February 03, 2008

Minnesota Leads The Nation In Number Of E85 Pumps

According to the National Ethanol Vehicle Coalition, Minnesota leads the way in the number of E85 stations. And as you can see by the list below of the top ten states it leads by a healthy margin.

Nationwide - 1477

Minnesota - 341
Illinois - 169
Wisconsin - 101
Missouri - 96
Indiana - 92
Iowa - 88
South Dakota - 70
Michigan - 59
Ohio - 56
South Carolina - 53

Almost a quarter of all the E85 stations in the country are in Minnesota. So the question is how did they achieve such numbers. Senator Amy Klobuchar provided some insight in her comments before the Senate Committee on Energy and Natural Resources Subcommittee on Energy on July 31, 2007.

As you know, Mr. Chairman, Minnesota ranks first in the nation in E-85 infrastructure – we have 320 pumps out of 1250 in the nation – far more than any other state. And I know, Mr. Chairman, that it’s a question of particular interest to you – how did Minnesota come to be the leader in this area? The answer, I believe, comes down to leadership:

  • Leadership in state government in setting statewide ethanol standards and providing grants for E-85 pumps.
  • Leadership of the Minnesota Corn Growers, who formed a coalition with the American Lung Association of Minnesota, the National Ethanol Vehicle Coalition, and others to promote E-85 across the state.
  • Finally, leadership on the part of the ethanol producers, who have developed innovative marketing arrangements, whereby they sell E-85 directly to gas stations, and cut out the oil company-owned middleman. In Minnesota, about 2/3 of the gas stations that sell E-85 purchase it directly from the ethanol producer, and that’s why they can afford to sell it at a price that’s attractive to consumers.

So what can we, at the federal level, learn from Minnesota’s example? First, wherever possible, we should encourage ethanol producers to sell directly to gas stations. Outside of Minnesota, ethanol is generally sold under long-term contract to blending terminals, which are part of the oil company-owned pipeline system. The terminals then re-sell the ethanol to gas stations. In essence, the price that consumers pay for ethanol is usually set by ethanol’s biggest competitor, the oil companies. When ethanol producers sell ethanol directly to gas stations without a middleman:

  • drivers get the benefit of a low-cost fuel,
  • the ethanol producers collect the 51 cent-per-gallon federal blender’s credit instead of the oil companies,
  • and America’s energy dollars come right back to our rural communities.

Solutions to problems don't always have to be difficult to find. As you can see Minnesota has already found a way to increase the availability of E85 and at the same time encourage competitive pricing. The same model could be spread throughout the country so that we all could have a choice between E85 and gasoline.

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