E85 Sales Continue to Grow in Iowa

Motorists are buying 48% more of the 85% ethanol blend than they did in the same period the year before.

The Iowa Renewable Fuels Association announced in early January that E85 sales in Iowa continued remarkable growth during 2007. That's based on data for the third quarter of 2007—the latest data available from the Iowa Department of Revenue. Sales of E85 by Iowa retailers reached 941,547 gallons during the third quarter of 2007, which is a 48% increase over the same time period in 2006.

"E85 continues to be a great bargain for Iowa consumers," says Monte Shaw, IRFA executive director. "Strong demand growth sends a signal to retailers that there is definitely room for many more E85 pumps in the state. And we are seeing movement. In the three months since this reporting period, Iowa has added 11 E85 pumps, bringing the current total to 79."

Thus, Iowa now has 79 E85 retail outlets. A list of all the E85 stations can be found at www.iowarfa.org/ethanol_e85refueling.php. Retailers interested in installing an E85 pump can receive a grant from the Iowa Department of Economic Development. Information and a grant application may be found at www.iowalifechanging.com/business/renewablefuels.html.  

Retailers continue to add E85 sites

"Two years ago, Iowa had only 30 E85 stations; now we have almost 80. There's clearly demand for a clean, renewable fuel source that keeps consumers' money right here in Iowa," says Shaw. "New data suggests there are several parts of Iowa that have the right vehicles to use E85, but sometimes there are no refueling sites nearby. We are pleased retailers continue to fulfill these needs by adding E85 sites."

The number of fuel stations offering biodiesel in Iowa is also growing. Iowa now has 175 stations in Iowa carrying a biodiesel blend of some level.

"We're making progress on getting E85 and biodiesel available to motorists," says Shaw. "But there are still 2000 more stations to go. The E85 results have been exciting, based on sales figures and with the attractive price of ethanol, we may see more retailers move forward. Some of them early on began offering E85 because they felt it was the right thing to do. Now retailers are figuring out that in the right location, it's the right thing and also a very profitable thing to do."

A year ago we had $4 corn and $70 oil. Now we have almost $5 per bushel corn and $100 per barrel oil. Does that mean that the profit margin on ethanol production still looks pretty good?

Higher gas prices help ethanol profit margin

"For ethanol it's okay right now," says Shaw. "But we've had many new plants built the last couple of years in the U.S. that the increased supply of ethanol is actually holding the ethanol price down somewhat. We have a lot more ethanol being produced now which means that the price of ethanol hasn't followed the price of gasoline up as much."

That's why if you go to the pump now, a lot of places in Iowa used to have a 7- to 10-cent spread between ethanol and the non-ethanol blend. It's now often 13 cents in most parts of Iowa. "That's great news for consumers, not quite as great news for ethanol plants that are making the ethanol," says Shaw. "But we're excited about being able to keep the cost of fuel lower than it otherwise would be for consumers - thanks to blending ethanol into gasoline."

Iowa is the leader in renewable fuels production, he notes. Iowa has 29 ethanol refineries with the capacity to produce over 2 billion gallons annually. There are 17 ethanol refineries under construction or expansion that will add 1.6 billion gallons of annual capacity. In addition, Iowa has 16 biodiesel refineries with a combined annual capacity of over 350 million gallons either in operation or under construction. Many additional renewable fuels projects are under development.

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