WASHINGTON - Using funds from the Rural Energy for American Program, the Department of Agriculture will begin offering grants and loan guarantees for gas station owners to install new "blender pumps" that dispense fuel with a higher ratio of corn-based ethanol, the Wall Street Journal reports.
Last week, USDA Secretary Tom Vilsack said that while a growing number of vehicles can operate on an 85-percent ethanol blend, few pumps are available to dispense it (according to the USDA, only 2,350 stations nationwide offer E85 pumps).
"Flex-fuel pumps will give Americans a choice to purchase domestically produced renewable transportation fuels," Vilsack said, adding that the new blender pumps cost about $120,000 to install. He said the USDA??s goal is to increase the number of flexible fuel pumps across the nation by 10,000 over the next five years.
Vilsack announced the plan at a time when there is great concern over the strong demand for corn, which has pushed food prices higher.
The Renewable Fuels Association endorsed the 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," said Bob Dinneen, the group's president and chief executive.
Vilsack did not estimate expenses for the program, saying he did not know how many station owners would seek the guarantees and grants.
NACS expressed skepticism that the new program would result is a significant increase in sales of mid-level ethanol blended gasoline. Although EPA authorizes the use of E15 in 2001 and newer vehicles, there remains concern within the automobile industry about the use of such fuels, which could dampen demand. In addition, retailers may face certain liabilities if consumers use E15 in non-approved engines and changes to the law are required to relieve these concerns.
Although the grant program may help offset the costs of some retailers interested in moving into these fuels, NACS does not believe the program will spur widespread investment. NACS believes a more constructive, long-term strategy is to pass legislation that will authorize a method for evaluating and recertifying existing equipment as compatible with these new fuels. This would enable many retailers to begin offering the new fuel without having to replace dispensers and tanks, which will be costly even with a grant from USDA.