Ethanol Effects of Energy Bill remain Unclear

Looks like someone will need a crystal ball to figure how, exactly, the Federal Energy Bill--signed yesterday by President Bush--will impact California's gas-additive situation.

Mike Scheible of the California Air Resources Board said the state's ethanol consumption, now tops in the nation, might drop by 20 percent.

Ethanol backers disagreed, saying the legislation could mean even more ethanol, not less, will get blended into California's gas. That's because the new law requires the nation's oil refiners to double the amount of ethanol they currently use by 2012, which virtually guarantees some ethanol consumption in California.

"It translates into more ethanol use in California," said Neil Koehler, chief executive of a company that's building a $52 million ethanol-production plant in Madera.

The new law erases a federal mandate, enforced by the U.S. Environmental Protection Agency, requiring the gas sold in most of the state to contain 5.7 percent ethanol.

California officials said the U.S. rule put refiners in a bind, limiting their ability to blend gas less expensively. Industry consultants said the rule was adding as much as a dime a gallon to the cost of California gas.

The EPA has said that ethanol cleans the air, but state officials contend that ethanol's chemical properties can actually worsen air quality during hot weather.