RICHMOND, Va. -- Aggressive lobbying paid off for gasoline dealers and the oil industry Wednesday as the Virginia General Assembly rejected Governor Timothy M. Kaine's proposal to extend statewide the use of ethanol, reported The Richmond Times-Dispatch.
Kaine's ethanol mandate was among the changes he proposed to a state energy bill, sponsored by State Senator Frank W. Wagner (R). Wagner's bill passed both houses of the legislature by wide margins, said the report. His new proposal stripped out the statewide ethanol requirement.
Gasoline dealers and the oil companies were caught off guard last week, according to the report, when Kaine proposed expanding the use of gasoline containing 10% ethanol. Under federal mandates, stations already are starting to sell gasoline mixed with ethanol in the Richmond, Hampton Roads and Northern Virginia areas, where air pollution is a problem.
Kaine had wanted to extend ethanol statewide to promote construction of an ethanol plant there. Under his proposal, ethanol gasoline would have been required statewide once production of the grain alcohol in Virginia reached 300 million gallons a year. Fuel distributors, however, warned that an ethanol mandate could cause disruptions in parts of Virginia that import fuel from surrounding states where ethanol is not required, the report said.
Delacey Skinner, Kaine's spokesperson, said the governor would have preferred that the provision remain in the bill, but Kaine was pleased that his 38-page version of an energy bill was passed with only a few changes.
Mike O'Connor, president of the Virginia Petroleum, Convenience & Grocery Association, told the newspaper that his group and others opposed to Kaine's proposal had lobbied lawmakers and held productive talks with Kaine's office last week. His group supports renewable fuels, but believes an ethanol mandate is premature, O'Connor said. Ethanol use should increase over time outside the state's urban areas with congressional requirements for its expanded use, he told the Times-Dispatch.
Meanwhile, critics of a proposed mandate in Missouri for ethanol-blended gasoline said state lawmakers' efforts to promote the alternative fuel could do more harm than good, the Associated Press reported.
Doug Beach of Casey's General Stores, Ankeny, Iowa, told members of the state Senate Agriculture Committee on Wednesday that the chain sells more ethanol than anyone else in Missouri because it believes it is good for everyone. But he questioned the wisdom of a bill that would require most gasoline to contain a 10% ethanol blend (E10) beginning Jan. 1, 2008, so long as the price to retailers is the same as or cheaper than traditional gasoline.
Beach said lawmakers should be finding ways to persuade gas station owners to choose to sell ethanol rather than forcing them to do so whenever the price of the ethanol fuel is a good deal.
He also noted that a provision in the bill (HB1270) would make it more difficult for retailers to get the type of gasoline they generally have used to make ethanol blends, forcing them to use more expensive types of fuel. He said that would discourage retailers from using ethanol blends when not required to do so. You may actually sell less ethanol in this state than you do now, Beach said.
Senate committee members voted six to two to send the ethanol mandate to the Senate floor. The House passed the bill earlier this month. If Missouri adopts the mandate, it would become the fourth state to require an ethanol-blended fuel, following Hawaii, Minnesota and Montana.
Leaders in the Missouri House and Senate as well as Governor Matt Blunt have said establishing an ethanol mandate is a legislative priority for the 2006 session. Supporters, including most House members, say the requirement is an important tool for helping the state's existing ethanol plants, improving rural economies and reducing gasoline prices.
Terry Hilgedick, a farmer who is president of the Missouri Corn Growers Association, said the requirement would be a boon for farmers and rural areas at no cost to consumers. This will not raise prices at the pump; it cannot raise prices at pump. That's a guarantee you can take to the bank, he said.
John Felmy, an economist for the American Petroleum Institute (API), said there should be subsidies and incentives to sell ethanol rather than requirements. We completely support the use of ethanol, but one has to look at what it's role can be, he said.
The tanks used to store the ethanol that is brought to stations are specially designed for that purpose and typically are not used to store anything else.
Felmy said a mandate that is only in effect at certain times would create a mess for distributing gasoline and ethanol to stations.
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