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In Kansas, Demand for Ethanol Continues to Rise

KANSAS CITY, Kan. -- Proponents of ethanol are crowing that since Kansas passed a law ending a requirement that ethanol gasoline pumps be marked, retail orders have soared.

The Kansas City Star reports that industry officials project retail demand to rise 400 percent to 500 percent in Kansas, reflecting an increase from 5 million gallons last year to 25 million gallons this year.

“There's been staggering demand for it,” said Curt Wright, vice president of operations for Taylor Oil, which distributes fuel in the area.

Demand began to build last winter when ethanol prices plunged and gasoline prices skyrocketed, according to the Star. But orders really took off in April after the labeling law passed in Kansas and has grown even stronger since July 1, when the law became effective.

Most Kansans may not even know they're using more ethanol. Under the law, retailers no longer have to alert consumers that some pumps contain a 10 percent blend of ethanol. It's up to retailers whether to use the labels.

Proponents of the change said many urban consumers mistakenly viewed the labels as warnings. They said the labels date back 30 years to a time when there were concerns about experimental “gasohol” blends and before fuel detergents.

“Basically it (labeling) was an outdated law,” Sue Schulte, a spokeswoman for the Kansas Corn Growers Association, told the newspaper.

Virtually all automakers now warrant their vehicles for a blend of 10 percent ethanol, which proponents say burns cleaner than gasoline and has the potential to stretch American petroleum supplies.

Officials said getting rid of the fear factor encouraged more retailers to sell ethanol. They now have the flexibility to sell gas or a 10 percent ethanol blend, whichever they can buy more cheaply, giving them a competitive edge that may result in savings that are passed on to consumers.

Though the labeling bill easily passed the Kansas legislature, some critics still think consumers should be informed. “I think people should know what they're buying,” said Richard Haig, owner of Westside 66 in Lawrence, who put up a sign at his station that trumpets it still sells “100 percent” gasoline.

So far, such critics are in the minority.

But ramped-up demand also is pushing up ethanol prices -- though consumers can still get a break of 2 cents or more per gallon at the pump on fuel containing ethanol. The increase in demand was so sudden the industry is struggling to build up supplies, causing temporary shortages and delays in shipping ethanol to terminals.

“We've seen demand increase by 400 percent in the last 60 days and we've had trouble keeping up,” said Galen Menard, vice president of supply and trading for the National Cooperative Refinery Association in McPherson, Kan., one of the state's biggest fuel refineries and ethanol blenders.

Consider last year that the McPherson refinery blended only 20,000 gallons of ethanol a month. In June it blended more than 575,000 gallons. And Menard expects demand to continue growing, creating a dire need for more trucks and storage tanks.

Because of its composition, ethanol cannot be piped like petroleum. It has to be transported by rail or truck to terminals, where it is blended with gasoline. Menard said trucks often are waiting two and three hours in line to get ethanol at terminals because they are not equipped to handle the demand.

Despite supply problems, Kansas officials see nothing but an up side. “We view this as good for Kansas,” Lee Allison, chairman of the Kansas Energy Council and director of Gov. Kathleen Sebelius's science and energy policy office, told the Star.

Allison said heightened demand would spur ethanol production, which would help farmers who grow corn, sorghum and other grains from which ethanol is made, to generate more jobs and reduce transportation costs to consumers. Some of these infrastructure problems could be addressed by new incentives contained in a proposed energy bill.
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