Saturday, April 9, 2011

USDA to subsidize E85 petrol pumps

Interesting timing here, just as the Republicans were threatening to shut down the US government to cut off "excessive" (in reality, miniscule) spending for aid to family planning clinics, in the name of deficit reduction.  From the Wall St. Journal:

Gas Stations Get Aid to Sell More Ethanol


The Department of Agriculture will soon be helping gasoline stations install new pumps that can dispense fuel with higher ethanol content, USDA Secretary Tom Vilsack said.

The USDA will soon offer grants and loan guarantees for the installation of costly new "blender pumps" so drivers can purchase fuel with a higher ratio of corn-based ethanol.

Most gasoline sold in the U.S. is 10% ethanol, but a growing fleet of flexible-fuel vehicles can run on an 85%-ethanol blend, or E85. However, there are fewer pumps available to dispense it, Mr. Vilsack said.

In the U.S., only about 2,350 fueling stations out of more than 110,000 offer E85 pumps, according to the USDA.

Gloria Bergquist, vice president of the Alliance of Automobile Manufacturers, said the number of E85 vehicles in the U.S. is growing about 10% each year. In 2008, there were 6.1 million such vehicles; now, the number has increased to about 8.2 million.

New blender pumps, which Mr. Vilsack said cost about $120,000 to install, also would make it easier for drivers of conventional cars to increase the ethanol content of the gasoline they buy. He declined to estimate the total expenses, saying he didn't know how many station owners would seek the guarantees and grants.

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Tom Vilsack, U.S. Secretary of Agriculture.

Newer vehicles can safely run on gasoline with a 15% blend of ethanol, according to the Environmental Protection Agency.

The USDA goal, Mr. Vilsack said, is to increase the number of flexible-fuel pumps across the nation by 10,000 over the next five years, in accordance with President Barack Obama's pledge to cut U.S. dependency on foreign oil by one-third by 2025.

Industry opponents include livestock producers, who say subsidies push corn prices higher, and some taxpayer groups who say the government can't afford such subsidies.

This year, the ethanol industry is expected to consume five billion bushels of corn, almost as much as the 5.2 billion bushels that will be used for livestock feed, according to USDA data.

U.S. farmers produced 12.4 billion bushels of corn last year. The USDA already has the funds it needs to help finance the new pumps, a spokeswoman said. Congress created the Rural Energy for America Program in the 2008 farm bill to help fund renewable-fuel projects, and it can be broadened to include financing for the blender pumps.

The farm bill program contains $60 million that can be spent in fiscal year 2010, $70 million in fiscal 2011 and $70 million in fiscal 2012, the spokeswoman said.

Mr. Vilsack announced the plan at a time when concerns about strong demand for corn, the primary ingredient in ethanol made in the U.S., have pushed prices of the grain to record highs. Corn futures have more than doubled since last summer on strong foreign and domestic demand, including record U.S. ethanol output. The USDA, in a crop report issued Friday, said producers of the biofuel would be consuming even more corn than expected this year. Corn futures on Friday closed up 1.2% at $7.68 a bushel, near the all-time high of about $7.73 a bushel set Thursday.

Congress also provides hefty support for the ethanol industry with a 45-cent-a-gallon subsidy that is paid to gasoline blenders that include ethanol in fuel.

The Renewable Fuels Association, an ethanol lobbying group, said it strongly endorsed USDA's new plan.

"Ethanol producers stand ready to work with Congress, auto manufacturers, gas station owners, and consumers to build a stronger, cleaner, more self-reliant energy future," Bob Dinneen, the group's president and chief executive, said Friday.

—Tom Polansek in Chicago contributed to this article.

Write to Bill Tomson at

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Biofuels are a wide range of fuels which are in some way derived from biomass.

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