#boondoggle

David writes:

Hi Sajeev,

Is it worth the extra 40¢/gallon to go for 91 octane ethanol-free gasoline based on its durability merits?

EU car owners will get a new kind of gasoline – whether they want it, or not. Most don’t want it. They get it anyway. While US-automakers sue to stop ethanol blends, an edict handed down from Brussels demands that Super has to contain 10 percent of ethanol. An alliance from Germany’s ADAC autoclub to Greenpeace says the new gasoline is a work of the devil, it is liable to ruin cars, and the environment.

The EPA is set to rule as soon as tomorrow on the so-called “blend cap,” which forbids the sale of gasoline with more than ten percent ethanol. The petition to raise the blend cap came from a relatively new pro-ethanol lobbying group, Growth Energy, which requested the cap be moved to fifteen percent ethanol. Growth Energy’s request cites foreign oil dependence, “green-collar jobs” and the future of cellulosic ethanol as reasons to bump the blend cap, but as the New York Times reports, the real problem is that the ten percent limit is bumping up against a congressional mandate to blend 15b gallons of biofuels with gasoline by 2012. What the Times fails to mention is the financial incentive for raising the blend cap: the 51 cent-per-gallon of ethanol blended tax credit. In 2007, when gas consumption was at an all-time high and ethanol blending mandates required a mere 4.7b gallons (with 7b actually blended), that credit cost taxpayers nearly $3b. In 2012, when the mandate hits 15b gallons, the taxpayer tab will be closer to $7.65b.