War & oil (part IV)

As I've been saying, America is at war, largely because of our dependence on Mideast oil.

In order to get out of the Middle east, we'll need to reduce, then end, that dependence. In order to do that, I think the CT legislature should get serious about moving to alternative fuels, such as ethanol.

In order to move to ethanol, CT needs to manufacture, distribute and consume ethanol locally. In previous posts, I've addressed the manufacturing and consumption aspects. But we also need to

Distribute

By "distibute," I mean we need alternative fuel stations across the state. And now some Q&A that may help make that happen...

Currently, how many ethanol (e85) fueling stations exist in CT?

Zero. (And therein lies the key hurdle in creating a real distribution network: CTs lack of fueling stations.)

Why don't any exist in Connecticut?

I blame the state legislature. While Governor Rell called for action on "energy issues" last January, the legislature decided that banning soda in schools was more important. Although, in fairness, it may not have been a conscious decision to ignore "energy issues." Frankly, it wouldn't surprise me if the majority simply found the task too daunting. Or perhaps they were afraid of confronting Big Oil. Or maybe there was another reason? If so, I can't fathom what it is. Regardless, whatever the answer, their inaction is unacceptable. When it comes to energy, the legislative majority has failed Connecticut.

Have other states "gotten it right?"

Yes. Here is an example of what's happened in Indiana just this year. And here is some more info on how, unlike Nutmeggers, Hoosiers are getting it right. (Indiana added 28 e85 fueling stations from mid-2005 to mid-2006.)

How do we get the fueling stations?

The two most straightforward answers are:

1) build new infrastructure (in other words, cut pavement and put in new "islands")--this is cost-prohibitive. The cost could easily exceed $100,000 per island/station. Or

2) convert existing infrastructure (clean out existing underground tanks and aboveground pumps and use them for alt fuels)--I believe this makes economic sense. This would likely cost from $2,000 to $15,000 per existing pump/tank and require a new law be written (Big Oil would likely view it as a slap in the face).

So what's my plan for the state to address both CT's and America's dependence on Mideast oil?

1) Pass legislation similar to that recently signed by Governor George Pataki (NY). This legislation would prohibit "exclusivity clauses" in gas station contracts. These are the clauses in the franchise agreements that prohibit the small business (gas station) owner from selling any fuel other than that offered by the Big Oil company. Put differently, if you own a gas station, you're not allowed to sell anything other than the fuel offered by the Big Oil company. You know... the one whose name is on the gas station island's canopy (i.e. Mobil, BP, Shell, Citgo, etc.).

2) Promote the federal tax credits (30%) provided for converting a gas station to offer an alternative fuel. (The Energy Policy Act of 2005 contains a new federal tax credit to assist with the installation of equipment and infrastructure to dispense E85 at retail outlets. This new incentive provides a 30 percent federal income tax credit, up to a maximum of $30,000, to assist with the establishment of alternative fuel infrastructure, including equipment necessary to dispense E85. This tax credit became effective in 2006 and is scheduled to expire December 31, 2008. Contact the Internal Revenue Service for more information about this tax credit.)

3) Add state tax credits (perhaps another 30%) that would further encourage conversion.

4) Promote, promote, promote! In my opinion, increasing public awareness is critical to making anything happen.

Some other thoughts:

Is the conversion technologically feasible?

Yes. 90% of gas stations built since 1990 (or so) are conversion-friendly.

How many gas stations would convert?

I'm not sure. But we have approximately 1100 gas stations in Connecticut. (I think there are about 13-15 gas stations in Bethany, Cheshire and Prospect.) I believe that with increased public awareness, gas stations across the state would begin to convert when they knew they had a ready supply of an alt fuel. (That's why we need to simultaneously address the manufacturing component.)

Why would a gas station owner want to convert?

Small business owners want to make money. Concurrent with the rise in gas prices, premium gas sales have fallen. In other states, gas stations are converting their premium gas tank/pumps. This is largely a profit-driven motive. If you're not making any money selling premium gas, you can't make any less money selling ethanol. But you might be able to make a profit.

How much would it cost the state taxpayers?

Based on the above estimates and adding some assumptions:

One tank/pump conversion: $10,000
30% state tax credit: $3,000
Stations in year one: 50
Total cost in year one: $150,000

Would that be an increase in spending?

Not necessarily. If we think big picture and address the manufacturing, distribution and consumption components together, it may very well not increase spending. Perhaps the $60,000,000 farm grant (or the $1billion state surplus) could cover it. (With this, my first goal is really to jumpstart a discussion and see where it leads.)

As I wrote above, America is at war largely because of our dependence on Mideast oil. Ultimately our only way out of the middle east is by ending that dependence.

Tim White
State Representative candidate
Bethany, Cheshire & Prospect
TimWhite98@yahoo.com