Washington (Platts)--8May2007

Oil companies are not preventing the installation and use of E-85 retail
pumps and storage tanks, an American Petroleum Institute official told a US
House of Representatives panel Tuesday.

     "Currently, there are just over 1,000 retail outlets nationwide [out of
about 170,000], located principally in the Upper Midwest that are equipped to
distribute E-85, Bob Greco, group director-industry operations and downstream,
told the House Energy and Air Quality Subcommittee. "The number appears to be
growing rapidly on its own, absent government mandate."

     Oil companies have been reluct about investing in the necessary equipment
because of the limited number of vehicles on the road that can use E-85 and
questions concerning its availability. Greco cautioned that overly ambitious
federal programs or mandates could result in wasted resources and increased
costs.

     E-85 faces "significant technological and economic hurdles," Greco said.
E-85 requires specially built "flexible fuel vehicles, which currently
comprise only 3% of the existing fleet of 220 million vehicles," he said. "The
Energy Information Administration estimates that FFV penetration will not rise
above 10% of the entire vehicle fleet until sometime after 2030."

     The fuel also requires special service station pumps and storage tanks
which represent expenditure by independent service station dealers "that can
range from $20,000 to as high as $200,000," he said.

     In addition, as some point "in the not too distant future, limits on
domestic corn ethanol production will be reached," Greco said. "Too little
attention is being paid to the transition from that point forward, especially
impacts associated with a delay in the mass-scale production of cellulosic
ethanol."

     Proposals to expand the Renewable Fuels Standard should continue current
restrictions, Greco said. They should not require the use of any particular
fuel or that an alternative fuel be used in any particular geographic area. In
addition, the Environmental Protection Administration should have the
authority to grant temporary waivers during supply emergencies, he said. 

		--Gerald Karey, gerry_karey@platts.com