While Thursday’s public hearing on ethanol-blending rules appeared to have produced plenty of support for the alternative fuel, the petroleum industry was hoping the whole thing would fall through. “It’s all about control,” said William Maloney of Maui Ethanol LLC.
While Thursday’s public hearing on ethanol-blending rules appeared to have produced plenty of support for the alternative fuel, the petroleum industry was hoping the whole thing would fall through.
“It’s all about control,” said William Maloney of Maui Ethanol LLC. “They don’t want the competition.”
The future of Kauai’s ethanol industry is now in the hands of the Department of Business, Economic Development and Tourism. Ultimately, Gov. Linda Lingle is the final arbiter. The petroleum industry hopes to the governor will stall on signing the rules by hammering home the theme that ethanol producers here won’t be able to meet the 40 million gallons per year necessary to meet the quota. They’re saying that the industry here will have to import sugar and other raw materials from outside the state.
“And that’s not good for Hawaii, is it?” asked Daniel T. Riley, Tesoro vice president of government, community and industry relations. “The people of Hawaii require a guaranty of local ethanol from local sugar,” Riley said on behalf of Tesoro Thursday.
“Tesoro is against the current version of the DBEDT’s rules because they do nothing to require or encourage Hawaii ethanol from Hawaii sugar. Instead, they leave the state open to a tidal wave of imported ethanol.”
It’s a slightly different tactic for the petroleum industry, who a week ago were saying that ethanol polluted the air, and that it would result in higher costs at the pump. Those arguments have been effectively terminated by ethanol proponents. Petroleum here was arguing that Hawaii’s ethanol should be sent to California, thereby bypassing the blending mandate.
Melissa Pavlicek, a spokeswoman for the Western States Petroleum Association, which represents ChevronTexaco and Shell Oil, testified that ethanol could cost consumers more money without necessarily resulting in less pollution. Now, petroleum is questioning whether 18 months is enough time to allow for adequate supplies of locally produced ethanol.
If that’s the best argument the petroleum industry can muster, then the existing ethanol rules probably stand a fighting chance of passing as is, said Bob Shlesser of Worldwide Energy Group, the group building Kauai’s ethanol facility.
“We’ll be ready,” Shlesser said. “We’ve got plenty enough to produce the necessary ethanol. That argument is moot.” Shlesser, however, is waiting to exhale because he is still not sure if DBEDT and the governor will be swayed by petroleum’s argument. “I’m confident that the rules will be passed, but it’s not a done deal until the governor signs,” he said.
At best, Petroleum hopes their new tactic is enough to stymie the rule-making process, or at least slow it and demoralize investors in the industry.
“The ethanol industry needs to have a guarantee of a market for the ethanol they plan to produce to assure investors that there will be a market for ethanol in Hawaii,” read Charlie Okamoto, director of finance and property management for Gay & Robinson. Unlike Maui sugar, which has the support of Alexander and Baldwin’s deep pockets, G & R’s businesses could be slammed if the ethanol rules don’t pass. Indeed, if they aren’t passed very soon, investors will walk, Okamoto says.
“If the rules are not passed as is we can expect a never-ending process and possibly the withdrawal of the potential producers,” Okamoto said.
It’s hard to believe that anything like an amenable working arrangement could come from all this.
After all, it’s been 10 years since the law requiring ethanol to be blended with gas was passed, and proponents and opponents of the alternative fuel have been clashing ever since. The two industries will have to set aside their differences and work together closely if the mandate to mix goes through.
Phil Hayworth, Business Editor, can be reached at 245-3681 (ext. 251) and phayworth@pulitzer.net
