Wal-Mart mulls selling ethanol-based fuel

Retailer explores offering gasoline alternative at 383 stations across U.S.

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updated 8:38 a.m. ET June 1, 2006

SPRINGFIELD, Missouri - Wal-Mart Stores Inc. may offer ethanol made from corn at its 383 U.S. gas stations, a company spokesman said Wednesday.

Wal-Mart stressed it is not ready yet to make any announcements, but corn growers said Wal-Mart's entry into a market now mainly made up of scattered independent gas stations would be a significant boost to a budding new fuel industry.

Ethanol made from U.S.-grown corn has become a hot topic this year as Congress, the Bush administration and American drivers look for alternative fuels to reduce dependence on foreign oil, keep fuel prices down and curb emissions blamed for global warming.

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The world's largest retailer brought together a group of industry, government and academic experts on alternative fuels in Washington last week to discuss how Wal-Mart could develop a network for supplying gas stations at its stores and Sam's Clubs with E-85 fuel.

E-85 is a blend of 85 percent ethanol and 15 percent gasoline.

"We are considering E-85, absolutely," Wal-Mart spokesman Kevin Gardner said.

"We are looking to continue to work with and identify strategic partners in the business community to further our efforts in the alternative fuels arena. That said, there are a lot of things we are looking at and considering and we just don't have anything to announce right now," Gardner said.

Representatives from the fuel industry, Wal-Mart suppliers and government and nongovernment experts attended the meeting.

The National Corn Growers Association was one of those attending, and its chief executive, Rock Tolman, said a decision by Wal-Mart to offer E-85 would help solve one of the emerging industry's problems: not enough availability for consumers.

More than 5 million vehicles on the road can run on the blend and car manufacturers say they are making more models that can use it. Yet the fuel is sold by just over 600 retailers across the nation, mainly independents rather than chains.

Tolman said the move would also increase competitive pressure on national chains to carry E-85.

"It would be one more significant, very big step in this whole transition toward biofuels," Tolman said.

Wal-Mart owns and operates gas stations at 375 of its nearly 570 Sam's Club locations and another eight on the grounds of Wal-Mart stores. Outside companies operate gas stations at more than 1,000 Wal-Marts nationally, but Wal-Mart cannot dictate whether they offer E-85, Gardner said.