Rising prices fuel interest in ethanol

Sheetz and Giant Eagle
consider expanding
ethanol fuel sales.

By DON SHILLING

VINDICATOR BUSINESS EDITOR

Drivers can save about 70 cents a gallon by using a new blend of fuel, but none is available in the Mahoning Valley.

E85 — a highly concentrated ethanol fuel — is sold at 41 stations in Ohio, but the nearest are in Medina and Wooster.

“I’m surprised we haven’t seen any retailers in the Mahoning Valley jump in,” said Sam Spofforth, executive director of Clean Fuels Ohio.

Two retailers that sell gas locally, Giant Eagle and Sheetz, are testing E85 pumps in other areas but aren’t saying when they might expand into the Mahoning Valley.

Much of the gasoline sold in the U.S. contains small amounts of ethanol, which is made mostly from corn. E85, however, is 85 percent ethanol and requires a separate pump at a fueling station. In addition, only vehicles with a modified fuel system, known as “flex fuel” vehicles, can use it.

As gasoline prices rose above $3 a gallon this week, the price of E85 has stayed at $2.39 a gallon at three Sheetz stations in the Pittsburgh area that offer the fuel.

“When there’s a spike in gas prices like this, more people start paying attention to the ethanol pump,” said Monica Jones, a spokeswoman for the Altoona, Pa.-based company.

There is a catch to the lower prices, however. E85 provides about 20 percent less fuel economy than regular gasoline. So, a car that gets 20 mpg on regular gasoline would get about 16 mpg on E85.

Jones said drivers pay a little more or the same for their total fuel costs when using E85, depending on the price spread.

So why use it? Clean Fuels Ohio says E85 is cleaner — reducing harmful emissions by 25 percent — and reduces the country’s dependence on imported oil. The advocacy group is based at The Ohio State University, and its members include automakers and environmental groups.

Spofforth said the organization is telling retailers that E85 can boost their profits. Prices for E85 are far enough below gasoline costs that retailers have wider latitude in setting retail prices, he said.

In fact, the reason E85 drivers aren’t saving money on their fuel costs is that retailers are keeping their profits up, he said.

He also noted that government incentives encourage use of ethanol. The federal government offers a tax credit of 51 cents a gallon for wholesale purchases of E85 and additional tax credits for station renovations. Also, Ohio offers a $20,000 grant to install E85 pumps.

Spofforth said he has stressed these incentives to Giant Eagle officials, who are testing two E85 stations in the Columbus area and one near Pittsburgh.

“We told them the Mahoning Valley up to Cleveland was a golden opportunity. Hopefully, they’re still willing to look at that,” he said.

Dan Donavan, a spokesman for the Pittsburgh-based grocer, said officials are studying consumer reaction and the ease of implementing E85 before deciding on future plans.

Spofforth said his group has been unsuccessful in setting up a meeting with Sheetz officials.

Jones said Sheetz still is studying expansion plans. Consumer interest was low at test stations at first but has picked up. In recent weeks, the number of customers calling the corporate office about E85 availability has increased significantly, Jones said.

Sheetz has been running promotions with fuel discounts at General Motors dealers to encourage people to come to the E85 pumps. One station has seen a 29 percent increase in E85 sales in the past two months.

Sheetz is expanding slowly with E85 because of the cost, Jones said.

It spent $40,000 to $50,000 at each test station to remove a diesel pump and replace it with E85. The loss of diesel sales was “a pretty big hit,” Jones said.

Sheetz removed diesel from the stations because that was less costly than installing a separate fueling point, which would require another underground tank.

Spofforth said installing a new E85 pump, with the tank, runs between $60,000 and $80,000.

Kroger, a Cincinnati-based grocer, operates about half the E85 stations in Ohio.

shilling@vindy.com