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Some Question E85's Staying Power

Vanishing Price Advantage Over Gasoline May Be Eroding E85's Hopes

POSTED: 4:52 pm EDT August 19, 2010
UPDATED: 7:02 pm EDT August 19, 2010

Five years ago, it was being promoted as a partial solution to the imported oil problem and a great opportunity for Indiana farmers, but E85 fuel hasn't taken off as its supporters had hoped.

The Legislature approved $32 million in credits for ethanol producers, some of which hasn't been claimed yet, and $1.7 million in grants for the special pumps the fuel needs, 6News' Norman Cox reported.

Supporters said E85 was a natural choice for Indiana with fields of corn waiting to be turned into ethanol, which makes up 70 percent or more of E85.

But backers admit it doesn't have the buzz it had five or so years ago, even though some consumers still look on it as an attractive alternative.

Thornton's gas stations are adding E85 pumps, and the manager of one station on Pendleton Pike said it's doing better than he'd thought it would.

But Meijer, which heavily promoted the fuel in the beginning, said it's taking longer than projected to meet sales goals.

The office of Lt. Gov. Becky Skillman, the state's point person on E85, said Indiana has 10 ethanol plants producing nearly a billion gallons a year and two more coming online.

"Is it quite as good as we thought? The jury's still out," said Skillman's spokesman, Jay Kenworthy. "There's still a lot of growth to be had and a lot of innovation that, truth be told, is still happening."

Industry representatives have said E85 has a number of drawbacks, including requiring specially-equipped vehicles and producing lower mileage.

At a time when regular gasoline prices are down, however, E85's price advantage has virtually disappeared.

"Consumers vote with their feet," said Maggie McShane, executive director of the Indiana Petroleum Council. "They're going to buy the fuel that offers them a better price. They're tending to navigate to fuel that offers them better fuel economy, and right now, you're not really seeing that favor E85."

It can also be difficult to find E85 stations. An Internet search of Indianapolis locations turned up 17 stations, while General Motors has a list showing 11 stations in the city.

The state does not have sales figures for E85. Backers of the fuel said 2.4 million gallons have been sold in the last three years by stations on Interstate 65, which is promoted as the E85 corridor.
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