USDA to help gas stations fund new ethanol pumps

By Dow Jones Newswires
Posted April 8 at 1:37 p.m.

The Department of Agriculture will soon begin helping gasoline stations install new pumps that can dispense ethanol to curtail the nation’s dependence on petroleum-based fuel, USDA Secretary Tom Vilsack said Friday.

The USDA will soon begin handing out grants and loan guarantees to gasoline stations that want to install costly “blender pumps” that would allow drivers to buy fuel with a higher ratio of corn-based ethanol.

Most gasoline sold in the U.S. is mixed with 10 percent ethanol, but there is a growing fleet of flexible-fuel vehicles that can run on an 85 percent-ethanol blend, or E85, in the U.S. but not enough pumps that dispense it, Vilsack said.

Only about 2,350 fueling stations out of more than 110,000 offer E85 pumps in the U.S., according to the USDA.

Vilsack said it costs about $120,000 to install a blender pump.

New blender pumps would also make it easier for drivers of conventional cars to increase the ethanol content of their gas.

The Environmental Protection Agency released a decision that newer vehicles can safely run on a 15 percent blend of ethanol.

Vilsack said the grants and loan guarantees represent a role the USDA is playing in President Barack Obama’s pledge to cut U.S. dependency on foreign oil by one-third by 2025.

The USDA goal, Vilsack said, is to increase the number of flexible-fuel pumps across the country by 10,000 over the next five years.

There is opposition to the government’s support of corn-based ethanol. Livestock producers argue that the ethanol industry pushes corn prices higher by consuming so much of the commodity that is also used to feed animals.

The ethanol industry is expected to consume 5 billion bushels of corn this year, almost as much as the 5.2 billion bushels that will be used to produce livestock feed, according to USDA data. Farmers produced 12.4 billion bushels of corn last year.

The USDA has the funds it needs to help finance the new pumps, a spokeswoman said. Congress created the Rural Energy for America Program in the 2008 farm bill to help fund renewable fuel projects and it can be broadened to include financing for the pumps.

The farm bill program contains $60 million that can be spent in fiscal year 2010, $70 million in fiscal 2011 and $70 million in fiscal 2012, the spokeswoman said.

Congress also provides hefty support for the ethanol industry with a 45-cent-a-gallon subsidy that is paid to gasoline blenders that include ethanol in fuel.

The Renewable Fuels Association, an ethanol lobbying group, said it strongly endorsed 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,” Bob Dinneen, the group’s president and chief executive, said Friday.

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  1. wake up April 8 at 1:50 pm

    Boy, it’s shocking why America is broke! Stop the subsidies now!
    Where’s Vilsack from? OHHH, IOWA!! No wonder why this happens.
    GE CEO is in Obama’s white house…shockingly, GE paid zero taxes last year! Wow, Obama, nice change!
    Both parties..enough subsidies, grants and corporate crap. I’d rather subsidize poor people, schools or whatever than rich farmers ….In fact E85 will raise the cost of FOOD!!! this is awful and dumb.

  2. Chitown Guy April 8 at 2:42 pm

    Ethanol is the most outrageous program this country has ever had. It is worse for the environment than burning gasoline, it uses more energy than it produces due to the fuel needed to grow the corn and the fuel burned in trucking it to be blended (it cannot go through pipelines like gasoline), it drives up the cost of food because we use the land to grow FUEL, not food and the best part is we get to subsidize it with our tax dollars. Is it any wonder Congress has a 16% approval rating. I wonder what’s wrong with that 16%!

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