Iowa Asks "Is Ethanol the Chicken, or the Egg?"

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Iowa Asks "Is Ethanol the Chicken, or the Egg?"

DES MOINES -- The widespread acceptance of ethanol-based fuel hinges on one factor -- do the pumps come first, or the car? It may be nothing more than the 'chicken or the egg' conundrum, but its proving to be quite a challenge to answer in Iowa, where the state has made available $13 million dollars in grants to convert pumps, but have only had limited response, according to a report in the Quad-City Times.

Even though the state offers up to $30,000 to convert existing pumps to E85, there have only been 24 grants awarded, with half of them going to retailers looking to install biodiesel, not E85, the report stated. Currently, 55 stations in the state sell E85.

Gas station owners are hesitant to spend the thousands of dollars it requires to switch their equipment, according to the Petroleum Marketers and Convenience Stores of Iowa.

Very few of Iowa's drivers own cars that can handle the E85 fuel, which makes gas retailers wary of installing the systems, said Dawn Carlson, the association's president. She estimates that less than 60,000 flex-fuel vehicles are being driven in the state.

"Our goal is to push renewable fuels, and E85 might not be the way to do it," Carlson told the paper. "We've got people who have put in E85 already who are taking it out because people aren't buying it."

Another roadblock for retailers is a new requirement that forces stations using the grants to keep the E85 fuel pumping for a minimum of five years. Few owners would be willing to make such a commitment, according to the organization, which sought a three year minimum.

"There's just so much uncertainty with E85 right now," Carlson told the newspaper.

But if the state wants to meet its mandate of 25 percent of its motor fuels to be made from renewable resources by 2020, gas retailers must adopt the fuel, officials said.

"People aren't buying flex-fuel vehicles because they can't buy the fuel for the flex-fuel vehicles. It's the old chicken versus the egg," Rep. Phil Wise, a non-voting member of the Iowa economic development board, told the Times.

Others maintain that the fuel will come, if given some time. "It's going to be ugly for a few years, I just think it will be, as you try to get supply and demand in balance," Iowa department of economic development director Mike Blouin told the paper. "But it will come. Too much depends on it."