Brent Beaulaurier had seen its effect before he had even really noticed evidence of the cause: the CONTAINS 10 PERCENT ETHANOL sign at a service station.

"I saw that the other day on the gas pump, that little 10 percent ethanol thing, and I thought oh maaan," said Beaulaurier, who operates a small-engine repair shop in Yakima that at this time of year is brimming with lawn mowers being fine-tuned for the summer.

"This was the first time I've noticed that on the pumps. We've noticed it (at the shop) by visually looking and observing the fuel that's coming out of these units."

Beaulaurier already has had to replace dozens of fuel lines in lawn mowers and weed trimmers whose owners left E10—gasoline blended with up to 10 percent ethyl alcohol—in them over the winter.

"It literally softens up everything," he said. "It turns gas lines into Jell-O."

Over the last year, E10 virtually replaced basic, ethanol-free unleaded gasoline in Washington after being slowly phased in across the country following passage of the Energy Policy Act of 2005. The measure called for an increased use of biofuel, which—derived from agricultural crops—is intended to be a more renewable, cleaner fuel while hopefully reducing U.S. dependence on foreign oil.

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For many Central Washington residents, though, E10 poses a new dilemma.

Although its effect on automobiles and four-stroke motorcycle engines is usually minimal, E10 can mean pricey repair bills for people who let gasoline sit in small motors that were unused over the winter.

Like older boat motors, for example. It's not unusual in Central Washington, with its dry climate and fresh-water fishing reservoirs, for boat motors to last 30 years or more. But because alcohol is a solvent, E10 can over a single winter peel otherwise harmless residue off the walls of a fuel tank and clog up the works.

"That's the biggest thing I'm seeing now—fuel systems contaminated with the normal residue," said Max Rutger, service manager at Valley Marine in Yakima.

While more modern fuel tanks made of plastic polymers such as polypropylene are rated for alcohol-infused fuel, E10 can render old-style fiberglass tanks useless. And E10 left for any length of time in any two- or four-stroke engine with plastic or rubber parts—like the flexible rim of a weed trimmer's carburetor diaphragm, for example—can ruin them.

"We're starting to see more and more of the fuel starting to gum up the carburetors," said Rich Gamache, service manager at Barnett Implement in Yakima. "In the past, we've seen it once in a while. It's more prevalent this year."

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When engine debris loosened by E10 clogs the fuel filter of a boat motor, Rutger said, the engine will continue trying to produce the same power on leaner fuel—essentially working itself to death.

Rutger uses the analogy of a marathon runner breathing through what amounts to the equivalent of a fire hose and then having to try to produce the same result while breathing through an espresso straw.

"Is the motor going to run? It's not," he said.

"It's a silent killer. Most of the time you don't even know the damage is happening until something literally fails."

Ed Klim, president of the International Snowmobile Manufacturers Association, said even older, pre-polypropylene-era snowmobiles shouldn't be as affected by E10 as boat motors.

"The gas seems to sit in the boats for a longer period of time," Klim said. "The ethanol sitting in that 90-degree temperature, it just causes a different chemical reaction we don't see in snowmobiles. Maybe you would have a problem if you parked your snowmobile out in the Yakima desert when it's 110 degrees."

Users of high-performance snowmobiles, though, should be wary of E10, said Jerry Mathews, operations manager at Starting Line Products in Idaho Falls, Idaho.

"As long as you know what you're getting, you can deal with it," he said. "Where you can't deal with it is where you pull up to a station and think you're getting non-E10 or you don't know what to do when you're getting ethanol.

"Every dealer has had a guy who has bought a sled, put ethanol in it without even realizing what he was doing or not knowing what it would do, and he's burned up his engine."

Many local customers are going out of their way to find non-E10 fuel, but they don't have a lot of options, said Tony Christensen, vice president of Grandview-based R.E. Powell Distributing, one of the region's largest fuel distributors.

"With Exxon and Conoco, we're still able to get the regular unleaded from those two companies. Shell and Chevron have phased it out," Christensen said, noting that only the Conoco stations in Yakima are continuing to order it.

"Conoco has both varieties of fuel available, the ethanol and nonethanol, and the stations were allowed to choose which products they were going to go with. Most of them elected not to make the change.

"There are quite a few customers that don't want the ethanol product."

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They may have no choice soon, as more stations go to E10-only fuel. Or, perhaps, Washington will follow Idaho's lead and resist the mandate.

"In Idaho, it went full circle," said Mathews, from Idaho Falls. "All of our stations were going to ethanol, and they all of a sudden started going back. A lot of the stations have gone back to nonethanol."

Brad Sharp, a professional snowmobile hillclimb racer who owns a Conoco station in Moxee, would like to see that trend here.

"With E10, it's like you're spending $1 and losing $1.10," he said. "They won't say that in the advertisements. They won't tell you (that) you might not get the same gas mileage or you may burn out your two-stroke engine, but they'll tell you you're helping the environment."

Not everybody is even convinced of that.

"The alcohol burns cleaner because it's better for the environment, but you're not getting as much mileage," said Valley Marine's Rutger. "But if it takes more gasoline to do the same job, is it really cleaner?

"It's a Catch-22. It really is."

Scott Sandsberry can be reached at 509-577-7689 or ssandsberry@yakimaherald.com.

What to do with your engine

Here's what you can do to minimize problems with E10 in your two- and four-stroke engines:

* Because ethanol has a shorter shelf life than regular gasoline, use fresh, high-quality gas and replace it often. (Consider buying gas from busy stations, where the fuel turnover is fast and the fuel will likely be fresher.)

* Don't let gas sit in the tank of your lawn mower or similar small engine for longer than 90 days. If you're not going to use it for a long period—over the winter, for example—leave the fuel tank empty.

“To buy this year when I know prices are great, or wait until next year when the great deals may be gone,” that is the question? The uncertain economy has stopped many boaters in their buying tracks. Still others are making tracks afraid that the window of buyer opportunity will not last long. Indeed, new boat sales have been nicely up the last couple of months. We’ve been saying for six months that 2009 will be the best year in history for the consumer buying a new boat. But there is no denying that the current credit crisis is forcing rapid and fundamental changes in the boating industry. We think it will affect the way you buy a new boat sell your used boat in the future, and maybe as soon as next year. Join us for a look at some of the possibilities --

And the question is… “Should I buy a boat this year or wait until next year?”

Eighteen months ago there were five major institutions lending money nationwide to boat dealers so that they could buy boats from boat builders and have them in stock for their customers. The dealers or the builders paid the interest on those loans (called “floor plans”) until the boats were sold and the bank was repaid. Usually the bank immediately made that money available again and the dealer immediately bought another boat to replace the one that was sold.

This system worked for a long time and it allowed boat builders to schedule their production. Dealers would go to “dealer meetings” in the summer see the new models for the following year, and place orders for boats to be delivered in the fall, winter, spring and following summer. With these orders the builders hired staff as needed and bought materials and started advertising the boats so people would go to dealerships and buy them. Ideally, the winter’s production was sold off at retail by mid July.

The boating industry does not work like that anymore.

The Only Game in Town

Now there is only really one major financial institution in the business of boat dealer floor plan lending and that is GE Capital. GE Capital has raised rates and drastically cut back the amounts they will lend boat dealers. Bank of America is no longer a major player and seems to be scaling back its floor planning and others nation-wide banks are minor players. Local banks have also cut back lines of credit or curtailed them altogether. At the same time banks are making it more difficult for consumers to get boat loans by requiring high credit scores, larger down payments and raising the interest rates.

For all of the talk about TARP and TALF funds making leading to small businesses easier, credit for the boating industry has steadily gotten tougher.

Possible Changes Coming

1. Fewer Boat Dealers This is a trend that has been going on since the 10% Luxury Tax put big boat dealers out of business for nearly three years in the early 1990s. The bumpy years since the turn of the century have driven more dealers out, and in the last nine months the credit crunch, the economy, and lower business values are all forcing more to shut their doors. One company tells us they have lost over 15% of their dealers during the last year, and in other cases builders have lost their biggest-selling dealers.

But there will still be boat dealers. But it may mean that when you go to buy a boat in 2010, you may have to drive farther to see all of the brands you would like to check out before making a decision.

2. New Dealers We would not be surprised to see more traditional boat brokers and marinas taking on boat lines. For example, HMY has for years been both a broker but also is the largest new boat dealer for Viking and Viking Sport Cruisers. In Europe boat brokers have been new boat dealers for decades. Increasingly we see marina’s beginning to hang out new boat shingles in the U.S. But we doubt that these dealers will be stocking in the traditional way.

3. Factory-Direct Factory-direct is how the boat business started and some, low production builders are flirting with that model today. Builders of very large boats often don’t have dealers and have customarily paid brokers a “finders” fee for bringing customers to the yard. This practice could slide right down the size range as builders of smaller boats find themselves with too few dealers or no dealers in some territories. Variations on this theme may develop.

4. Hybrid Dealer/Factory-Direct One variation is what Regal started a few years ago. It was the first company we know of which started a hybrid dealer/factory-direct program with just one of its models, the then-new 5260. Because the boats would cost about $850k fully optioned, Regal figured that most of its dealers would not want -- or be able – to stock the boat. For that reason, the factory partnered with the dealer. The dealer would not have to stock the boat, but he could sell the boat, take the trade and service the customer after delivery. He would be paid a fixed commission for his efforts. The factory would work with the customer after a contract was signed to customize the boat and commission it. The program has worked well and the Regal 5260 has been back-ordered since its introduction, and dealers seem to be quite happy with it.

5. Fewer Boats in Stock Next year you will find far fewer boats in stock simply because the banks have cut back on the amount of floor planning they will entertain. Already, major companies have announced nearly a 50% cut back in floor planning dollars for the next model year. That means that the likelihood of the dealer having the exact model you are interested in will be far less than before.

6. Price-Shopping Curtailed When dealers have no inventory in the model you want (and are not paying monthly interest on the floor plan loan), much of the buyer’s leverage to grind down the price will be lost. The boats that are in inventory will probably be the smaller boats and ones less popular to discerning buyers.

7. Boats Built to Order In the future many dealers will only place orders to have boats built once the consumer has signed a contract and placed a deposit. In fact this procedure is going on now with most boat builders but it is not obvious because of the large overhang of 2009 and non-current inventory. Consumers will learn how great they had it when they could just waltz into a dealership and buy the boat they wanted off the floor or back lot.

8. Waiting for the Build A corollary of building to order, is the necessity of having to wait for the build. Most builders have cut back factory crews from 10% to 20% of what they were two years ago and they are not likely to hire back many workers until long-term production planning can take place. That means longer lead times and longer waits for consumers for both large and many small boats.

9. Earlier Decision Making Certainly some size ranges and some brands will be in stock, although less plentiful. This will put pressure on consumers to buy sooner to make sure they get the boat they want before someone else buys it. And veteran and discerning boat owners won’t buy just anything that is available -- they want what they want. They will have to decide early and make sure there is enough time for the boat to be built.

10. Your Money Will Be Tied Up Sooner Essentially, with credit curtailed to the boating industry, the consumer may have to put his cash in the game at an earlier point. Deposits will be required at the time of ordering and depending on the builder, progress payments may be due, as they are customarily for large motoryachts and custom-built boats. In this way the consumer and the consumer’s credit will be helping finance the build for the dealer and builder.

11. Taking Delivery Sooner Starting next year or whenever you order a boat, you will have to pay for the boat when it is ready, even if that is January or February, eventhough you do not plan on using the boat until June.

12. Taking Delivery Later Unless you have a rock-solid contract on delivery date, you may well find that your boat has been delayed in production. You may want the boat in June but get it in August. Don’t assume builders will agree to a hard date for delivery, as many experienced ones will not because there are simply too many things that can go wrong.

13. Will Discounts Disappear? For the last three years boats have been discounted and, of course, never as they have been the last nine months. As the overhang of excess inventory is sold off, and not replaced, the financial imperative for dealers to discount will greatly diminish. Factory rebates will dry up. While there will always be someone discounting, will that be for the boat you want?

14. How Will Trade-ins be Affected? Much of the industry has lived on taking trade-ins and then re-selling the used boats. The trouble is that many savvy dealers are finding this year that the amount they valued a trade last year was far too high and they are underwater on their trade-ins. We think that dealers will be choosy about which boat they will take in trade and how much they give for it.

15. FSBO (for sale by owner) May Grow Increasingly, consumers will have to sell their own boat to have a good chance to maximize the income from it. More dealers than ever will be recommended this approach. The Internet is a low-cost and effective way to sell a used boat privately and so boats listed there will increase. Dealers will also take boats on consignment or broker the used boat for the industry standard of 10% commission.