Ethanol is here|[06/29/08]

Published 12:00 am Sunday, June 29, 2008

Stickers indicating blended fuel popping up as close as Clinton

John and Rupina Leake of Columbus, Ohio, thought nothing of filling their gleaming white Harley Davidson Ultra Classic with ethanol-blended fuel on the final legs of their three-state trip.

Their dream machine had averaged its usual 40 miles to the gallon as they toured Texas and Louisiana, enjoyed lunch in Vicksburg, then stopped in Clinton for gas.

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“Why not? We’ll see what happens,” said John Leake, unfazed by the sticker staring back at him and other customers in a small but growing number of Mississippi cities where fuel supplemented with the grain alcohol can be found.

“It’s on to Graceland tomorrow,” Leake said, topping off his tank at the listed per-gallon price of $3.81, about a dime a gallon less than Vicksburg’s week-ending cost of about $3.93.

By most accounts, the fill-up that sent the Leakes on their way won’t increase their fuel economy. However, it might lighten their pockets at the pump in Mississippi, as ethanol-blended fuel is becoming a reality in a state where a gallon of regular gas averages $3.90.

Andy Prosser, spokesman for the Mississippi Department of Agriculture and Commerce, said distributors are lining up to take advantage of the opportunity, as 10 blending permits have been awarded by the department since May 1.

“As prices are so high, demand for it is rising,” Prosser said.

Fuel containing 10 percent or less of ethanol began popping up not long after the Mississippi Legislature passed Senate Bill 2939 during its spring session. Authored by Sen. Perry Lee, R-Mendenhall, the bill rewrote the definitions of allowable gasoline mixtures in the state to line up with international standards. One such modification involved oxygenated fuel, which includes ethanol.

The new definitions come up for renewal in 2010, when current federal incentives for ethanol production expire.

Overall, 43 distributors across the state hold permits to mix the primary alcohol with gasoline. Notable distributors include Wal-Mart supplier Murphy Oil and Jackson-based Mac’s Gas Inc.

Much of the Vicksburg market is led by stations owned by Sanford, N.C.-based The Pantry Inc., which owns convenience stores in 11 states under various names, including Kangaroo Express.

The company’s stock price shot up 16 percent this week due to analysts’ optimism that gas margins will outperform earlier forecasts because of ethanol prices were 22 cents cheaper than clean gas during the second quarter. Ethanol is sold in about 60 percent of Pantry-owned stations.

Calls to The Pantry were not returned.

John Moak of Moak Petroleum, operator of 10 stations in Vicksburg and Warren County, indicated difficult times at the pump will continue for most consumers regardless of the ethanol mixture.

“The market is so volatile right now,” Moak said. “(E10’s effects) will depend on the price of refining oil.”

Prosser said most fuel pumps in Mississippi featuring up to 10 percent ethanol are north of Interstate 20. Only two stations, he said, sell mixes of up to 85 percent, or E85, one in Newton and another in Forest.

Only “flex-fuel” vehicles in the United States can run on E85, which contains up to 85 percent ethanol and is averaging $3.28 a gallon nationally, according to the Oil Price Information Service, the source for AAA’s Daily Fuel Gauge Report.

Still, the state insists vehicles with traditional engines can handle a little alcohol with their usual fill-up as long as the mixture is low.

“Anything E10 or less can go in any car, even cars from the late 1960s,” Prosser said.

Vicksburg could become a vital cog in the gradual ethanol transition, as well as eight plants planned in Louisiana.

Bunge-Ergon expects its $100 million-plus facility at the Port of Vicksburg to begin selling the corn-based product by summer’s end.

“We’re not yet transporting any of it out,” plant manger Mike Tate said, adding some of its initial wet grain product was given to local farmers as spring wound down and drying equipment remained on order.

“The dryers are running, and we’ll have a release soon,” Tate said.

Among plants in various pre-construction phases in Louisiana include one in Lake Providence by Quincy, Mass.-based BioEnergy International expected to begin making corn-based ethanol in 2009. Another, in Jennings, is slated to produce it via the cellulosic method, using bagasse, or post-processed sugar cane stalks.

New provisions in Mississippi do not mandate that all gas stations carry ethanol blends, as is the case in nearly a dozen other states. Michael Right, spokesman for AAA Missouri, the organization’s parent club for members in Mississippi, Louisiana, Arkansas and parts of four other states, said transportation costs that drive up prices at the pump for regular gasoline are likely to swallow up any appreciable savings for consumers.

“One of the big knocks (on ethanol) is you can’t move it by pipeline,” Right said. “It has to be moved by truck, rail or barge. One, it’s slow. Two, it’s expensive.”

Those challenges are reflected in where Kroger Co. has offered its ethanol-blended fuel.

Kroger spokesman Joe Bell said E10 is offered at its 696 retail stores with fuel centers where the fuel can be purchased from suppliers in close proximity.

“We have it in north Mississippi, like in Olive Branch and Hernando, because we can pull it out of Memphis,” Bell said.

At this time, Bell said, ethanol blends will not be offered at its store under construction on Pemberton Square Boulevard. Only the company’s King Soopers brand of stores in Colorado features E85 at its stations, Bell said.