Clearing the Air On Ethanol Mandates
A regular commenter on the R-Squared blog made some reasonable, articulate, and civil comments under my previous post. Rather than address them in the comment field I’ve opted to give my response (which got rather lengthy) in a new post.
If the EPA doesn’t want to up the blend wall, there’s plenty of demand for ethanol around the world. It’s an excellent oxygenate, if nothing else. And there’s no shortage of smog filled cities.
Nobody is arguing to remove the freedom to blend corn ethanol into fuel as an additive if desired by refiners. A 2004 CARB study showed that ethanol actually increased smog forming emissions relative to non-oxygenated gas by 45%. Two years later the EPA dropped the requirement to oxygenate gas. Modern cars can meet very strict emissions standards in a variety of ways.
The official stated goal of ethanol mandates is to reduce dependency on foreign oil, not smog. Although, spending billions to create a corn ethanol refinery infrastructure to replace a modest portion of our oil with a fuel that itself derives 70% of its energy content from fossil fuels seems like a rather (pick a word) way to accomplish that goal. A corn crop can be seen as just one of many steps needed in a process to convert diesel, natural gas, and coal into ethanol.
There are other ways to reduce oil use and some of those ways are vastly more cost effective. My wife’s midsized hatchback uses roughly four times less fossil fuel than the average 2012 flex fuel car. She also pays four times less for fuel because rather than spend money to substitute one liquid fuel for another, she simply uses much less liquid fuel. Speaking of which, she just ran off with a car load of teenagers and all of their sports gear. Contrary to popular opinion, you really don’t need an SUV to do that.
The average 2012 flex fuel car gets 13 mpg. If each of our two cars were to drive 10,000 miles this year (for a total of 20,000 miles), they would use in total, 88% less oil than the average flex fuel car driving 10,000 miles using standard gasoline. If the average flex fuel car actually used E85, my two cars together would still use 22% less oil.
There have also been studies suggesting that significant use of ethanol may have a greater negative health impact on air quality than regular gasoline. The average EPA air pollution ratings of the 2012 flex fuel cars when using E85 is 4 out of 10 (with 10 being the best). This is well below the average for all cars.
Russ, which export contributes best to the trade imbalance, feed corn or ethanol?
Things that are easy to measure tend to get measured. Things that are difficult (or impossible) to measure tend to be ignored. More points to consider:
- Any reduction in oil imports attributed to corn ethanol should take into account a realistic estimate of the loss of grain exports thanks to corn ethanol (ethanol’s contribution to the high price of corn reduces its consumption by other users).
- Those who argue that ethanol has lowered the price of gasoline are inadvertently also arguing that ethanol has increased gasoline consumption and therefore oil imports (because lower prices generally equate to higher consumption).
- All things being equal, ethanol exports tend to equate to more oil imports.
Trade imbalance, like any economic issue, is ultimately all about cost. Corn ethanol may be reducing oil imports, and if so, at what cost?
- Consumers all over the world are paying more for food (the percentage of wages spent on food varying from place to place but the poorest really get nailed by that one).
- With the average 2012 flex fuel car getting 13 mpg, it’s hard to argue that they’ve reduced oil use, not to mention, almost nobody burns E85 in them.
- Unaccounted for is the total cost of damage to fuel systems, particularly in older cars used by lower income people, as well as recreational vehicles.
- My previous article talked about ramifications to wildlife habitat, soil erosion, and the negative impact to the hunting and fishing recreation industry.
- There are significant costs to other industries like livestock farmers and grocery producers who have to pay more for feed or the products created by that feed.
- Pouring on the fertilizers, herbicides, fungicides, and insecticides isn’t going to reduce the Gulf of Mexico dead zone or its impact on yet another industry–fishing.
- And contrary to what the corn ethanol lobby thinks, indirect land use change isn’t a myth. All around this planet the high price of grains has incentivized famers to find land to plant on.
Granted, there are indisputable positive aspects of corn ethanol. Grain farmers and those who outfit them are raking in the dough. I have nothing against farmers and don’t blame them for taking advantage of government policy. I do it all the time.
Put another way, thanks to a powerful lobby, early primaries, and a hopelessly ill-informed and gullible constituency, our politicians have managed to create right under our noses one of the biggest transfer of wealth schemes in our history. Americans have no choice but to consume a product produced by a two percent minority (farmers). Consumers are held hostage to whatever price that product ends up being.
Should When a string of really bad crop years greatly increase the price of ethanol, consumers will just have to eat it …not literally, hopefully. They won’t have the freedom to switch to a cheaper fuel that contains no ethanol.
I suppose we COULD triple ethanol use by using 80% of the corn crop today. OR, we could continue using the same 40% for the next 20 years and give harvests a chance to double in size.
A good analogy for the concept that ever-increasing crop yields will make everything right would be the housing bubble that just burst. Everyone was counting on housing prices going up forever, which of course, isn’t possible. As with housing prices, corn yields will also stop rising.