- The Washington Times - Sunday, May 21, 2006

The Big Three automakers in the U.S. have built about 5 million “flexible fuel” vehicles that can run on gasoline, a mix of 85 percent ethanol and 15 percent gasoline, or anything in between.

The problem is that few places are available to fill up with E85, the 85 percent ethanol, 15 percent gasoline blend.

“We need about 30 times the … E85 ethanol pumps available today,” Ford Motor Co. Vice President Sue Cischke said. She was on Capitol Hill last week to back legislation that would direct revenue from gasoline taxes to reimburse gas stations for installing renewable-fuels pumps.

Chief executive officers from Ford, General Motors and DaimlerChrysler also were in Washington last week to meet with lawmakers. They said pension and health care costs add thousands of dollars to the price tags of American automobiles, and noted broad economic issues that affect the costs of Japanese imports.

The chief executives also pushed a few ideas that might help Detroit better compete with automakers in Japan, South Korea and elsewhere. GM Chairman and CEO Rick Wagoner, Ford Chairman and CEO Bill Ford, and Tom LaSorda, president and CEO of DaimlerChrysler’s Chrysler Group, asked lawmakers during closed-door meetings for help building the number of gas stations that supply ethanol.

U.S. automakers hope that, with gasoline prices topping $3 a gallon, the less expensive E85 will make their vehicles more attractive to consumers if it were readily available.

“Every economist in the world will tell you that if you get good fuel economy and affordable gas, people will drive [your autos],” said Mark LaNeve, GM’s vice president for North America.

In the Midwest, where corn is grown and processed into ethanol, E85 can run 50 cents less per gallon than straight gasoline, said Michelle Kautz, director of communications for the National Ethanol Vehicle Coalition, a Jefferson City, Mo., trade association.

Out of roughly 165,000 publicly accessible gas stations, Ms. Kautz said, about 710 sell E85.

Most of these are in the Midwest, the coalition says on its Web site (www.e85fuel.com). None is in the District, three are in Maryland and one is in Virginia. The Navy Annex Citgo, near the Pentagon, last week was selling E85 for $3.22 a gallon.

Several other stations in the region sell E85 to government fleets.

U.S. automakers have not manufactured flexible-fuel cars as a response to consumer demand. Rather, they have been exploiting a loophole in corporate average fuel economy (CAFE) standards, the federally mandated regulations that dictate the average miles per gallon of a company’s fleet of cars and light trucks.

CAFE grants credits for flexible-fuel vehicles, even though most never burn ethanol, allowing automakers to compensate for an abundance of gas-guzzlers sold in the U.S.

Without the CAFE incentive, Japanese automakers haven’t invested as heavily in building up flexible-fuel fleets and manufacturing capacity.

“[U.S. automakers] have been producing … hundreds of thousands of E85-capable cars over the past few years for a selfish reason: to get a more favorable CAFE rating,” said George Peterson, president of AutoPacific, an auto industry research firm.

“But it’s not disingenuous for GM and Ford to be asking [for broader ethanol distribution]. They have all of these vehicles out there,” he said.

Farm groups also support ethanol measures because the fuel is made from corn and other crops.

The National Ethanol Vehicle Coalition succeeded in adding a federal income tax credit to the 2005 Energy Policy Act that is worth up to $30,000 for gas stations that install alternative-fuel dispensing systems such as E85 pumps.

Sen. John Thune, South Dakota Republican, Rep. Jerry Moran, Kansas Republican, and other lawmakers are sponsoring the legislation that would direct funds from the gasoline tax to gas stations when they install alternative fuel pumps. The reimbursement, separate from the tax credit, would be worth up to $30,000.

Skeptics see the government subsidies as a sign that ethanol could not compete on the free market.

“I would love to see a day when ethanol is cost-competitive with gasoline. I don’t think we are there yet. If we were, we would not need subsidies,” said Jerry Taylor, a senior fellow at the Cato Institute, a Washington think tank.

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