State cars to use more ethanol -- when officials can find it

The price crunch will pass, say advocates and clean-energy analysts.
COLUMBUS (AP) -- An upcoming requirement for more state-owned vehicles to run on corn-based fuel helps Ohio respond to air pollution concerns, painfully high gasoline prices and hand-wringing over America's dependency on foreign oil. But it comes at an awkward time.
Under the bill Gov. Bob Taft is expected to sign into law, state vehicles must buy more of a cleaner-burning mix of gasoline and ethanol -- which was cheap when the idea started. Now, prices are starting to jump along with demand, few stations sell the fuel and their supplies are far-flung. What's more, the ethanol mix is less efficient, requiring more frequent fill-ups.
Clean-energy analysts and advocates say the crunch will pass.
"A year from now, we could find ethanol once again being as cheap as gasoline," said Spencer Kelly, an ethanol analyst for the Oil Price Information Service in Rockville, Md. "We're making policy for five years from now, 10 years from now."
What's required
The bill requires 90 percent of new vehicles the state buys to be capable of accepting fuels that mix plants with petroleum. Of more immediate impact: The 6,700 biodiesel and ethanol-ready vehicles the state already owns must buy the alternative fuels when "reasonably available and reasonably priced."
That's easy with biodiesel, a mix of 20 percent soybean oil and 80 percent diesel that can run in any diesel engine. Most state diesel vehicles are owned by the Department of Transportation and fill up at state garages in each county, Jeff Westhoven, deputy director of general services for the Department of Administrative Services.
The trouble is with the 2,100 state cars and light trucks that can accept a gasoline mix with 85 percent ethanol, called E85.
"A year or so ago, there was a lot of excess ethanol, and overnight that changed," said Sam Spofforth, executive director of Clean Fuels Ohio.
The ethanol market is squeezed between lagging supply, because of lack of production and blending plants, and racing demand as other states abandoning the gasoline additive MTBE for health concerns gobble up gasoline mixed with 6 percent to 10 percent ethanol.
Spot market prices, the base for prices to wholesalers and then retailers, last week topped $3 a gallon for ethanol, compared with less than $2 for gasoline, Kelly said.
Hadn't hit Ohio
As of Friday, the spike hadn't hit Ohio. The five retailers that sell E85 to the public had an average per-gallon price of $2.60 heading into the holiday weekend, about 12 cents less than the average for regular unleaded in eight urban areas surveyed by AAA. The stations still have to truck their supplies from out-of-state, because there's no Ohio-based plant to make ethanol out of Ohio-grown corn.
The state owns 11,500 vehicles, not including law enforcement vehicles or state cars for elected officials. The fleet is about to meet the bill's requirement of using 1 million gallons of biodiesel in 2006, Westhoven said, but the 16,800 gallons of E85 used so far are far short of the required 60,000 gallons.
Taft asked that the bill include the state fleet requirements to set an example, said Rep. Steve Reinhard, the Bucyrus Republican who wrote the bill.
"If we're going to get serious about using biofuel on the retail market then the state should be doing the same," he said.
Expected to rise
Supplies are expected to increase. An ethanol producing plant is expected to open next year in Lima and developers hope to build four more.
Plus, incentives in the bill should increase availability at the pump, Spofforth said. The bill adds $1 million to a grant program that pays retailers up to 80 percent of the cost of installing E85 pumps.
A new pump can cost up to $50,000, but stations can save money by converting old pumps.
The state fleet is tiny compared with up to 150,000 privately owned cars in Ohio that can run on E85, based on vehicle registration statistics, Spofforth said.
The vehicles made by all of the Big Three cost about the same as gasoline-only models.
"What's going to build and sustain the broad market is going to be privately owned vehicles, although the state fleet will be an important component of that," Spofforth said.