General Motors has apparently chosen E85 ethanol as the best “near-term” alternative fuel solution. In a post on GM’s FastLane blog, technical fellow Candace Wheeler, says that the carmaker is ready to move forward with an ambitious expansion of flex-fuel vehicles, which can run on either gasoline or corn ethanol blends of up to 85 percent.

Despite commitments from major automakers like GM, E85’s long-term outlook remains in question. Why’s that? Because evidence suggests that very few people who own flex-fuel vehicles actually end up using the fuel. Just 2,500 of the 162,000 gas stations in the United States actually offer E85, which in most parts of the country offers little to no cost savings compared to standard gasoline.

Dr. Wheeler said that GM has pledged to produce 850,000 flex-fuel vehicles, beginning next year. That would represent a 55 percent increase over current levels. “Our 2010 lineup represents the most (flex-fuel vehicle) models on the market,” wrote Wheeler. “With many new stations opening up, especially in the south and south central regions, it’s becoming easier find a place to fill up.”

But How Just ‘Near-Term’ is E85?

Indeed, Wheeler cites a 17 percent increase in ethanol production over last year’s levels, to 839,000 barrels per day, as a reason why E85 might catch on. But even if expiring production and blending incentives are extended by congress later this year, there’s still reason to be skeptical of whether it will catch on. E85 isn’t in a position to immediately benefit from a spike in gas prices, and could be edged out by increased production of other alternatives should prices rise more gradually.

Even if the majority of American cars were to have flex-fuel capability and gas prices were to somehow increase to 2008 levels next summer, most drivers would have no way of cashing in on the savings until enough fuel pumps were installed at enough gas stations nationwide. Furthermore, even with production of ethanol rising, it’s unlikely that enough E85 could be produced to meet a significant level of demand in the near term—especially without impacting food prices.

Of course, there isn’t any single alternative fuel technology that could be plugged in quickly enough to fully capitalize off a rapid spike in gas prices, but with just about 6 percent gas station availability, flex fuels are in a far worse position to drive new vehicle sales than hybrids, clean diesel or the most efficient gas-powered ICEs.

For Carmakers, the Question is ‘Why Not?’

So why is GM so eager to expand its production of flex fuels? One reason is that so long as the production capacity exists, it costs automakers virtually nothing to add E85 capability to a vehicle. That capacity has been in the pipeline for some time now, and the auto industry—which has pledged to make half of its cars flex-fuel vehicles by 2012—has little reason not to go ahead with those plans.

Furthermore, exotic 22-year-old language in the US Corporate Average Fuel Economy laws allow carmakers to effectively double count the increased efficiency that they get from selling a flex-fuel vehicle. (For instance, an E85 light duty truck that averages 13 mpg is currently credited with about a 23 mpg rating.) Although that law is scheduled to expire at the end of the year.