Bumps on the road for U.S. ethanol vehicles
By Timothy Gardner
NEW YORK (Reuters) - Brad Beldon bought a 2007 flexible-fuel Chevrolet
Suburban that runs on either gasoline or a mostly ethanol fuel blend,
thinking it would be good for the environment.
But Beldon, of San Antonio, Texas, can only find two service stations that
carry E85, a fuel made from 85 percent corn ethanol and 15 percent gasoline.
Both stations are clear across town, and he said he doubts whether he'd ever
buy another flex-fuel car.
"You can only go so far in doing the right thing, but if you can't get the
fuel, it doesn't help you much," said Beldon, who owns a roofing business.
What's more, he learned only after buying the sport utility vehicle that
while E85 can cost less at the pump, it actually costs 20 percent more than
gasoline because its lower energy content cuts fuel efficiency.
Driving flex-fuel sports utility vehicles on E85 15,000 miles a year can
cost consumers an additional $400 per year, according to the Department of
A recent study of 1,200 consumers by market research firm Synovate found 37
percent of drivers would consider purchasing a flex fuel vehicle, but that
more than a third of those consumers lost interest when they learned about
the reduction in fuel economy.
To be sure, ethanol is a growing source of domestic fuel that cuts
greenhouse gas emissions. This year it has been growing into its role as a
10 percent additive in clean-burning gasoline, replacing suspected
But experts doubt that E85 will ever develop into more than a niche market,
meaning many of the millions of flex fuel vehicles in the United States may
rarely run on the corn fuel, if at all.
"If you look at it as a gasoline additive, ethanol has a lot of potential,"
said A.G. Edwards assistant energy analyst Eric Wittenauer. "As a gasoline
substitute it loses all viability."
Wittenauer said that even if all the U.S. corn production had been put to
ethanol last year, it would have only displaced about 15 percent of U.S.
gasoline. Current production of the fuel replaces only about 3 percent of
While U.S. ethanol production has grown to 4.8 billion gallons a year, it
needs to grow 30 percent before it saturates the 10 percent gasoline
additive market, according to the federal Energy Information Administration.
While Wall Street, Silicon Valley venture capitalists and Midwest farmers
have combined to create an ethanol boom, consumers must wait years for some
projects to come on line.
CAR MAKER BREAKS
There are about 5 million flex fuel vehicles in the United States. This is
largely because government incentives since 1993 have allowed car
manufacturers making flex-fuel cars to avoid paying a total of about $2
billion in fuel efficiency fines, according to the Union of Concerned
But only about 700 of the 170,000 U.S. gasoline stations offer E85.
California has 1 private E85 station, and 13 states, including eight in the
East, have none. A lack of pipelines and the need to install new tanks at
service stations for E85 make it hard to add more stations quickly.
Environmentalists complain that car markers could continue to get credits
for making flex fuel cars, many of them low mileage vehicles, that rarely
use the fuel. "This loophole is not going away," said David Friedman, a
vehicles researcher at the Union of Concerned Scientists. "Unless something
dramatic changes, there will be many more vehicles than there is fuel to
keep them filled up."
Charlie Territo, spokesman for the Alliance of Automobile Manufacturers,
said the flex-fuels program is needed to boost the number of E85 pumps.