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AdvertisementMissouri ethanol mandate is self-enforcingJEFFERSON CITY, Mo. (AP)--Missouri mandates that gas stations sell ethanol-blended fuel whenever it costs no more than regular gasoline. But the state has no means of ensuring that Missouri's roughly 4,000 gas stations are following the law on a day-by-day basis. Instead, compliance is left largely to the pressures of the marketplace. So far, state regulators say, that seems to be working fine. Missouri's unusual ethanol requirement began Jan. 1, 2008. It requires nearly all fuel sold by retailers to contain a 10 percent blend of ethanol, but only when it is cost-effective to do so. If the price of ethanol is more than regular gasoline, then tanker trucks do not have to distribute it to retail gas stations. But ethanol must be hauled to the pumps if its costs is less than or equal to regular gasoline. That makes Missouri's law a little quirky. But it gets far more complicated. According to the state Department of Agriculture, which regulates fuel, there are about two dozen refined fuel terminals located either in Missouri of just across the border in neighboring Illinois and Kansas. And each terminal may sell several different brands of ethanol and regular gasoline--each at a different price. So whether a fuel distributor must buy ethanol varies depending on the price of the particular brand of gasoline being purchased at that particular terminal on that particular day. The Agriculture Department's Division of Weights and Measures subscribes to a service that provides daily prices of the various blends of gasoline sold at terminals. But the department does not have personnel who review every sales receipt to see whether tanker truck operators follow Missouri's price-dependent ethanol mandate. Nor does the department have enough personnel to check daily--or even monthly--at each retail gas station to see whether it follows the ethanol law. In fact, legislators didn't give the Agriculture Department any additional staff to enforce the ethanol requirements they passed. Fuel inspectors get to each gas station about once every 18 months, said Ron Hayes, director of the Weights and Measures Division. They check the fuel's octane rating, volatility, sulfur content, cleanliness and its ethanol composition, among other things. If tests show the fuel contains little or no ethanol, then state employees may ask the gas station to prove the price of ethanol was too high when it filled its tank, Hayes said. State regulations give power to both the Agriculture and Revenue departments to examine the records and financial books of gasoline sellers to determine if they are complying with the ethanol law. Violators can face misdemeanor charges punishable by up to a year in jail and a $1,000 fine. But it never has come to that. The Revenue Department has done nothing to enforce the ethanol mandate, said agency spokesman Ted Farnen. The Agriculture Department has asked for price documentation in only a few cases, Hayes said. Of 421 gas stations tested from July through September, just one--in rural Cedar County--had no ethanol in its fuel, Hayes said. That case is under investigation. "We're not really having to go in and do any enforcement actions. It's taking care of itself,'' Hayes said. That's because there is little incentive for gas distributors to violate the ethanol law. It doesn't make sense in a competitive market to buy regular gasoline when ethanol is cheaper. Regardless of how aggressively the state is enforcing the law, "my guys comply with the ethanol standard each and every day, each and every time their tankers pull up to a terminal,'' said Ron Leone, executive director of the Missouri Petroleum Marketers and Convenience Store Association. That's "because we're always pulling the cheapest product.'' Last week, ethanol-blended gasoline generally was several cents cheaper than regular gasoline at Missouri's fuel terminals. But that's not always the case. In the first quarter of this year, the price of regular gasoline was significantly cheaper than ethanol, the agriculture department said. Yet the department said 90 percent of its test samples showed the ethanol-blended fuel. Perhaps because of the hassle of switching between ethanol-free and ethanol-blended gasoline, some Missouri gas stations continued to sell the ethanol version even when they were not legally required to do so. Similarly, fuel suppliers at terminals always keep ethanol on hand--even when it is more expensive than regular gasoline, said Ryan Rowden, executive director of the Missouri Petroleum Council. A permanent "straight mandate would have made more sense for our guys at the end of the day, because we would have had a consist product,'' Rowden said. Advertisement
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