consumer Protection (DATCP) to not pursue any actions against sellers of ethanol-blended fuel.
Wisconsin is emerging as a leader in ethanol and other renewable fuels, and we need to build on that momentum, Doyle said. I want to send a clear message to producers and consumers of ethanol that the state of Wisconsin will not do anything to artificially [image-nocss] drive up the price. More and more drivers are turning to ethanol-based fuels because they are cheaper, and that is a trend we want to continue.
The minimum markup law sets a minimum price at which motor fuels can be sold in Wisconsin, but makes no distinction between fuel derived from petroleum and fuel derived from ethanol. Doyle said this has the effect of artificially inflating the cost of ethanol-blended fuels such as E85 and E10. Ethanol is selling wholesale at $1.37 a gallon (accounting for a federal ethanol tax credit), while the price of petroleum is $2.60, he said.
The move came hours after Doyle's Republican opponents ripped a DATCP investigation into complaints a Monroe, Wis., ethanol station run by the Badger State Ethanol Coalition was underselling its product, said the Associated Press.
U.S. Rep. Mark Green, a Green Bay Republican challenging Doyle in November, issued a statement hours earlier saying if he were governor, he would call DATCP off the probe. State investigators should have better things to do than stopping gas station owners from selling cheaper fuel to Wisconsin motorists, Green said.
Doyle spokesperson Dan Leistikow scoffed at the notion that the order came in response to Green's statement. We don't pay attention to his press releases, Leistikow said.
But Doyle's order allowing stations to sell ethanol blends below the state's minimum prices won't mean much at the pumps, gasoline industry observers and experts told AP. The governor's order doesn't change the wholesale price of gasoline, which retailers must pass on to consumers to make up their expenses, said Bob Bartlett, president of the Wisconsin Petroleum Marketers & Convenience Store Association.
I'm sure it does sound good. Everybody would like to get energy at less cost, and that includes Wisconsin's independent retailers. What this doesn't recognize is the actual cost those retailers have to pay to get the products, Bartlett said.
The 1930s-era minimum markup law requires wholesalers to charge stations at least 3% more than they paid. Gas stations in turn must tack on at least 6% more at the pumps.
Jim Kemerling, president of Risser Energy, Wausau, Wis., which owns about 25 stations in central Wisconsin and supplies fuel to another 58 independent operators, said Doyle's move could create more demand for ethanol and drive its price up. And without the minimum markup in place for ethanol blends, big companies can drive small stations out of business by underselling their competitors and absorbing the loss, he added.
That is about the only impact ([he governor's order] has, he told AP.
Meanwhile, in the wake of his order to suspend enforcement of the minimum markup law on ethanol, Doyle renewed his push for a key proposal to double the number of E85 pumps in Wisconsin.
Making sure ethanol remains more affordable than petroleum is a good first step, but we also need to make sure that consumers can have access to ethanol based fuels like E85, he said. I urge the Republican legislature to reconsider my plan to double access to E85 in Wisconsin by providing incentives to station owners to offer this cheaper renewable fuel.
In March, Doyle launched the Promoting Our Wisconsin Energy Resources (POWER) Initiative to promote energy independence. On June 21, Joint Finance Committee Republicans rejected a vote to provide $335,000 to fund POWER Initiative projects that would increase the number of E85 fueling stations, increase use of E85 in local government vehicle fleets and promote the use of E-85 fuel. Grants totaling $175,000 would have been distributed to local gas stations to install E85 pumps.
Currently, there are only 35 stations with E85 pumps in Wisconsin. The governor's proposal would have more than doubled that number, funding at least 35 additional stations.
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