Ethanol debate rages in Missouri

Proponents say blending ethanol with gasoline is a way of reducing dependence on foreign oil, reducing prices at gas pumps, infusing Missouri’s economy with $726 million and saving the environment.

Opponents say enacting an E-10 standard – requiring all fuel sold in Missouri to contain 10 percent ethanol – would hurt gas-station operators, raise consumer fuel prices, drive business to neighboring states and even lead to more pollution.

Support in Jeff City

Despite the chasm separating the opinions of ethanol supporters and detractors, Spence Jackson, spokesman for Gov. Matt Blunt, said his boss is likely to win approval of a bill that would enact an E-10 requirement in Missouri.

“There is a lot of support in both rural and urban areas to move to this standard,” Jackson said. “We are cautiously optimistic that this bill will be well-received.”

Blunt, leading the 32-member Governors’ Ethanol Coalition, recently toured the state touting the virtues of ethanol along with representatives from the Missouri Farm Bureau and the Missouri Corn Growers Association.

Corn-produced ethanol is the most efficient and prevalent type of ethanol, though it can be made from a variety of crops, such as potatoes.

“This is a win-win for our environment and our economy,” Jackson said. “We need to decide in this state if we want to be a leader in this endeavor or if we want to be a follower.”

Any E-10 requirement wouldn’t take effect until 2008, though Missouri may still be on the leading edge of ethanol production.

Fueling Minnesota

Minnesota, Montana and Hawaii are the only states to have already adopted E-10 standards.

Minnesota led the way, adopting an E-10 standard that it began implementing in 1995. Hawaii passed its E-10 legislation in 2004 and Montana in 2005.

“The E-10 standard has been an enormous success in Minnesota,” said Ryan McClung, spokesman for Minnesota Gov. Tim Pawlenty.

Minnesota’s policy was so successful that the state’s legislators adopted an E-20 policy last year that will take effect by 2013.

McClung said Minnesota’s motorists have saved a little bit of money on gas – likely just a few cents per gallon – though he couldn’t peg the exact amount. He did note that higher ethanol blends, such as E-85 flex fuel, costs 30 cents to 40 cents less per gallon.

Paying at the pump

Rob Wilson doesn’t foresee those types of consumer savings.

The owner of 24 area Rapid Roberts convenience stores said he is concerned that an E-10 requirement would add unfair station expenses and increase Missouri pump prices.

He said station owners would need to clean their tanks before filling them with ethanol-blended gasoline.

“I see some downtime there,” Wilson said. “I see some extreme expense.”

If Missouri fuel stations need to charge higher prices to recoup changeover costs, he fears his customers in places like Branson, Kimberling City and Shell Knob could cross the Arkansas border for a less expensive tank of gas.

“I’ve got a lot of concerns about it,” Wilson said. “It looks to me like it’s going to be a very difficult transition.”

Bill Walljasper, chief financial officer for Casey’s General Stores Inc., said E-10 requirements could lead to higher pump prices if production capacity can’t meet demand.

Casey’s has been in the ethanol game longer than most.

The Iowa-based gas station chain, which operates 1,366 stores in nine states including 275 in Missouri, started using ethanol in 1980 as a less expensive way of offering unleaded fuel during a conversion from leaded gasoline.

“Intuitively, I think there would be some concerns with having an ethanol mandate,” Walljasper said.

The farmer advantage

Becky Grisham, director of communications for the Missouri Corn Growers Association, said ethanol production capacity is a non-issue in Missouri, the 10th-highest corn producing state in the country.

She said Missouri currently exports 37 percent of its 330 million bushels of corn. That corn would simply stay in the state if Missouri adopts an E-10 standard, she said.

“That’s dollars going out of Missouri, basically,” she said. “By working to build our ethanol industry we’re keeping that corn here and adding value to what the producers are growing.”

She said building an ethanol industry could earn farmers 5 cents to 15 cents more per bushel of corn.

According to University of Missouri economist Vern Pierce, lead researcher for an economic impact study about ethanol that was completed in January, adopting an E-10 standard would give Missouri corn growers $73 million and generate $63 million in state tax revenues annually.

Ultimately, his study concluded, ethanol could give Missouri an economic infusion of $726 million every year.

The ripple effect

“When you bring in a new business, or a change in business, what you want to try to measure is how will that … economic activity ripple through the community,” said Pierce, part of MU’s commercial agriculture program.

Pierce predicts that developing Missouri’s ethanol industry could lead to 150 new high-paying ethanol-plant jobs in the next few years, doubling employment in the sector.

Missouri now generates 115 million gallons of ethanol from plants in Macon, Malta Bend and Craig.

To meet an E-10 standard, Missouri would need to produce 300 million gallons of ethanol, which Grisham said could easily be accomplished once planned plants in Laddonia, St. Joseph and Missouri’s boot heel are built.

She said 45 percent of the gasoline sold in Missouri is already blended with ethanol – primarily because it’s required in St. Louis and its five surrounding counties – and that a statewide requirement isn’t a huge leap.

The cost of building an ethanol-producing infrastructure is one of the reasons Rapid Roberts’ Wilson and Casey’s Walljasper are wary of the proposal. The Malta Bend plant, for example, cost $69 million to build. It was paid for by a cooperative of about 700 Missouri farmers.

Wilson and Walljasper said they fear those construction costs could be passed on to them and their customers.

Blunt spokesman Jackson, however, said the government and the state’s farmers are picking up the tab.

To them, he said, the plants are business investments.

“There hasn’t been a need to go out to convenience store owners … and ask them to pay additional money to get theses facilities online,” Jackson said. “The economic activity that they generate I believe will help (the plants) pay for (themselves).”

The state has committed $5.3 million toward ethanol production in its fiscal year 2006 budget.

Gary Marshall, Missouri Corn Growers Association CEO, said plant construction takes 10 years to 15 years to pay off. But motorist still won’t need to pay higher prices during that period, he said.

Marshall said that E-10 fuel would work with almost any car. The only exception might be cars with carburetors more than 30 years old. However, he said some stations would still carry non-blended fuel for classic cars.

Environmental issues

Ethanol’s other major point of debate is its environmental impact.

“It will help our environment by producing a cleaner-burning fuel than what we have currently in our state,” Jackson said

However, Missouri State University chemist Richard Biagioni said ethanol’s a mixed bag environmentally.

Because ethanol is an oxygenated fuel, it emits less carbon monoxide, soot and nitrogen oxide.

On the flip side, ethanol can increase photochemical smog and peroxyacetynitrate – or PAN – that Biagioni said, is “a fairly nasty compound that irritates eyes and lungs, can damage plants and … is a suspected carcinogen.”

“There is some controversy about just what the benefits are,” Biagioni said.

The next step

Meanwhile, the House Agriculture Policy Committee passed House Bills 1270 and 1027 Feb. 14, which both propose E-10 standards, moving the debate to the House floor. No hearings were scheduled for the bills at press time.