CORAL GABLES, Fla. -- Even as Florida Gov. Jeb Bush stresses the importance of the United States and his state to become less dependent on foreign oil, Iowa state officials say gas-station operators are not burning a path to take advantage of new state incentives to help install pumps that offer motorists fuel blended with 85% ethanol, a product they say is a slow seller due to a low number of flex-fuel vehicles.
On December 18, Bush launched a commission to push for the use of ethanol throughout the United States, Canada, Central America and [image-nocss] South America. Bush was promoting the Interamerican Ethanol Commission, which aims to educate governments about the alternative fuel source and to push for combined research efforts in the region, according to a report in the South Florida Sun-Sentinel.
At a gathering of business leaders in Coral Gables, Fla., Bush suggested that increased use of ethanol could help ease gas shortages caused by storms in Florida. Wouldn't it be nice to have alternative sources of fuel during hurricanes? he said after a ceremony marking the creation of the commission. My thinking has been shaped forever by eight hurricanes in two years.
Referring to Venezuelan President Hugo Chavez, Bush said he was concerned about relying on unstable or unfriendly nations for oil. What happens if the tyrant in Venezuela decides to turn the spigot off? he said.
Ethanol is an alternative fuel that can be produced from crops including corn and sugar cane. It is mixed with gasoline in different ratios. Ethanol has received a lot of attention in public policy circles as gas prices have pinched consumers' pocketbooks in the past two years.
However, Iowa Economic Development Board members were told December 21 that only 24 state grants totaling about $650,000 have been awarded so far under a $13 million program that provides state matching funds for deploying pumps to dispense E-85 or bio-diesel fuels, according to a report in the Iowa City Gazette. The incentive program was designed to help the state eventually meet a statewide renewable fuel standard.
Dawn Carlson of the Petroleum Marketers and Convenience Stores of Iowa said there is reluctance to make a commitment of capital and space for the specialized pumps right now because of low and miscalculated demand factors.
"This legislation that was enacted this year was based on some false facts. There are not 100,000 flex-fuel vehicles in the state of Iowa, there are only 55,000 flex-fuel vehicles. So we've got a lot of growing to do yet before that demand for E-85 increases," she said.
"We've got people that have put in E-85 already who have taken it out because people aren't buying it," Carlson added. "There's just so much uncertainty with E-85 right now."
Because of that, a separate state panel that oversees the renewable fuel infrastructure program had recommended that businesses awarded the grants be allowed to be waived from contract requirements after three years. Waivers granted prior to that would be subject to returning state matching funds and possible penalties.
However, Economic Development Board members worried that pumps subsidized with public funds to expand renewable fuel opportunities would be used for other purposes if the requirements were automatically waived after three years. The board voted to expand the time frame to five years under program rules, and Rep. Phil Wise, an ex-officio member, said he suspected lawmakers likely would revisit the issue next session.
"When we're putting out this amount of public dollars, we want to make sure that there is accountability," Wise said. "We are trying to incent the production and marketing of bio-fuels. We don't believe that people should be able to receive state dollars to do that and then back out of that after a brief period of time."
Mike Blouin, director of the state Department of Economic Development, said renewable fuel pump installation is being hampered by an imbalance between supply and demand. That situation could be improved if Gov.-elect Chet Culver succeeds in getting a proposed new state tax credit for Iowans who buy flex-fuel vehicles enacted next legislative session.
"The concern among the gas station owners is: Where's the beef -- the beef being the cars that burn E-85," Blouin said.
"They've got to have buyers for their fuel or they're taking up limited pump space on something that isn't going to move," he added. "So it's going to be ugly for a few years. I just think it will be as you try to get supply and demand in balance. But it will come, too much depends on it."
Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.