Fueling Freedom Plan Will Redirect Government Support to Create Open Fuels Market

July 19, 2010

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(Growth Energy) Growth Energy, a coalition of U.S. ethanol supporters, today called for the redirection and eventual phasing out of government support for ethanol in return for a level playing field – infrastructure investments that will create competition in the fuels market and give consumers true freedom to choose their fuel.

"We are confident that in a fair and open market, ethanol can and will compete successfully against oil,” said Tom Buis, CEO of Growth Energy. “Creating that competitive market will save money for both taxpayers and motorists, since it takes the control out of the hands of Big Oil and puts it into the hands of the consumer.”

The “Fueling Freedom” plan calls for the phasing out of current ethanol supports over time, by redirecting a portion of those funds to build out the infrastructure for the distribution and use of ethanol, and shifting the remaining portion away from the oil companies to opening the market. The primary elements of the plan include:

Funds currently going to the oil industry as an incentive for blending ethanol into gasoline (the VEETC) would be redirected to provide backing for the build out of distribution infrastructure for ethanol – such as tax credits for retailers to install 200,000 blender pumps and federal backing of ethanol pipelines. This will provide Americans the access to choose ethanol in an open and free market, and would allow for the elimination of the tax supports over time in exchange for that level playing field.
Requiring that all automobiles sold in the U.S. be flex-fuel vehicles – as many as 120 million. This requires no additional cost to taxpayers and a minimal cost (about $120 per vehicle) to vehicle manufacturers.

Growth Energy’s Fueling Freedom plan, once implemented, would build out the infrastructure in the United States to create a path that leads to a genuinely free market – an open market that is free of government supports. Redirecting monies currently paid to oil companies to blend ethanol into gasoline toward infrastructure improvements would enable consumers to choose between gasoline and renewable, homegrown ethanol.

“Fifty five years ago, President Eisenhower, himself a former general, proposed an Interstate Highway System to give Americans the freedom to travel our country,” said Growth Energy Co-Chair Gen. Wesley K. Clark (Ret.). “Today, Growth Energy is proposing to give Americans the freedom to choose an American fuel to travel those highways. By creating an open fuel market, we can break OPEC’s monopoly, improve our national security and create jobs here at home.” READ MORE and MORE and MORE (background--excerpts below)

...Why Americans have not been given an option?
There are three fundamental reasons that Americans have not been given the opportunity to choose their fuel in a free market:

Access to America’s automobile fuel market is tightly controlled by the oil industry, which maintains complete management of the infrastructure for distribution of fuel – from the oil wells to the fuel pump. And while the oil companies (blenders) have been incented to include ethanol blends, it is only based on the economics of receiving a “blender credit” which incents them to blend ethanol to their financial gain. There is no other reason for blenders to provide delivery mechanisms for ethanol – a product which competes directly with their own product.
Automakers have not been making all vehicles flex-fuel compatible, despite the clear advantages of making every model flex-fuel. Why? Because most Americans don’t have an option of pumping higher blends of flex fuel – only a fraction of fueling stations offer blender pumps, which are designed to allow the consumer to choose the amount of ethanol blended in their fuel. Automakers have singled out the lack of blender pumps available in many U.S. markets as a hurdle that must be resolved in order to see more ethanol used in transportation fuel.
As a fledgling industry competing with deeply entrenched and heavily-subsidized fossil fuels, domestic ethanol did require assistance to gain some market share, develop new technologies and grow to meet the goals of the Renewable Fuel Standard. Based on this, a course of growth was determined, and in honesty, the industry became comfortable with this track. However, producing ethanol is no longer the problem; the problem is access to the markets. READ MORE and MORE (GreenTechMedia) and MORE (Reuters) and MORE (Des Moines Register with RFA statement)