Demos seek tax credits for fuel products

are scheduled this week to announce legislation that would eventually require all gasoline sold in the state to be mixed with fuel made mostly of corn.

The legislation is intended to reduce the dependency on foreign oil and cut the price of a gallon of gas in the state, which hit an average of $2.70 for self-serve, unleaded on Monday.

"We need to take serious steps to relieve the pain at the pump we're all feeling," said Rep. John Espinoza, of Croswell, who introduced a bill that would provide tax credits to gas stations and others that produce ethanol and blend it with gasoline to make it burn cleaner.

House Democrats are scheduled today to lay out the details of their six-bill package at news conferences in Lansing, Bay City, Port Huron and Petoskey.

Under their proposal, Michigan in 2007 would join two states -- Minnesota and Montana -- that require much of the gasoline sold within their borders to include 10 percent ethanol, said Dan Farough, spokesman for House Democrats. Hawaii will have a similar requirement in 2006, he said.

House Democrats also want to require that biodiesel, which is made from soybeans, make up 5 percent of diesel fuel beginning Dec. 31, 2006.

Democratic representatives said their proposal will benefit Michigan farmers who grow soybeans and corn. About 40 percent of the corn grown in the Thumb region already goes to an ethanol plant in Caro, House Democrats said.

Sugar is a third source of energy produced in the state; it can be converted into an alcohol-based fuel blend that is efficient and environmentally friendly, Democrats said.

Two gas stations in Michigan -- in Dimondale and Rochester Hills -- sell fuel that is 85 percent ethanol and 15 percent gasoline, or E85, according to the National Ethanol Vehicle Coalition Web site. The number of stations offering alternative fuel could grow in the coming years because three Michigan companies are planning to build biodiesel plants, Farough said.

Democrats also want to promote the use of alternative fuel vehicles by encouraging Gov. Jennifer Granholm to use E85 fuel or hybrids -- powered by gasoline and electricity -- made by American auto companies in the state's fleet of vehicles.

Jason Brewer, a spokesman for Republican House Speaker Craig DeRoche, of Novi, said the speaker will review the Democratic bills when they are officially introduced. He pointed out that Rep. Neal Nitz, R-Baroda, already has introduced legislation that would require diesel fuel sold in the state to have at least 2 percent biodiesel.

Brewer criticized House Democrats for introducing the alternative fuel package after voting in June to close loopholes in the tax structure that now limit taxes on low-producing oil wells and change the way oil and gas royalty incomes are taxed. The changes were not approved by the full House, where Republicans have a 58-52 majority.

"The Democrats' proposal might seem more credible if they had not voted to increase taxes on domestic energy producers by $7 million," Brewer said.