By on July 22, 2006

E85juice222.jpgShould America be fuelling its vehicles with corn-based E85?  Now there’s a question worthy of public debate.  Meanwhile, the question’s been settled.  E85 is coming to a pump near you, whether you like it— or use it— or not.  The political momentum behind the fuel is enormous, including huge CAFE (Corporate Average Fuel Economy) credits for manufacturers that build vehicles that will never see a drop of corn juice.  In fact, the production and distribution of E85 involves a strange mix of politics and economics which could well lead to a dead end.  Following the money may make your head spin, but it's high time to separate E85 facts from the politically correct fug of obfuscation. 

First of all, corn farmers aren’t getting rich off of E85.  America produces 11 billion bushels of the yellow foodstuff every year.  More than half of the US corn crop goes to feed animals, mostly cattle and pigs.  Much of the rest is used for corn syrup, oil, plastics and even heat.  What’s left gets exported.  The US ethanol industry’s growing appetite for corn has reduced our exports somewhat, but there’s still plenty left over after we’ve exhausted every possible domestic use.  So corn prices remain low.

Or high.  Despite the over-abundance of American corn, the US federal government subsidizes the price— paying farmers the difference between the crop’s fair market value and $2.50 a bushel.  This price support ensures that corn farming remains profitable, so the US doesn’t have to buy corn on the global market.  You might think the federal subsidy would assure profits for farmers and low input costs for ethanol producers, but you’d be wrong.  Enter the middleman… 

Unlike sugar cane (the source for Brazil’s ethanol), corn is a seasonal crop.  Corn is also expensive to transport, making it difficult for farmers to sell directly to distant buyers.  At the same time, most corn farmers lack the storage capacity needed to stockpile their Biblically bounteous harvest.  No surprise then, that there’s an entire industry devoted to buying grain from farmers, storing it and shipping it to other buyers. 

Obviously, there’s a nice little price bump involved.  Grain middlemen seldom pay more than about $2 per bushel to buy corn; they can then get $2.50 to $3 for that same bushel on a futures contract.  Ethanol plants are even willing to pay a little more, since they know they’ll sell every drop of fuel they produce.  The upshot of all this agricultural to-ing and fro-ing: ethanol producers are stuck with a raw material cost that rarely drops below $2.50 a bushel, no matter how much corn is grown, stored or shipped.

Thus, a gallon of ethanol requires roughly $.75 of corn.  That may seem like a compelling cost structure for an alternative fuel– especially when compared to this week’s crude oil price of $1.40 per gallon.  But E85’s ancillary costs are far higher.  First, ethanol is more expensive to produce than gasoline (i.e. it takes more energy to make fuel from corn than oil, and energy ain’t cheap).  Second, thanks to the phaseout of octane-enhancing MBTE gasoline additive, demand for ethanol far exceeds supply.  Third, ethanol’s transportation costs are astronomical. 

Unlike petroleum-based gasoline, ethanol is too corrosive for existing pipelines.  That means E85 has to be transported by truck or train.  Unfortunately, America’s trains are busy hauling billions of tons of coal from mines to power plants.  The railroads are adding locomotives as fast as manufacturers can build them (bet GM’s sorry they sold their locomotive business), but they’re all dedicated to moving a material that provides a larger, steadier business that's less hazards than schlepping ethanol.  So, for now, E85 distribution is pretty much restricted to trucks.

The bottom line is clear: E85 production is dependent on a crop whose costs are more or less fixed at a permanently high level.  E85 may be eco-sexy and an all-American source of fuel (provided you discount the petrochemical products used to fertilize and insect-proof the corn crop and power the vehicles that harvest, process and haul the corn around), but its current production costs make it an economically dubious alternative to “cheap” gas.  And that’s without considering the fact that E85 yields about 20% less “bang for the buck” than gas.  Unless the price of gas soars another dollar or so, or increased supply drops the price of ethanol by a like amount, E85 will struggle to provide a cost-effective alternative to its imported competition. 

The fundamental economics of the E85 business ensure that the fuel is– and will remain– a product whose future depends more on politics than the “free market.”  Of course, there’s nothing inherently wrong with that.  If we’re serious about energy independence, the US government could intervene to make E85 more viable. Uncle Sam could build a national network of E85-compatible pipelines, or remove taxes from E85, or add taxes to gas, or end corn subsidies, or, well, lots of things.  Meanwhile, the people who’ll benefit most from E85 are the people who move the raw materials to the ethanol plants and the finished product to the consumer.   

 

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36 Comments on “E85: Children of the Corn?...”


  • avatar
    zipper69

    “the US government could intervene to make E85 more viable. Uncle Sam could build a national network of E85-compatible pipelines, or remove taxes from E85, or add taxes to gas, or end corn subsidies”

    Mark, the gas fumes are getting to you…

  • avatar
    icenine

    So what about sugarcane, then? Sugarcane can be more efficiently converted to fuel and produced far more cheaply than corn. Why not open the market like a good capitalist nation and let Brazil export as much sugarcane as the market will bear? I’m sure the refiners and transporters wouldn’t care – they’ll make just as much money hauling sugarcane as corn, given the unquenchable thirst of the US gas-guzzling public. A public which would greatly appreciate the lower gas prices that cheap ethanol could provide. And Brazil, while not the most stable nation on the planet, is still a preferable business partner to most of the oil-producing Middle East.

    Which only leaves the farmers. Those poor mom-and-pop operations still operating a 19th-century business in a 21st-century world. You can’t help but feel for them. But wait… they don’t exist! 90%+ of the farm industry is run by huge corporations like Archer Daniels Midland, which love the price supports provided by the government, since they equal competition-free profit.

    Personally, I own no stock in ADM, but I do use plenty of gas, so I’d much rather import some Brazilian sugarcane or sugar beets and burn that instead. As long as it doesn’t affect the horsepower of my car.

  • avatar
    vallux06

    Willie Nelson approves of E85, we all know he approves only of the best home grown stuff!! WWwfffffffffffftttttttt!! Good!!!!

  • avatar
    Martinjmpr

    My only problem with this analysis is that it seems to assume that everything – and I’m specificially thinking about petroleum prices – remains static. As we’ve seen even over the past few weeks, that’s unlikely to remain the case. So, when petroleum hits $100/barrel, some of the equations start to change. Things that were not economically viable before become economically viable. IOW, the market itself will apply the “gas tax” through higher prices.

    I agree that E-85 is not a panacea nor is it a miracle product that will, by itself, free us from our dependence on foreign crude, but it’s one of many technologies that holds promise for the future. ‘

    Incidentally, here in Denver there’s a station near downtown (Alameda and Broadway, for those who live here) selling E-85 for $1.99/gallon. It’s enough to make me wish I still had my Flex Fuel Ford Ranger.

  • avatar
    Martinjmpr

    Icenine: We don’t have to import sugar beets. There are thousands of acres of them right here in Colorado. For that matter, sugar cane can probably be grown in some parts of the US – I’m thinking Florida here, and I think they do grow sugar cane in Hawaii, although I don’t know how much.

    The point is, I’m not terribly worried because making motor fuel is always a moneymaker. As long as there’s money to be made, someone will find a way to make it. What killed the alternative fuels industry in the 1980s was not lack of government funding, it was when the Saudis opened up the taps and started pumping more oil, which dropped the price of fuel across the board.

    Honestly, I think the biggest threat to our motoring future is not that the oil producing countries will cut production or raise prices – while that would create a temporary crisis it would also give us the economic incentive to increase production of alternatives. What chills me is the thought that after private investors spend millions of dollars on alternative fuels, the oil producing countries might drastically increase production and drop prices, just so they can pull the rug out from underneath the alternative fuels business.

  • avatar
    mbslk350

    As Mark notes, E85 yields at least 20% less bang for the buck. In plain language, a vehicle that gets 18 mpg on gas will get 14 or less with E85. Unless E85 sells at a 20% or greater discount to gas, the average consumer has no incentive to buy it.

    Even though I live in the corn belt, E85 is hard to find and it’s more expensive than gas. So, who’s going to hunt for a station which sells fuel that costs more than gas and gives you fewer MPG? Doesn’t sound like an economically viable solution to me.

  • avatar

    zipper69: I said “the government could intervene,” not “should.”

    icenine: I agree that sugar cane makes more economic sense than corn. Good luck convincing people that fueling American cars is worth chopping down even some of the Amazon rain forest. As for ADM, it’s true nobody likes them (except their shareholders), but you have to acknowledge they made significant investments in ethanol before there was a market for the stuff. And does anybody think ADM or the other agribusiness conglomerates wouldn’t find a way to get rich off biodiesel or butanol?

    martinjmpr: $100 a barrel wouldn’t be enough to make E85 competitive on a dollars-per-mile basis, unless ethanol dropped 30 to 40 cents per gallon on the cash market. The break-even dollars-per-mile point for E85 (irrespective of transportation costs) comes when ethanol is 18.5% cheaper than regular unleaded gas. (Right now ethanol is about 21% more expensive than gasoline.) There is some possibility that this situation may change in the next few years, as the futures chain shows a steadily declining price for ethanol, reflecting the increased supply that will come on line over the next year. But the volume in ethanol futures is pretty low right now, and I don’t feel comfortable saying that trend will continue indefinitely.

  • avatar
    Transylvanian

    Hello,

    Let me quote:
    ” What chills me is the thought that after private investors spend millions of dollars on alternative fuels, the oil producing countries might drastically increase production and drop prices, just so they can pull the rug out from underneath the alternative fuels business.”

    That is why the government has to protect these enterprises. I know that americans like to have a government that intrudes very little in the business and that is a feeling that is well founded because one of the things that made this country great is exactly this freedom and that is why I can understand zipper69’s comment. Having freedom in business led to today’s prosperity.

    But let’s just look at the problem from a game theory point of view: the concept behind free competing players in the economy is due to Adam Smith, who in 1776 said that “self-interest guides the most efficient use of resources in a nation’s economy”. But we are in the 21st century and we know a little more about game theory (thanks for example to John Nash) and we know that there are cooperative solutions to given games that cannot be found by individual optimization. The reason why Adam Smith’s theory worked so long is that it’s really hard to design a government that focuses on finding the best solutions for the whole system (country) instead of focusing on their own interests (corruption). Sometimes, though it happens and then we see the payoff – such as in Brazil’s case with the sugarcane fuel or just think about the long-term planning of the Chinese government. Once a better solution is found then it’s easy to stick to it and beat those global competitors who do not use collective strategys and do not find these better solutions to the game.

    I think that we in America need to re-evaluate our position regarding cooperative solutions to problems if we want to stay competitive, and that would mean some of the things that Mark Hasty suggested in the last paragraph. The hard part is not figuring out the mathematics behind it, but applying it well enough to get a payoff that convices people.

  • avatar

    Well put, Transylvanian. As I researched this article, two things became clear:

    1. In the short run, whatever replaces/supplements gasoline in the US market will be a technological step backwards. It will involve paying more money, or getting lower mileage, or both.

    2. Somebody is going to get stinkin’ rich off alternative fuel. The only question is who, and the only possible answers involve people or companies generally regarded as unpopular.

    Thus, I came to the conclusion that there is no single optimal solution to the gasoline problem. The real question is, “What network of solutions can we implement which will cause the least disruption to our economy and lifestyle?” I’m very neutral on E85, as you can tell, but it has the advantage of being available right now, whereas other solutions are not.

  • avatar
    Martinjmpr

    Mark: If more ethanol/e-85 factories were built, wouldn’t economies of scale act to reduce prices? For that matter, wouldn’t that also reduce transportation costs (because all you’d have to do is transport the corn, not the refined ethanol, which can be done by truck, train, etc.) BTW, as I said above, E-85 prices here in Denver are currently 33% below unleaded gasoline ($2/gallon vs. $3.) Of course, I know that’s a heavily subsidized price, and I’m not aware of anyplace where the price for E-85 “floats” on an open market.

    The other problem with E-85 is that I haven’t seen any kind of concrete estimate on what it will cost to convert cars that can’t run on E-85 to do so. However, again, if that starts becoming more and more common, then economies of scale kick in to reduce prices. We’ve seen this with consumer electronics (remember when DVD players were $300?) and I expect we’d see similar drastic reductions in cost if such conversions became more economically viable through reduced E-85 prices relative to gasoline.

  • avatar
    C.D.Weir

    While we quibble over these details, at least it provides a plan B. For almost no cost added to a vehicle we at least have another fuel possibility.

    The answer to transportation is distributed generation. Lots of small refineries.

    Sugar cane is too bulky to transport internationally. The answer is to import their ethanol, which the US bans currently, I believe.

    The figure of 90percent of farms being owned by a few megacorps is not valid. Check your data.

    Look around us at the world. We should already be full steam on ethanol and working like fury on the next two…or three energy source projects. Waiting is certain calamity.

    Have a nice day!

  • avatar

    martinjmpr: Yes, as more supply becomes available, competition will inevitably move the price downward. Supply, however, is only one of the “pinch points” driving up the cost of E85 right now. Transportation is just as much of a problem. Much of the corn an ethanol plant uses is not acquired directly from local farmers. It, too, has to come by truck or train. And, like I said in the article, the railroads have all the work they can handle moving coal to electric power plants to satisfy our equally unending demand for electricity. (One industry-connected person I talked to in researching this article told me the railroads weren’t even all that interested in moving cars anymore.)

    As for what it costs to convert an existing engine to run on E85, I too couldn’t find any concrete information, probably because there are no EPA-certified conversion kits available on the market.

  • avatar

    C.D. Weir:

    Thank you for pointing out that icenine’s 90 percent corporate control figure doesn’t quite ring true. I didn’t catch that the first time through. Nearly every Corn Belt state has laws restricting corporate ownership of farm land. These laws have been challenged and, in some cases, found overly restrictive. Some laws are solely intended to prevent vertical integration; others (the more restrictive ones) are intended to prevent independent corporations from engaging in farming. The reasons behind the former laws are obvious; in the latter case, the intent is to prevent rural depopulation and an outflow of farm revenues away from rural communities.

    Two states (Nebraska and Oklahoma) have actually written their corporate farming bans into their state constitutions. These states have some of the most restrictive laws.

  • avatar
    thx_zetec

    Ethanol/E85 reminds me of elecric vehicles (EV) in the 1980’s -90’s. The press seems to love the idea, and about 90% of politicians and voters love it. Who could be against energy independence? Who could be against an unlimited supply of cheap, locally grown fuel?

    In the 1980’s the press always downplayed EV problems. Now they downplay ethanol problems. Independent testing consistently shows 25-30% worse fuel economy, but many articles either don’t mention this or use the ethanol industry’s “10-15%” figure (for fun go to an ethanol website and read about fuel economy – you’ll find some evasive language)

    Cost for E85 has been higher per mile and will be for years – thus the worry about oil producers cutting prices is really an understatement: Ethanol is an economic loser supported by taxpayers and mandates.

    BTW US *can* make sugar but our sugar prices are way above world prices (we have huge tariff wall to keep out efficient sugar makers). Corn is expensive, sugar is even less competitive. Simple common sense – if someone could do it – they would. Recently some southeast politicians talked about US-sugar ethanol propped up by subsidies of $1.50 per gallon (?!).

    There are unlimited technical arguments about the pro’s and con’s of various fuels. In all of this detail we lose site of the big picture: Free markets work best (look at Cuba). Get rid of subsidies and mandates and let the best fuel win.

    BTW interesting competitor to ethanol is butanol see http://www.butanol.com – it does not have the political strength, but it might be better.

  • avatar
    Terry Parkhurst

    The CAFE (Corporate Average Fuel Economy) standards are a joke, most especially with the two-tiered system that is used; to allow trucks and SUVs to correspond to a different set of standards. Back in the 1970s, when CAFE was instituted, those two-tiers were established to allow those who used trucks to make a living – farmers, construction workers and such – some relief from the escalating price of gasoline and diesel fuel. But of course, in today’s world, while it might still allow those people that, it also means that the manufacturers have put all their eggs into the SUV and truck basket – most especially Ford and General Motors (but even Toyota, who I guess makes a susbstantial portion of their profit margin on Toyota Tacoma four-door cabs and SUVs of all sizes that they make).
    The Federal government should simply eliminate CAFE and put the pain at the pump, on the consumer(s) who insist that ‘cheap gas” is an American right. It isn’t.
    The price at the pump should reflect the true price of gasoline and diesel. It should reflect what economists might call externalities, such as the continuing (and seemingly unsuccessful) occupation of Iraq. The true cost of “cheap gas” is reflected in the national debt and the cost of fielding an armed services to contain the cost of gasoline and diesel, at the pump.
    Presdient Bush should present Congress with a proposal for a “war tax,” let’s say 50 cents a gallon (the same tiny amount proposed by John B. Anderson in 1980 to help shore up Social Security and by Ross Perot in 1992 to help reduce the national debt). That might – emphasis on the word “might” – get Americans to consider E85 and make it “pencil out” a bit better. At the very least, it would hasten stepping away from Explorer, Yukons and Sequoias by the American consumer (as well, as allowing for another post under “GM Death Watch” perhaps).
    There is, another highly important cost to the continued use of petrol (gas and diesel) by American consumers. That cost is the number of American military and Iraqi civilians that seems to go up everyday. While the insurgents certainly bear a major part of the blame for those deaths. it is truly a cost, not only figuratively, but also quite literally.
    As the Chambers Brothers sang, back in the Sixties, “Time has come today!”

  • avatar
    Steve@Rennsport

    While the political aspects of ethanol fuels has been debated, I’d offer that the use of E85 fuel in cars built before 2006 will prove to be a windfall for the Automobile Repair industry.

    After 33+ years in this business, IMHO ethanol fuels are a bad idea unless the car & the engine are specifically made to contail & process that stuff. Further, its a curse for people who live & drive in cold climates due to ethanol’s micsibility with water and its reluctance to vaporize in cold weather.

    Butyl alcohol is a FAR better choice. You can read something about that here: http://en.wikipedia.org/wiki/Butanol_fuel

    Once again, Politics Trumps Science.

  • avatar

    C.D.Weir:
    There isn’t a current ban on the importation of ethanol. There is just a $.25 per gallon import tax from the Chinese stuff and that happens to be where we get most of out ethanol imports. So no one imports it.

    And just a random fact. The US produces as much ethanol as Brazil.

    My opinion on the stuff is, if I am going to take a Horse power and mileage hit this stuff better be CHEAP!

    thx_zetec: EXACTLY!

    Steve@Rennsport: I, for one, can’t wait to see how many people use this stuff in autos not rated to use it.

  • avatar

    Terry Parkhurst:

    I can’t believe Congress hasn’t been able to close that particular CAFE loophole. I mean, I can believe it, I just wish I didn’t have to.

    thx_zetec & Steve@Rennsport:

    If the science on butanol is accurate (and I suspect it is), it’s clearly a better choice. I just wonder how long it will take to develop enough supply to make any difference.

    Tyler D:

    I ran into a friend the other day who’s running aviation gas in his ’69 Road Runner. $4.65 a gallon here in America’s Dairyland, but he doesn’t trust his car to anything else. That is dedication to horsepower.

  • avatar
    qfrog

    Only thing good about e85 is the high octane level which makes it good for lots of timing advance and or lots of PSI of boost… but you need larger injectors to run the corn juice because it contains less energy. Oh and a fuel supply system that wont be corroded to shyt from the nastiness that is ethanol.

  • avatar
    qfrog

    what would it take to convert a car…. and certify such a conversion with the DOT, EPA etc etc etc *.gov and the like. A lot like more than you would ever save by using the corn juice, I’d imagine it would involve a new fuel tank, injectors, fittings, seals, evaporative emissions system components, oh and software to run the engine too.

    At the going retail prices for the parts I push that would come to a several thousand dollars insalled per vehicle. The over the counter price on a fuel tank is about $1k usd where I work… thats just the tank no labor included which would involve removal of the rear suspension and differential together. Injectors vary in price greatly but I’d say $300-500 for a set of 4-6 is a fair guess for orignal components. A fuel rail…. those are another few hundred and lines from the front of the car to the rear… lets toss in another few hundred… a charcoal canister, maybe a purge valve for another two or three hundred (parts alone of course)… I dunno lets toss in 10-20 hours of labor at $115 an hour and you’ve got yourself one hell of a bill, and the only person or persons benefitting from that great expenditure is the dealership and the companies making the parts… you the customer would be raped with a frozen 15″ black rubber cock.

    E85 is a laughable attempt at solving a complex problem with a simple and impossible solution. Diesel on the other hand is a temporary solution which is viable if *.gov would only get things rolling and help/encourage mfg’s to sell diesel cars here. We need a fuel with more energy per ounce not less… we need a fuel with an existing distribution chain and we need it like yesterday.

  • avatar
    rtz

    I can’t wait until E85 gets here!

    http://www.turbomustangs.com/smf/index.php?topic=47094

  • avatar
    vallux06

    As often, especially here in the home market, DIESEL is once again (on purpose?) overlooked. These latest cars run clean AND ultra-efficient.

    Yes, they make us still dependend on foreign oil. But the technology is THERE, definitely not a step backward and in most cases doubles the mileage of what is feasible with their make/model bretheren. So even with limited supply if everybody so keen on E85 would in the short run (1-2 model cycles) go for Otto’s diesel until we can come up with something more thought out.

    I yearn here in NY to be able to buy (and register) Two clean VW TDI’s a Golf(even better would be the new Polo) and a Touareg (with the 6 cylinder diesel, not the V10 monster). GM could bring over various rebadged Opel/Vauxhall models that do fine too. As well as Ford.

    My wife and I are often in Europe where diesel manages to be 1/3 cheaper then gas too….. Old fashioned panic makers like Chuck Schumer and an industry that is reluctant to settle for low sulfur diesel will make that still a pipe dream, The nasties stinking diesel powered car of today is still a 100 times cleaner as at the time when this asenine ban was implemented. So, once again, thank you California!

  • avatar
    RonKMiller

    qfrog:

    You might want to here and do a bit of reading: http://www.flextek.com.

    I’m not completely sold on the idea of converting yet, but it certainly does NOT appear that you need to do a massive overhaul of your vehicle to run E85. Indeed the benefits of running your engine at a lower temperature – and cleaner at the same time – may prove to be an economic incentive, especially if you keep your vehicles for a long time as I do. Oh, did I mention the benefit of producing MUCH less air pollution as well??

  • avatar
    Glenn Arlt

    Question: If we move to E85, are we just moving from one monopoly (oil greedies) to another (Archer-Daniel-Midland)?

    If so, why?

    Butanol seems to be a far more viable option (which is no doubt, why we aren’t using it).

    Hydrogen made from the sun and purely electric cars energized by the sun may be smarter, too.

    I honestly do not think there is “one” replacement fuel for gasoline in our collective future, however.

  • avatar

    Glenn:

    According to the Federal Trade Commission, “the largest ethanol producer” (i.e., ADM) only produces 25% of the ethanol on the market, down from 40% in the mid-90s. That’s hardly a monopoly.

    (Source: http://www.ftc.gov/reports/ethonal05/20051202ethanolmarket.pdf)

  • avatar
    Martinjmpr

    Oh yeah, then we’d be at the mercy of “Big Hydrogen.”

  • avatar

    I just think it’s interesting that the FTC spelled “ethanol” wrong in the link I posted.

  • avatar
    starlightmica

    Good article, Mark – the truth about E85 needs to get out there. And if you Google “ethonal”, GM has an ad for their flex fuel vehicles at the top of the results.

  • avatar
    ilex

    Liquid fuels from plant mass are wasteful and unsustainable. From a July 7 study done jointly at UC Berkeley and Cornell:

    -Corn requires 29 percent more fossil energy than the fuel produced

    -Switch grass requires 45 percent more fossil energy than the fuel produced

    -Wood biomass requires 57 percent more fossil energy than the fuel produced.

    In terms of energy output compared with the energy input for biodiesel production, the study found that:

    -Soybean plants requires 27 percent more fossil energy than the fuel produced

    -Sunflower plants requires 118 percent more fossil energy than the fuel produced.

    This is all about shuffling responsibility away from the OEMs and making green-sounding promises to a general public that doesn’t read beyond headlines (and doesn’t much care). Conservation- in this particular case, buy building high-efficency engines- is our only answer in the short term. Ultimately, like many have said, there will not be one silver bullet. Plant mass might be one small piece of the puzzle, but it is certainly not the answer.

  • avatar
    GS650G

    The nasty truth about ethanol is fewer calories. i think ethanol comes in at 8500/gr versus 19,000 for gasoline in various forms. Race cars using ethanol need to have incredibly high fuel air ratios to use it. It is safer to use than gasoline although it does have an almost invisible flame when lit. Your not going to get the energy out of it. Considering how much energy it takes to bring to market it is a fools enterprise.

    The lifting cost for a barrel of crude in Saud is around 5.00. The north sea costs 13.00 – 18.00 a barrel. when you do the math against farming there is no comparison. We think oil is expensive but it is really a better deal. The problem is the political price we pay since bad countries have oil to sell and we refuse to allow drilling for oil anywhere at anytime domestically. Domestic production would lower the price of oil and allow us to extend Uncle Sam’s middle finger to Chavev.

    Ethanol went from 1.47 a gallon in June 05 to 2.77/gallon in May of this year. That rise in cost was not forecast but resulted from changeover costs and speculation about availability.

  • avatar
    Kevin

    Despite the over-abundance of American corn, the US federal government subsidizes the price

    Not sure why the need of the word “Despite” here, Mark, obviously the feds aren’t going to subsidize the price unless there was an oversupply relative to demand :)

    I kind of like the idea of trying out E85 to see if people go for it and it works out in the market, but I have to say most of its supporters are morons who keep mindlessly repeating bad justifications and spouting bogus shibboleths about it.

  • avatar

    You’re right, Kevin, “because of” would have been a better choice.

  • avatar
    porker

    Corn’s fer drankin’ not burnin’!

  • avatar
    BarryO

    Wish I had a plan.

  • avatar
    Engineer

    The US ethanol industry’s growing appetite for corn has reduced our exports somewhat, but there’s still plenty left over after we’ve exhausted every possible domestic use.
    True for now. But if you run the numbers, it becomes apparent that there simply is not enough corn to make a dent in our energy needs. For example, in 2005 14% of the US corn harvest was used to make 4 billion gallons of ethanol. Sounds like a lot, does it? After factoring in ethanol’s lower energy content, that is about 1% of America’s oil use. So, even if we used 100% of the corn harvest for ethanol production, we could only produce ~7% of our oil needs!

    Or try this simple explanation: think it makes sense to burn food as fuel? If you are out of wood for the fireplace, what would you rather burn: a piece of jerky or yesterday’s paper? The government is effectively subsidizing the burning of food for fuel. As Mark suggests, this can only be because the politically connected are making nice profits.

    The whole ethanol debate misses the point: you can make ethanol from crude or coal. As Mark points out, there are obvious reasons not to do so. Gasoline is far superior as a fuel to ethanol. It is also true that you can convert biomass to gasoline and diesel. So again, why bother with ethanol?

    The key question that needs to be answered is what feedstock can we use to produce the fuels we need? How about something that we already produce in abundance, but currently have no use for? In other words, something that would require no new resources to produce, no new investment and require no sacrifice. Too good to be true? There is something better out there.

    According to USDA and DOE we can produce 33% of our oil needs from forestry waste and agricultural residue. Personally I suspect the 33% number is a bit positive. But it dwarfs the 7% from corn ethanol, and can be done without affecting the price of food. In fact, people typically pay you to take away there wastes.

    What can be done beyond the 33%? Again, logic would require that you focus on the most productive crop (ton/acre.year): Algae. According to another DOE study (as explained) we can grow 100% of our oil needs on 15,000 square miles, using algae. While 15,000 square miles is a lot of land, it is only ~2% of the total US cropland.

    Bottom line: The question that needs to asked is “What could we possibly use to fuel the future?”. The answer, I believe, is “Waste biomass and algae”.

  • avatar
    Mr. Bojangles

    also Icenine and Martinjmpr back in July, Sugarcane can also be grown in Puerto Rico.


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  • Seth Parks, United States
  • Ronnie Schreiber, United States
  • Bozi Tatarevic, United States
  • Chris Tonn, United States
  • Corey Lewis, United States
  • Moderators

  • Adam Tonge, United States
  • Kyree Williams, United States