Higher Price of Ethanol Doesn't Stop Nebraska Government Purchases

Users of ethanol have been paying more at the pump this summer, and Nebraska state government is no exception.

Since 1980, state policy has been to purchase gasoline with ethanol, either E10 with 10 percent or E85, which is 15 percent gasoline — no matter the price.

This summer, however, gasoline with ethanol has often been more expensive, after several years of E10 being priced a dime below regular unleaded. Nevertheless, the state isn't having second thoughts.

The policy goes beyond price, said Aaron Sanderford, a spokesman for Gov. Dave Heineman.

"The governor is committed to ethanol and is committed to the good it does our rural communities," Sanderford said. "It is impossible to ask folks to use ethanol unless you lead by example. And state government has been leading by example for more than a quarter of a century."

Nebraska corn is used to make ethanol, which is then used to make the blends that the state's policy promotes.

Heineman's staff recently sent a memo reminding employees who drive the 690 state-owned flexible fuel cars that they should buy whatever is cheapest between E10 and E85.

Governors since Charles Thone in 1980 have required employees who drive state-owned cars to always use an ethanol blend.

The exception: the Nebraska State Patrol.

Troopers are directed by state law to buy the least expensive fuel. That directive saved the patrol about $22,000 over four months when E10 prices were a dime higher than regular, records show.

By the end of the year, Nebraska will have 12 plants producing just more than 650 million gallons of ethanol, said Todd Sneller, administrator of the Nebraska Ethanol Board.

Currently, about 250 million bushels of Nebraska corn is used by the ethanol industry, he said.

The general surge in E10 pricing was tied to a high demand for ethanol, he said. Demand increased when several northeast states substituted ethanol for MTBE an additive blamed for groundwater pollution.

Gov. Matt Blunt, who earlier this year signed into law legislation requiring Missouri's gas stations to sell ethanol-blended gasoline beginning in 2008, is scheduled to address the Governors' Ethanol Coalition convention on Wednesday. He'll be joined by Kansas Gov. Kathleen Sebelius, chairwoman of the 35-member group.