Carmakers and "Big Oil" Square Off on Ethanol

Robert Farago
by Robert Farago

A recent article in BusinessWeek (BW) investigated the reasons behind the "shortage" of E85 pumps down at your local gas station– a situation which displeases Detroit's Corporate Average Fuel Economy (CAFE) compliance-seeking automakers no end. Apparently, Big Oil's to blame. Shell spokesperson Anne Bryan Peebles admitted her employer is not exactly chomping at the bit to install ethanol spigots. Peebles says E85 requires separate pumps, trucks and storage tanks. All in, it costs some $200k to set-up an E85 pump– whilst satisfying the farrago of local, state and federal health and safety regulations surrounding its installation. [Hence almost all of America's E85 pumps are run by independent gas stations. ] Why not just switch-out a standard pump? The American Petroleum Institute says its pilot programs reveal that many flex fuel consumers fill up just once– after clocking E85's 25 percent hit on their fuel economy. So E85's business case is dubious. Just don't expect much sympathy from automakers. "'Big Oil is at the top of the list for blocking the spread of ethanol acceptance by consumers and the marketplace,' says Loren Beard, senior manager for energy planning and policy at Chrysler. What's more, oil company "foot dragging" is set to worsen the current ethanol glut– which could lower prices to the point where E85 becomes profitable enough for oil companies to accommodate with new pumps; providing federal subsidies continue to prop-up ethanol production. [Thanks to starlightmica for the tip.]

[RF interviews the Mark Cooper of the Consumer Federation of America on Big Oil's anti-ethanol conspiracy]

Robert Farago
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  • Lewissalem Lewissalem on Nov 28, 2007

    He never addressed who will pay for all of the costs associated with building and entire infrastructure. He also points out that his magic beans (cellulose) aren't even viable yet. What a nut. If there were a demand for ethanol, somebody would build stations independent of the oil companies. The truth hurts though, as consumers will stay away in droves.

  • Redbarchetta Redbarchetta on Nov 28, 2007
    I don’t know where these people come up with a 25% loss. I see the loss just from using E10. With regular gas my 500cc single cylinder motorcycle gets between 55-60 mpg depending on how much highway driving I do. With E10 the best I have been able to do is 45 mpg and this is all highway. And the bike runs like crap on it, definate loss in performance and it doesn't have much to begin with at only 26hp. I like ethanol from a fuel standpoint just not this retarded system we have been forced into. If we had properly designed engines to take advantage of the higher octane with less hot spots and much higher compressions that used 100% ethanol I would jump all over it. But the way we have it now with stupid flex-fuel engines it's just too much of a compromise all around. It would be nice if we have some real leadership that could provide good solutions and not just ways to make the rich richer.
  • Landcrusher Landcrusher on Nov 28, 2007

    Starlight, There have been times that the oil companies were laying off people and contracting in a big way. If you think Oil companies are so insanely profitable, by the stock. The P/E ratios are rather low even now, so I think maybe the market knows something you don't want to believe. Quail23, What subsidies are you upset with? The subsidy they get to use ethanol? That's a great example of government stupidity. OTOH, what about all the taxes on the other end? Much like the airlines, the oil industry is insanely regulated and taxed. Any discussion of subsidies without looking at the overall balance provides no information to the listener except about the bias of the speaker. Dave Justice, I would encourage you and your neighbors to be very careful about how much of your economic future is riding on government largesse rather than the real market for your products. The corn subsidies could end at any time. Best if the end sooner rather than later. The government MAY have an interest in getting ethanol up and going, but they have no business choosing corn as the best source. Diversify your personal assets. As for your lowered performance not being so bad, there could be lots of reasons for that. One of them being that your truck may not be as efficient with regular fuel as it could have been. Another may be that you are accelerating less quickly using E85. lewissalem, Well said.

  • Ihatetrees Ihatetrees on Nov 28, 2007

    This guy sells the rope for the noose of his argument - saying the "marketplace" does not work for refining biz or gas prices (taxes)... Does he have any idea of the huge capital, environmental, and (hugely uncertain) NIMBY factors needed to build a domestic refinery from scratch? Look for refineries in Mexico or Asia shipping us gas first... The ethanol mob's fantasy is slowly unraveling in the face of tough media scrutiny...