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U.S. Energy Secretary Steven Chu said in Des Moines today the nation's car manufacturers ought to make all new automobiles able to run on E85 ethanol-blended fuel.

But Chu said the government could face resistance should it insist on the new standard, despite two of the nation's three main automakers' having recently filed for bankruptcy protection.

Chu, in Iowa awarding the state a share of its federal stimulus money, later said all pumps ought to offer at least a blend of 15 percent ethanol.

"We should think about doing the following. I've been told it costs about $100 in gaskets and fuel lines to turn a car so that it can go all the way to E85," Chu said, addressing public officials and news media at the Des Moines Botanical Center.

E85 is a blend of 85 percent ethanol and 15 percent gasoline. Iowa is the nation's leading producer of ethanol.

"But a new car , it would only cost $100 out of $15,000. Wouldn't it be nice to put in those fuel lines and gaskets so that we can use any ratio we wanted," Chu added. "It's just a thought, I don't think you're going to get any objections in this audience."

Chu stopped short of saying the Obama administration would require the companies to build all vehicles as flex-fuel-ready.

"It's beginning to be discussed," Chu said. "But, again, it's one of those things where I think with virtually anything, once the government steps in the natural tendency is to resist government intervention."

General Motors and Chrysler have recently sought bankruptcy. The federal government would become a majority shareholder in GM.

There is legislation pending in Congress that would require all domestic automobiles to eventually make all vehicles capable of running on E85.

Monte Shaw, executive director of the Iowa Renewable Fuel Association said the government's new financial stake in the auto industry means it can require the higher renewable fuel standard.

"Clearly, if the White House decided they wanted GM and Chrysler to do this, they would do it," Shaw said. "I think it would be good. Once one company goes that way, I think it puts pressure on the other automakers not to be left out."

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