Senate energy chief urges more E85 pumps, does not back mandate

Washington (Platts)--7Mar2006

US Senate Energy Committee Chairman Pete Domenici, a Republican from New
Mexico, said he would urge oil companies to set up pumps dispensing
ethanol-rich E85 fuel at their service stations but would not support
government mandates to require them to do so.

     "Not only do we have to lean on them, we have to find out if there is any
possible way we can pursue this so the [oil] companies will do more," Domenici
told reporters following a hearing on energy independence. "Nobody is going to
do this to be nice," Domenici said, noting that there had to be some business
benefit to allow flexible fuel pumps to be set up. At the same time, he said
that it was not the government's place to require the companies to install the
pumps.

     Last week US Energy Secretary Samuel Bodman said he intended to question
oil executives on whether they have policies in place that could prevent
deployment of fuel pumps that dispense E85 at their branded stations. E85 is a
fuel blend of 85% ethanol and 15% gasoline which can be used in modern
flexible-fuel engines.

     Some players in the ethanol market have expressed concern that it will be
difficult to expand that market if they are prohibited from setting up E85
fuel dispensers at gasoline stations. 

     The Bush administration hopes that increased use of ethanol, which is
made largely with corn, can help reduce the nation's dependence on foreign
oil. The new energy law, passed by Congress last year, expands the use of
ethanol in US gasoline to reach 7.5 billion gallons in 2012. 

     Rayola Dougher, manager of energy markets for the American Petroleum
Institute, told reporters after the same hearing that the oil industry already
allows about 4 million gallons of ethanol to be sold at their service
stations. She acknowledged that oil companies do not allow their names to
appear on the E85 pumps because they cannot verify the quality of the product.
The lack of branding is said to hamper the sale of E85.

     She also said that certain contracts may limit the installation of the
E85 pumps, but that companies did not impose restrictions as a matter of
policy. The lack of pumps was more the result of a business decision, Dougher
said, explaining that pumps cost about $200,000, which is a significant
investment for a small business owner such as a service station operator.

		--Dan Whitten, daniel_whitten@platts.com

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