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Ethanol exec: Demand for renewable fuel is climbing
Indiana Correspondent

FORT WAYNE, Ind. — Prices for E85 are higher than some expected, but that shouldn’t discourage gasoline retailers from offering the product, according to a representative of the National Ethanol Vehicle Assoc.

“Demand for ethanol is high right now, and that’s keeping prices up,” Bob Raffety said. “It’s a supply-and-demand issue. As our supply catches up with the demand, the prices should go down.”

Raffety spoke March 21 at an E85 Workshop in Fort Wayne, one of four scheduled across the state. The Central Indiana Clean Cities Alliance (CICCA) sponsored the Fort Wayne event, along with one last month in Indianapolis, and one scheduled for April 27 in Jasper. A fourth is scheduled for Michigan City.

E85 is a blend of 85 percent ethanol and 15 percent gasoline.

Nationwide, 32 ethanol plants are under construction, and eight existing plants are being expanded, Raffety said. Currently, 97 operational ethanol plants produce 4.44 billion gallons a year.

Once construction and expansion of current projects is complete, total capacity will be 6.48 billion gallons, with a minimum capacity of 7.5 billion gallons projected by 2012. Use of ethanol and other alternative fuels diversifies the U.S. energy portfolio and makes America less vulnerable, said Belinda Puetz, director of marketing with the Indiana Corn Marketing Council.

“There is growing consumer interest in reducing our dependence on foreign oil,” she said. “And the growing number of flexible fuel vehicles makes E85 more marketable. Retailers will be able to differentiate themselves in the market.”

In Indiana, 23 stations currently sell E85, said Kellie Walsh, CICCA executive director. A total of 36 are expected to offer it soon, she said.

“Given the corn crop in the state, E85 is the most practical alternative fuel for Indiana,” she said. “Once the supply comes up, hopefully the price will go back down.”

Ethanol production has increased steadily since 1999, Puetz said. In 1999, 1.47 billion gallons were produced nationwide, and by 2004, that number had increased to 3.41 billion gallons. About 4 billion gallons were produced last year.

According to projections, about 1.5 billion bushels of corn, or 14 percent of U.S. corn production, will be used in ethanol for the 2005-06 crop year, Puetz said. In the 2004-05 crop year, 1.325 billion bushels were used.

“We’re not close to realizing our full potential,” Puetz said. “There’s a tremendous opportunity for growth.”

In addition to reducing the nation’s dependence on foreign oil, ethanol also burns cleaner, Raffety said. E85 reduces ozone-forming pollution by 25 percent, he said.

The goal of the National Ethanol Vehicle Coalition is to promote E85 and to promote the introduction of flexible fuel vehicles, he said.

Retailers interested in selling E85 will have to make some changes to their stores, Raffety said. Storage tanks must be cleaned, and must be steel or double-wall fiberglass, he said. Tanks cannot have any sediment or moisture.

Fill caps must be tight fitting, and dispenser hoses must be Teflon coated, he said. The nozzle and fittings must be stainless steel or nickel-plated.

Retailers must be especially careful to educate consumers that E85 is for flexible fuel vehicles only, he said. If someone inadvertently puts E85 in a non-flexible fuel vehicle, it won’t cause problems unless used long term, Raffety said.

The goal of the workshops is to get information on E85 to retailers, Walsh said.

“When people leave, I want them to have all the answers and all the knowledge to make decisions about if they should install E85 in their stations,” she said. “We want them to have all their questions answered about E85.”