The wholesale cost of E85 ethanol fuel is now substantially below the cost of regular unleaded gasoline - and motorists in Iowa are responding by using more of the 85% ethanol blend. Having E85 available at more retail gas stations in the state is also helping increase sales of E85, says Monte Shaw, spokesman for the Iowa Renewable Fuels Association.

Sales figures gathered and compiled by the Iowa Department of Revenue were released last week and they show that E85 sales in Iowa continued their strong growth in the first quarter of 2007 despite a temporary, but challenging pricing environment. According to the state revenue department, sales of E85 by Iowa retailers reached 407,932 gallons during the first quarter of 2007. That was a 37% increase over the same time period in 2006.

"Greater consumer access is leading to greater E85 sales, but Iowa has a long way to go," says Shaw, IRFA's executive director. "Despite having less than twice as many flexible fuel vehicles as Iowa, Minnesota has five times as many E85 pumps. Consumer access to E85 is our biggest challenge in Iowa."

Only about 60 Iowa convenience stores and service stations now sell E85.

Iowa needs many more E85 retail pumps
E85 wholesale prices are now attractive relative to regular unleaded gasoline after a challenging period dating back to 2006. Ethanol was called upon to replace MTBE nationwide over a period of just a few months. The unexpectedly short transition period put upward pressure on ethanol prices at that time.

"Today, based on what's happening in the Des Moines terminal market, E85 could be priced more than 70 cents below regular unleaded once you factor in the state and federal incentives," says Shaw. "We know E85 retailers went through a tough time in 2006 and we are excited to hear how the larger price spread is really driving demand."

Iowa is the leader in renewable fuels production. Iowa has 11 biodiesel refineries with a combined annual capacity of nearly 200 million gallons in operation. Three biodiesel refineries under construction will add 120 million gallons of capacity. In addition, Iowa has 28 ethanol refineries with the capacity to produce nearly 1.9 billion gallons annually. There are 19 ethanol refineries under construction or expansion that will add over 1.4 billion gallons of annual capacity. Many additional renewable fuels projects are under development.

The Iowa Renewable Fuels Association was formed in 2002 to represent the state's ethanol and biodiesel producers. The trade group fosters the development and growth of the renewable fuels industry in Iowa through education, promotion, legislation and infrastructure development.

IRFA announces new Values Fund grant recipients
IRFA on June 1 announced the recipients of new Renewable Fuels Infrastructure Grants from the Iowa Values Fund. Grants totaling approximately $80,000 will make E85 renewable fuel available for three more gas stations in Iowa and will make biodiesel available for one more biodiesel blender in the state.

After two years of operation for the Iowa Values Fund grants program, a total of 27 E85 pumps and three biodiesel blending facilities have been funded. Legislation creating the three programs n Iowa was passed two years ago and established the goal of funding 30 E85 pumps and four diesel blending facilities. This state-funded grant program is a cost-sharing program to help gas stations and other distributors in Iowa install pumps and tanks to make renewable fuels like E85 ethanol and soy biodiesel more available to the motoring public.

"We're especially pleased to see companies coming back and applying for grant money for a second location because they're first location is doing so well," says Lucy Norton, IRFA's managing director. She oversees the program in Iowa. "Over the next four to five years, we expect E85 and biodiesel blends to become available at retail fuel stations pretty much everywhere in Iowa."

Businesses that want to install E85 or biodiesel retailing sites or biodiesel blending terminals can apply for the grants through the $13 million Iowa Department of Economic Development's renewable fuels infrastructure program. For information contact IRFA at 515-252-6249 or for an application go to www.iowalifechanging.com/business/downloads/renewfuelprojectapp.pdf. Both programs offer grants covering 50% of the infrastructure cost for E85 and biodiesel up to $30,000 for retailers or $50,000 for biodiesel wholesale blenders.