The Big Three automakers—General Motors Corp. (GM), Ford Motor Co. and DaimlerChrysler—have already produced more than 6 million flexible-fuel vehicles (FFVs) for U.S. markets, all of which are capable of running on E85. According to GM, the three auto companies have agreed to make half of their vehicles E85- or biodiesel-capable by 2012.

One common complaint from FFV drivers is that there simply aren't enough outlets distributing the fuel, which is why most FFV owners still operate on straight gasoline or E10 at best. If all the FFVs in the United States were to fill up on E85 year-round—assuming annual mileage at 15,000, a fuel-efficiency rating of 20 miles per gallon and an exact 85 percent blend—this would require a total ethanol production volume of more than 3.8 billion gallons. Total U.S. production in 2006 was 4.86 billion gallons. So where is all that ethanol going? According to the American Coalition for Ethanol, 99 percent of domestic ethanol production is consumed in low-level blends like E10 or, in the case of California, E6. Conversely, this means that only 1 percent of ethanol is blended into E85. Despite this fundamental supply problem, automakers are continuing to ramp up production of E85-capable cars and trucks. What happens when demand is created without the ability to supply?

This issue isn't new by any means. Four years ago, National Ethanol Vehicle Coalition Executive Director Phil Lambert said, "Our hope is that by increasing awareness, we can help solve the chicken and egg problem—spurring more market demand, which will lead to more fueling stations and ultimately more E85 vehicles on the road."

One can argue that 1 percent of ethanol blended into E85 is enough to meet the country's current demand, but if awareness of this renewable fuel spread and all FFVs on the road started fueling with E85, there would be a strain on all ethanol supplies. Ethanol could be redirected from lower-level blends into E85. However, the problem with this is that there are state-level mandates requiring E10 in various places and E6 in California as well as lower-level oxygenate blending in non-attainment zones as designated by the U.S. EPA. Another contentious approach to making more ethanol available for E85 blending is to remove the import tariff. If legislation seeking to subsidize the production of coal-based synthetic ethanol becomes law (see the Feedstock feature), perhaps more U.S. ethanol would be available for E85 blending.

Red Cavaney, American Petroleum Institute president and CEO, took part in a conference call with energy bloggers April 18. He discussed limitations to E85 and addressed claims that oil companies are holding back the distribution of the renewable fuel by saying oil companies absorbed every drop of ethanol that U.S. producers could make in 2006. "[We] think that E85 can ultimately have a place, and right now we have no objections," Cavaney said. "Most of our member companies have it in some facilities. But E85 can only come into its own when you can get larger volumes of ethanol, and it's got to be cellulosic ethanol into the system, and that's not here yet."

One concern with the creation of E85 demand, but lack of supply, is the potential backlash that the renewable blend could receive by those who purchase FFVs but are unable to find the fuel. When compared with the alternative of having too much E85 on the market with no purchasers—maybe it's a risk worth taking.