ETHANOL MANDATE SPARKS PROTESTS BY GAS MARKETERS

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After priming the pump with an intensive ad effort, ethanol marketers last week scored a major victory with the Environmental Protection Agency.

The EPA approved a mandate that gasolines sold in the nation's nine smoggiest cities use ethanol, a corn-based additive that makes fuel burn cleaner.

The mandate opens to corn growers and Archer-Daniels-Midland Co., Decatur, Ill., the top maker of ethanol, a market that has been tiny compared with methanol.

But it also means methanol, a gasoline additive made from natural gas and coal that performs the same functions as ethanol, cannot be used in those cities starting Jan. 1. Only oxygenates from renewable sources can be used, but few if any are available.

Before the EPA ruling was finalized, Agriculture for Clean Air, a coalition of Midwestern farmers and agricultural interests, and the American Methanol Institute flexed their advertising muscle.

Agriculture for Clean Air made the first move, placing ads in the National Journal, Congressional Quarterly Weekly Report, The Washington Post and The Wall Street Journal.

The ads contended methanol is a dangerous substance that shouldn't be used in gasoline and that ethanol is pure, even safe enough to drink.

It's unclear who created the ads for the group, which listed a Washington post office box in its ads but has no listed phone number.

Larry Quandt, president of the Illinois Farmers Union, a member of Agriculture for Clean Air, said the organization decided to keep the name of its agency to itself.

Mr. Quandt also denied speculation that Archer-Daniels-Midland, also a member of the coalition, funded the ads or otherwise was more involved than other members. ADM executives didn't return phone calls.

The effort prompted the American Petroleum Institute and American Methanol Institute to file complaints with the Federal Trade Commission, alleging the ads were "misleading." The FTC has yet to take action on the complaints.

The methanol group ran an ad in The Wall Street Journal and The Washington Post to counter the Agriculture for Clean Air ad. The headline read, "America needs clean air, not hot air." It went on to say: "The recent ethanol ads used the pseudo-science of Model T Fords, spelling lessons and `indulgent patriots' swigging motor fuel in an effort to discredit methanol." The Gorman Group, Washington, created the ad.

Adam Sieminski, analyst for NatWest Securities, Washington, said the advertising played a role in the EPA decision by influencing constituents to write letters and raising awareness. However, he said it's very unlikely it influenced anyone in Congress, which could overturn the EPA decision.

The API, petroleum marketers and methanol producers vowed to fight the EPA mandate, claiming it will cause fuel shortages, increase the cost of gasoline and eliminate a competitive market for methanol.

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