Fueling gas price pains, solutions

Thursday, April 7, 2005

JEFFERSON CITY, Mo. -- Every drop of gasoline sold in Missouri would be required to contain at least 10 percent ethanol as of 2007 under legislation the House Agriculture Policy Committee heard this week.

Supporters say mandating fuel blended with ethanol statewide would lead to lower prices at the pump, expand a market for corn farmers and create jobs with the construction of additional ethanol production facilities in the state, all while increasing the use of cleaner-burning fuel.

Petroleum industry representatives, however, say the potential ramifications of the bill haven't been thought through and that the free market should determine ethanol availability.

State Rep. Steve Hobbs, R-Mexico, said pure ethanol was selling for $1.15 a gallon earlier this week at a time when standard gasoline costs in excess of $2 a gallon in Missouri.

"I'd submit to this committee that we ought to be burning corn instead of crude," Hobbs said. "We don't drill many oil wells in Missouri, but we sure grow a lot of corn."

Because of air pollution problems, all gasoline sold in St. Louis and its surrounding counties contains at least 10 percent ethanol. Hobbs' bill would extend that requirement statewide.

While ethanol blends caused performance problems in many vehicles when first introduced decades ago, the major auto manufacturers for years have designed their vehicles to run on fuel containing between 10 to 20 percent ethanol. As a result, state Rep. Peter Myers, the agriculture committee chairman and co-sponsor of the bill, said the old complaints about ethanol no longer hold up.

"The problem with ethanol in gas was with older cars it clogged up the fuel filter," said Myers, R-Sikeston. "We don't have that problem now."

Missouri Corn Growers Association chief executive officer Gary Marshall said about 100 million gallons of ethanol currently is produced in the state each year. With a statewide requirement, that amount could triple. Marshall said that roughly 20 percent of the fuel sold in Missouri outside of the St. Louis area contains ethanol.

"It's much more available now than it has ever been before," Marshall said.

Harry Gallagher, a lobbyist for the American Petroleum Institute, said that if sufficient demand for ethanol exists it will naturally gain market share.

"We are opposed to mandates," Gallagher said. "We want the market to work."

Ron Leone, the executive director of the Missouri Petroleum Marketers and Convenience Stores Association, echoed that view but also said the two-paragraph bill fails to account for numerous variables that could increase fuel costs for consumers.

"You need to study this issue a heck of a lot more than has been done and by people who aren't special interests -- either me or the corn growers -- to ensure this is good for consumers," Leone said.

While supporters have focused on the low cost of producing ethanol, Leone said they have ignored the higher costs of transporting it. For example, he said ethanol can't be transferred through pipelines because it attracts moisture. Therefore, it has to be shipped by tanker, a more expensive means.

Leone also noted the bill doesn't contain a provision for retailers to temporarily opt out of the ethanol requirement in years when the corn crop is poor or sufficient supplies of ethanol are otherwise unavailable.

The committee, meeting on Tuesday, took no immediate action on the bill, HB 864.


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