Most readers, but not all, agreed with our view. There were three detractors and over a hundred supporters. “I would hope that your market analysis is more accurately researched than your ethanol editorial,” wrote Larry. So we will dedicate this ethanol blog to Larry. And to those few others who think that ethanol is a good idea. We don’t.
We say that now without reservation, based on the data we see and the reactions we have received. By the way, ethanol is really deeply entrenched. In the US, ethanol production was 960,000 barrels a day in January. For basic US government information on ethanol, see: http://www.afdc.energy.gov/fuels/ethanol_production.html . From all we can learn, if there were no laws supporting corn ethanol, its production would not be economically feasible. It takes subsidies in one form or another to keep corn ethanol in business. That is not true for cane ethanol. But the US sugar lobby makes sure that cane ethanol does not become competitive. Sugar is another story for another time.
We have organized these responses in a blog format and appended the writers’ initials so they may identify their quotes. We keep identities protected, but we note that a number of these comments originated with prominent experts who have established distinguished careers in engineering, finance, government, or industry. Our conclusion remains the same: corn ethanol is an American travesty that was imposed on much of the world. And that harmful imposition continues to this very day.
We have organized this blog response by subcategories.
1. Comments on availability of non-ethanol gasoline
“There is an Apple app called [Pure Gas] which gives you stations that carry pure gas.” –GM
“I hope we get the choice here in PA. Ethanol-blended fuel is not good for my daily drive and wreaks havoc on my classic motorcycles. Seafoam helps the situation a bit.” –TB
“Amen, brother Kotok. I have attached a link below to a site where consumers may post the locations of gas stations that provide ethanol-free gas. This is not the only one, but it showed up at the top of a google search. Ethanol-free gas stations in the U.S. and Canada .” Thanks. –DE
“I wish we could make such a choice here in South Jersey. I would buy non-ethanol for my boat, lawn mower, generator, etc., in a heartbeat.” –ML
“Good one, David, we should start a campaign to eliminate the ethanol. It has destroyed all small engines, and because it is basically alcohol, it eats rubber fuel lines and separates in the tank if it sits a while. I had to replace my entire fuel system in my boat, including the aluminum tank because of ethanol. Now they have created an additive market that is used to somewhat control that. I can no longer leave any fuel in my chainsaw, weed eater, or lawn mower, because it destroys the fuel lines. Non-ethanol fuel is not available in NJ, but if it were, I would buy it.” –RO
“I've seen the non-ethanol gas with much lower premiums, some as low as 10 cents/gallon.” –JS
"Google Jay Leno and his trials with ethanol-laden fuel for his classic cars. By the way, ethanol fuel is mandatory in wonderful California.” –JR
“David, let me "splain" it to you, you will never see non-ethanol fuel in Pa, Camden NJ, Harrisburg, Columbus Ohio, it is for boats!!!!! On another note did you read the interview with John Watson of Chevron in Fortune?? He said he has seen a 50% drop in the cost of crude 5 TIMES in his career. One of the things I learned in my experience is that the oil producers never get the balance right.” –MK
“Ethanol-laced fuel is a relatively new feature in German fuel stations. However, during the past few years it has come to dominate the non-diesel pumps. However, an unadulterated pump ordinarily is available, and that is the one I use. With respect to price, diesel is our lowest-priced choice. The unadulterated fuel is about 5 euro cents more than the "bio-enhanced" alternative. Lest you guess that I drive a high-performance vehicle, I "fill up" a 2007, 1.8 liter, 4-cylinder Mercedes "compressor" E-class sedan. The engine is substantially smaller than any in the Mercedes cars exported to the U.S.” –PB
2. Comments on gas mileage. (In our original piece we used octane ratings to get a comparison on price but we did not address the issue of better gas mileage without ethanol than with it. Some evidence follows.)
“You may pay more per gallon, but you’ll also get more MPG, so the cost per mile increase is small (ethanol has about 70% of the BTU content of “normal gasoline” – the oxygen atom doesn’t combust).” –RP
“My understanding is that gasoline has a higher energy density per unit volume than ethanol. Therefore, your, market-based, apples-to-apples comparison is lacking one significant component: how many miles will you get burning 1 gallon of non-ethanol fuel vs 10% ethanol-laced fuel? I estimate the non-ethanol-laced fuel you cited is priced approximately 15% higher than the alternative. I suspect if you factor in the fuel savings (easy math) and the decreased maintenance/enhanced performance (really difficult math) when using non-ethanol fuel you may find the difference in cost is nil.” –DE
“http://www.fueleconomy.gov/feg/factors.shtml. Some fuels contain less energy than others. Using oxygenated fuels or reformulated gasoline (RFG), for example, can cause a small decrease (1–3%) in fuel economy. Most of the gasoline now sold has a small amount of ethanol in it—up to 10% by volume depending upon the region. Using gasoline with 10% ethanol decreases fuel economy by 3–4%. The energy content of gasoline varies seasonally. Typical summer conventional gasoline contains about 1.7% more energy than typical winter conventional gasoline.” –DD
“Excellent blog. But you forgot to mention the difference in gas mileage between E10 and pure gasoline. As ethanol has a lower energy value than gas, you also pay a cost in reduced mileage (in the 6% to 10% range), which partially makes up for the difference in prices – making pure gas even a better deal. Here is a link to a Road & Track article on this subject: http://www.roadandtrack.com/car-culture/a17240/how-does-ethanol-impact-fuel-efficiency/. Be warned, however, it will only make you more frustrated with our federal government 'leaders.' ” –JS
“The 10% ethanol gas also gets lower MPG performance. I tracked a comparison between gas tanks with & without ethanol and found that I got 5% to 10% better MPG with non-ethanol gas. So your net cost differential may less than $.37.” –PG
“Two other aspects of the ethanol debate are its BTU content and why it was proposed in the first place. If the attached explanation is correct, as I am told it is, there is even more argument for using non-ethanol fuel. But as I remember, when lead was removed from gas to protect urban air, the additive, methyl tertiary butyl ether (MTBE) [began to be used. But it] was poisoning ground water, [so the switch was made to ethanol as an ‘anti-knock’ compound].” http://zfacts.com/p/436.html. –TP
3. Comments on ethanol toxicity
“Yes, you hit the nail on the head. The last thing I worked on when I was a scientist was … energy alternatives. Corn-based ethanol was so bad that it really took 1 unit of energy to produce 0.8 units of ethanol energy. 1 to 1.1 was the popular number published, but I was suspicious that the conversion of corn to fuel was a net negative because of the political money behind ethanol for fuel. Generally, the biggest negative to a lot of ethanol is that it attacks many gaskets on the engine, especially on older cars that don’t have gaskets designed to resist ethanol. The only two processes that were truly energy net positive were sugarcane (1 unit in, 5 out), and switch grass (1 unit in, 3.5 units out). The only thing you need to ask about your ethanol-free gas is what they are using for an antiknock compound. Small amounts of ethanol is a good antiknock compound--much preferable to the old antiknock, tetraethyl lead.” -JK
“I’m dubious of this analysis. If ethanol was such a bad proposition, why did the US export over a billion gallons of ethanol last year, with no subsidy or mandate requiring such purchases? Except for 2013 (big drought, lowering corn yields), ethanol use in the US has consistently exceeded the mandate. Now that the production infrastructure is in place (which was driven by the mandate), whether ethanol makes economic sense is a largely function of gasoline and corn prices. There is also no evidence that ethanol damages engines, especially those manufactured to run on ethanol blends.” –LA, who consulted his analyst in his Washington-based firm.
“Excellent article! As I understand it, adding some ethanol to gasoline helps cities in high ozone areas comply with EPA regs, so some might still be put in fuel at certain times of the year for that reason.” –MT
“Ethanol can improve an engine's performance (please check into this). It is substantially higher-octane in its purest form. In fact, several high-performance racing teams use the fuel specifically for its high octane. The reason mechanics and small engine dealers hate it: it is also an extremely fantastic solvent. In any combustion engine not specifically built to withstand the corrosive nature of the fuel, the hoses, and other rubber seals will be "eaten" away. This obviously will cause a regular engine (that is not equipped to handle the fuel) to underperform over time and need parts replaced. My simple point here: you don't put diesel in your Hyundai… don't put ethanol in it, if it is not properly made to handle it. There have been ample studies performed to show that 10-15% ethanol is not enough to harm the seals and hoses on a normal functioning engine.
However, using a higher dosage of the fuel will absolutely increase the wear on the non-metal components of your engine. Ethanol is a very good oxygenater and a wonderful replacement for MTBE (kills people). Usage beyond that should be an economical choice for an engine specifically designed for its usage (i.e. diesel for diesel, electric for electric, nat. gas for nat. gas, etc.) My flex fuel Suburban and F-150 perform better on E-85 than regular gasoline. Granted, the MPG is less, but when the economics present themselves (20% cheaper than regular fuel), I will absolutely use ethanol. My vehicles are 5 and 9 years old respectively, and I have had zero issues with them. Don't use the fuel in small engines (mowers, boats, four-wheelers, etc.) as these engines are not equipped to handle them. Blame the parts, blame the cost, but don't blame the fuel. It is meant to be an additive, and it succeeds at that. Oh, by the way, ethanol does not have to be made from corn… it just makes economic sense. The corn used to make the fuel is not the corn you have for dinner (may want to check on that as well). This is strictly my opinion, but I read your opinion… thought you should read another.” –TS
“When I bought my boat, the first thing that they mentioned to me was not to use gas with ethanol. It not only voids the warranty but corrodes the engine fairly quickly.” JA
“This old argument against anything mixed with gasoline is largely promoted by the big-oil industry. Ethanol is no longer subsidized – big oil is just against it. The arguments in the press about ethanol remind me of the so called 'facts' about global warming (which is actually a natural 1500 year cycle mostly caused by solar fluctuations). Many of the 'facts' supplied to the media about ethanol is just as full of holes.” –RN
4. Comments on politicians and political influence of ethanol
“I could not be more disgusted with our politicians or the ‘machine,’ from top to bottom. Their constituents keep voting the same old ‘……’ in every year no matter what they do. We are in dire need of a charismatic, ethical candidate… not sure one exists.” –JP
“Ted Cruz opposed the ethanol fuel mandate at the Iowa Ag Summit, gets applauds” http://www.examiner.com/article/ted-cruz-opposed-the-ethanol-fuel-mandate-at-the-iowa-ag-summit-gets-applauds. –LF
“I support your ethanol boycott for the reasons you cited. You'll note that I'm from Iowa. I regularly attend presidential candidate meetings where I've heard support for ethanol. Although the blender subsidy is gone, the largest subsidy of all remains: forced consumption. The Renewable Fuel Standard requires blenders to use a specific quantity (gallons, not %) of ethanol each year. As total fuel consumption decreases, the mandated quantity (not %) of ethanol increases each year, causing ever-higher ethanol production. For this reason, it's very hard to find non-ethanol gasoline in our area. Also, let's not forget that ethanol-laced gasoline provides less MPG. Even the EPA admits this… Thanks for your article. I'll listen more carefully to the candidates this election cycle. A good compromise might be to offer E85 alongside pure gasoline. Let the market decide what to buy. PS – My John Deere tractor manual recommends I use pure gasoline.” –JH
“I nominate Senator Chuck Grassley as the US Hunger Czar to the World for his help in making sure ethanol policy was started and is maintained to the detriment of the world, particularly our dear friends and the children in the poorest countries, where the inflated price of corn means they will have only a half bowl of food tonight rather than a whole one.” –MM
“David, thanks for speaking out on this. This subsidy is a travesty, and I seriously doubt that one could have forecast the Gordian Knot in which we have tied the world – but even if it could have been forecast, I doubt that its severity and extent could have been appreciated – and further, I doubt that anyone could have stopped it. I can remember sitting in a loan committee in Oklahoma listening to numerous strong loan proposals for ‘tea kettle’ ethanol processing plants ($5 million range) whose superior economics were based solely on federal mandates for percentages in gasoline mix, and thinking that ‘this is too good to be true’ (in the sense of the return for the borrower) – and it was. The returns were there, the bank got repaid, the borrowers' economics very good, but the natural balance was tilted – by an uneconomic player. Corn prices skyrocketed, people starved, and the corn lobby was (and remains) happy. Setting aside the impact on US fuel prices and damage to our engines, I really think the more morally repugnant impact is the worldwide shock to maize prices, which translates into starvation. But that don't sell in Iowa! The only candidate I have heard speak against the subsidy/mandate is Cruz, but there are many obstacles to his becoming a credible candidate.” –JW
“We all know that the ethanol hoax was fostered by Senator Grassley and the other Corn Belt senators and congressmen. God save us from our politicians.” –HW
“However, the economics are crazy. Particularly at the current oil prices. One of the telling facts is the production of ethanol also requires fuel. So the most readily available fuel for ethanol plants is ethanol – they are producing it on site. But none of the ethanol production plants use ethanol to operate the process – way too expensive. Either natural gas or a petroleum product is used. And this was true even at high oil prices. Everything I read indicates this only exists due to multiple subsidies and should be eliminated. It distorts not only the price of fuel, but as David points out, has had a very significant effect on the world grain markets. And this from the country where free-market economics is supposedly the answer to better lives. As David points out, the problem here is politics. It would seem a done deal. One would think that those who oppose government interference in markets and advocate reduced government spending would obviously target this program for immediate termination. And the left would clearly support elimination of a program that leads to human suffering. Even the engine (auto) industry should support something that would result in extended engine life. But a lot of folks depend on farming, and they vote. And the ethanol industry undoubtedly puts big money into political action.” –SS
“Someday we will get rid of the whole ethanol boondoggle, but the only question is, what other form of short-sighted stupidity will take its place? A genuine question: what could we do to incentivize our elected representatives to focus on the merits of an issue as opposed to who is funding them? Texas has a part-time congress. Does it work better or worse? I honestly don't know. But do we need to destroy politics as a lifelong job description? The lobbyists are full-time and better paid. How do we change the balance of power here? Again, I don't know.” –JH
“First, let me say that I agree with you. Second, my circumstances don’t make me a likely candidate to have this view; I currently live in Iowa. I grew up on a farm. I’ve owned farmland since 1986; however, I sold my last remaining piece two years ago when uninformed investment experts were tripping all over themselves to buy. My brother is a output plant manager at a major ethanol plant in Iowa (makes for an interesting Thanksgiving meal!)” DH
5. Comments on environmental issues
“But the real reason ethanol is such a bad deal is carbon displacement. After the farm lobby got their payoff, it took several years for life cycle studies to conclude there really was almost no reduction in carbon emissions. Too many fossil emissions from the production process. Brazil sugar cane was somewhat better and wood ethanol quite a bit better. And yes, there was substitution for a more basic need: food. But using wood for ethanol really is a carbon-negative technology. And by the way, Congress did learn something (not enough), as in their follow-on renewable fuel standards they required a life cycle study to show that the savings in fossil emissions from alternative fuels met a standard of 60% reduction in fossil emissions. Of course, they used an efficiency metric that is questionable. However, taking wood for ethanol as the example, DOE is subsidizing producing airplane fuel out of low-quality wood residuals or short-rotation crops with high wood yield. When you do a life cycle study, you find that the increased processing required for ethanol from wood results in only 0.4 units of carbon displaced for every unit of carbon in the wood used. That is a true efficiency metric (output/input).
The DOE requirement doesn’t stop you from using more wood to decrease the fossil emissions, so you can always get to 100% reduction in fossil emissions by burning more wood for utility grid energy to decrease the fossil emissions measured – more than offsetting the low efficiency for producing ethanol. So if instead you use the wood, even underutilized species or recycled demolition material, in things like engineered wood I-joists to displace steel I-joists, you can displace 5 units of carbon emissions per unit of carbon in the wood used. Ten times better on carbon accounting than ethanol. Basically, wood has structural properties that don’t need energy to produce (solar) and can displace many competing products that are very fossil energy-intensive to produce. The last priority for using wood should be for fuel and far better to burn it in a utility than produce ethanol. Almost any composite-board can be far more effective at displacing fossil emission even from pretty low-valued wood. And as you might expect, almost every government policy affecting the use of wood is counterproductive by subsidizing the lowest-efficiency uses of the raw material.” –BL
“Everyone today – Earth Day, April 22 – knows the planet is in dire and immediate peril. However large the price premium on ethanol gas, or on anything else, we should be happy to pay it so that the polar bears can be safe and warm. (Sorry, I mean cold). To remain sustainably free, we must accept the burdens implied by a bountiful, but limited, Nature. The president knows this. The Joint Chiefs of Staff have advised him that Global Warming, or, to be less narrow-minded, Climate Change, is a defense challenge for America. One may doubt his assertion that such advice was also that it was Numero Uno, but such doubt is carping, and hints at racism. Who the hell are we to know anyway? We have less than perfect knowledge; we must defer to the men in white coats. It may irk you accept that, but I urge you to go to church, as they did in the Middle Ages, and learn to believe. Go green, man.” –HM
“The remarks from SECNAV Mabus about not having to rely on foreign fuel were made in 2012 and are presently OBE – Overtaken By Events, http://tinyurl.com/jvtqq38.” –PS
“The Brazilian auto economy figured this out a long time ago—corn-based ethanol kills engine life. Cellulose-based works better, accommodates all kinds of plant waste, and is cheaper to produce, but the same politicians who promoted the ethanol subsidies promoted the tariffs that bar importation of cellulose-based ethanol.” –AR
6. An extensive and thoughtful response from MB that stands alone
Thank you for your excellent commentary. The corn-based ethanol problem needs to be addressed. More broadly, our energy policy and future energy needs must be better addressed. There are more issues than can be addressed in a newsletter.
A few comments:
1. Price for non-ethanol gasoline: The price you paid is really not "market-based" as if it were simply competing with ethanol-containing gasoline. An exact head-to-head estimate is complex to make, but should be less than $0.10 per gallon extra for ethanol-free gasoline. I base this on the price differential when ethanol first came into use and the lower energy content of ethanol. The higher price you paid is because it is "special," requiring separate storage and distribution, and is for special markets, such as recreational vehicles and small engines requiring ethanol-free gasoline and special interests such as those who think, correctly or not, that ethanol-free is better.
2. Ethanol has less energy per gallon. Pure ethanol has about 30% less energy per gallon than gasoline. E10 has about 2% less energy per gallon. So at $2.50 per gallon pump price, you have a $0.05 per gallon penalty for E10. So head-to-head there should be little if any net cost benefit using corn-ethanol.
3. Energy gain: out per energy in. We got into our corn-based ethanol mess because of the unexamined hype about the wonderful ethanol economy in Brazil. And in Brazil it is a good thing because they use sugar cane, which yields 8 times the energy out for each energy unit in. Unfortunately, corn-based ethanol is still close to no-more-out-than-in (estimates vary from 1.5 out down to 0.75 out (which would be less out than in)). Absolutely no one is predicting that it will be possible to get corn-ethanol up to 8:1. Gasoline is about 15:1 (yes, it takes energy to get crude out of the ground, refined, and to the pump).
4. Ethanol risk. Higher ethanol content runs the risk of absorbing water into the gasoline and thereby risking phase separation. This would be bad for engines.
5. Biofuels might have a rational future. Research into other processes for ethanol is somewhat encouraging. This includes switch grass and more complete use of the corn cellulose and lignin. Algae-based bio-diesel is promising. Certainly, bio-diesel from waste cooking fats and oils is a non-supported commercial success (although it does not have the potential to supply a large percentage of our overall energy needs).
6. The future. Although we have enough oil and gas for the next 10-20 years, at the rate the US and the world are using up our proved and probable reserves, we will be in dire straits in around 50 years, well within the lives of our grandchildren. Simple market forces cannot address this issue. See also Forbes article: http://www.forbes.com/sites/jamesconca/2014/04/20/its-final-corn-ethanol-is-of-no-use/. – MB