Friday, August 13, 2010

GM Calls E85 'Our Best Near-Term Solution'

GM E85 Ethanol

General Motors has apparently chosen E85 ethanol as the best "near-term" alternative fuel solution. In a post on GM's FastLane blog, technical fellow Candace Wheeler, says that the carmaker is ready to move forward with an ambitious expansion of flex-fuel vehicles, which can run on either gasoline or corn ethanol blends of up to 85 percent.

Despite commitments from major automakers like GM, E85's long-term outlook remains in question. Why's that? Because evidence suggests that very few people who own flex-fuel vehicles actually end up using the fuel. Just 2,500 of the 162,000 gas stations in the United States actually offer E85, which in most parts of the country offers little to no cost savings compared to standard gasoline.

Dr. Wheeler said that GM has pledged to produce 850,000 flex-fuel vehicles, beginning next year. That would represent a 55 percent increase over current levels. "Our 2010 lineup represents the most (flex-fuel vehicle) models on the market," wrote Wheeler. "With many new stations opening up, especially in the south and south central regions, it�"s becoming easier find a place to fill up."

But How Just 'Near-Term' is E85?

Indeed, Wheeler cites a 17 percent increase in ethanol production over last year's levels, to 839,000 barrels per day, as a reason why E85 might catch on. But even if expiring production and blending incentives are extended by congress later this year, there's still reason to be skeptical of whether it will catch on. E85 isn't in a position to immediately benefit from a spike in gas prices, and could be edged out by increased production of other alternatives should prices rise more gradually.

Even if the majority of American cars were to have flex-fuel capability and gas prices were to somehow increase to 2008 levels next summer, most drivers would have no way of cashing in on the savings until enough fuel pumps were installed at enough gas stations nationwide. Furthermore, even with production of ethanol rising, it's unlikely that enough E85 could be produced to meet a significant level of demand in the near term�especially without impacting food prices.

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