American Synfuels Inc., which has been supplying ethanol to the gasohol market for more than a year now, is taking advantage of a change in Maryland tax law to start making the finished product.

The Federalsburg, Md.-based company is going to start blending ethanol and gasoline into an gasohol mix on July 1, when the law that gives a three-cent-a-gallon tax break to gasohol goes into effect. The law was signed by Gov. Harry Hughes last week.

The company says it expects the tax break to create a "significant" market for the alcohol-gasoline mix by lowering the pump price of the fuel. "With that tax exemption, it makes ethanol very competitive with gasoline on the marketplace," said O. Wayne Eakin, president of American Synfuels.

The company expects to produce about 500,000 gallons a month of premium or super-premium gasohol, eventually expanding production to 1 million gallons monthly and adding a regular unleaded grade, Eakin said. Gasohol is a mixture of one part ethanol to nine parts gasoline.

In addition to blending gasohol, which the company will then sell to service stations, American Synfuels will continue to sell the rest of its monthly production of about 400,000 gallons of ethanol to other wholesalers for blending into gasohol, Eakin said.

Eakin said the expansion of business will not require any additional capital expenditure on the company's plant because blending equipment was installed when the facility was built two years ago.