Ethanol Mandate is Dusted Off

Sep.12–LINCOLN — Breathtakingly high gasoline prices make this an opportune time to require 10 percent ethanol in all gasoline sold in Nebraska, a state senator said Wednesday.

Speaking in advance of a public hearing on the issue, State Sen. Matt Connealy of Decatur said he believes changing circumstances could boost the chances of an ethanol mandate passing the Legislature next year.

“It’s probably more timely than ever,” he said. “We need to make our fuel profile broader. Ethanol is part of that.”

Connealy said greater ethanol use could save money for Nebraskans. The Consumer Federation of America concluded earlier this year that using 10 percent ethanol in all gasoline could cut the cost of fuel by 8 cents a gallon.

In addition, a mandate would reduce the use of oil, build the state’s ethanol manufacturing industry, provide markets for Nebraska-grown crops and help reduce pollution, he said.

Connealy was among the senators who have previously pushed an ethanol requirement.

He and State Sen. Ed Schrock of Elm Creek, both farmers, introduced bills in 2000 and 2001 that would have mandated that certain grades of gasoline contain ethanol. All failed in the face of stiff opposition from the petroleum industry and others.

One of the opponents during the earlier debate was State Sen. Tom Baker of Trenton, who owns a convenience store that sells ethanol-blended and regular gasoline.

Baker said Wednesday that he remains opposed to mandates.

“The market will straighten this out,” he said. “Just let the market work.”

Connealy argues that the market isn’t working well enough. Although ethanol-blended fuels cost less than gasoline, petroleum marketers don’t always pass on the savings to consumers, he said.

He said Nebraska should follow the lead of Minnesota, which has had a 10 percent ethanol mandate since 1997. That state implemented the mandate with few problems, despite predictions of disaster, he said.

“Most Minnesotans are unaware or unconcerned that ethanol comprises 10 percent of every gallon of gasoline they buy,” U.S. Sen. Mark Dayton, D-Minn., said in 2003.

This year, Minnesota state lawmakers increased the mandate to 20 percent, starting in 2012.

Hawaii and Montana are in the process of joining Minnesota. Hawaii has a 10 percent mandate that takes effect next year. Montana’s will start when companies in the state produce 45 million gallons of ethanol.

But proposed ethanol mandates failed in North Dakota and Wisconsin this year and are the subject of controversy in Missouri.

NEBRASKA’S FUEL TAXES:

–Nebraska currently collects 25.3 cents in fuel taxes on every gallon of gasoline and diesel sold in the state.

–The total includes a 12.5-cent base, which is fixed in law. The rest is variable and is adjusted Jan. 1 and July 1 of every year. Adjustments typically are less than one penny per gallon.

–The variable tax is set at the rate needed to support the state’s road-building budget. Prices of fuel, consumption of fuel and trends in other revenues earmarked for road-building all affect the variable rate.

–Revenue from fuel taxes go into state and local road-building and maintenance projects. If fuel taxes were lowered, state roads officials say, the state would have to find other sources of revenue to pay for current contracts.

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