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By Robert Rapier on Feb 18, 2014 with 54 responses

Solving the Midwest Ethanol Problem

What Ethanol Problem?

If you live in the Midwest, you are in the midst of a thriving ethanol industry. But the Midwest does not control its own destiny when it comes to ethanol. That is still controlled by the federal government.

When I first started writing about energy nearly a decade ago, many of my early articles were addressed at the ethanol policies we were pursuing in the US. Even though I supported renewable energy, I felt like we were going about things in the wrong way. While I acknowledged that you could subsidize lots of ethanol production into existence, there needed to be a clear path for sustainability in the event that strong government intervention waned.

Today, nine years after I began writing about energy, we have an ethanol industry that has undergone rapid growth, but it is an industry that still relies heavily on the hand of government in the form of the Renewable Fuel Standard (RFS). One need look no further than the uproar over the Environmental Protection Agency’s (EPA) decision to lower the RFS for 2014.

This situation could have been avoided — and could still be avoided — but the ethanol industry continues to chase policies that will ensure that they remain dependent on the federal government to create their markets.

An Unsustainable Industry

The roots of the ethanol industry’s current problems go back to 1978, when the United States Environmental Protection Agency (EPA) set the maximum legal limit of ethanol in motor gasoline at 10 percent ethanol. Three decades later the RFS deemed that increasing amounts of ethanol had to be blended into the gasoline supply, but because US gasoline consumption has been falling, the 10 percent limit of ethanol in the gasoline supply was reached. As the gasoline pool was approaching that limit – commonly referred to as the “blend wall” – the ethanol lobby requested that the EPA allow 15 percent ethanol blends.

Once more, I thought this was the wrong policy to pursue. (See Ethanol Lobby Agitates for E15 Mandate). Car manufacturers said they wouldn’t warranty models for ethanol blends higher than 10 percent, and even though the EPA did grant a waiver that allowed E15 in most modern cars, it was not the mandate that the ethanol lobby really wants – and thus E15 sales have been near zero.

I would have pursued a different policy. I am a firm believer that to the greatest extent possible, locally-produced energy should be used to satisfy local needs first, before exporting any excess energy. This is a position I explained in Thoughts on an Ethanol Pipeline and E85 Case Study: Iowa.

But this isn’t the way our ethanol policy is designed.

Fuel Demand in the Midwest

The United States is divided into five Petroleum Administration for Defense Districts (PADDs). PADD 2 encompasses most of the Midwest. The states in PADD 2 are Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, Oklahoma, South Dakota, Tennessee, and Wisconsin.

In 2013, US ethanol production averaged 852,000 barrels per day (bpd). PADD 2 — the Midwest — was responsible for 93.5 percent of total US ethanol production (796,000 bpd). Gasoline consumption in PADD 2 in 2013 was 2.1 million bpd of conventional gasoline and 380,000 bpd of reformulated gasoline (which contains 10 percent ethanol). So on the conservative side, PADD 2 used about 2.4 million bpd of gasoline. This is the energy equivalent of 3.6 million bpd of ethanol — 4.5 times all of PADD 2′s 2013 ethanol production.

But imagine if the Midwest could figure out a way to transfer the demand for gasoline to demand for E85 (a blend containing 85% ethanol and 15% gasoline). In that case, the region would never again have to worry about federal ethanol mandates. The ethanol industry would then be forever racing to catch up to demand, instead of spending money lobbying Congress for continued mandates.

How to Drive E85 Demand

There is one primary factor that will cause drivers to favor E85 over gasoline: Price. Yes, there needs to be enough E85 vehicles and enough stations offering E85, but both will be in strong demand if the E85 price is right.

Because of the loss of fuel efficiency when using E85, drivers need a discount to keep their cost per mile competitive with gasoline. E85 contains about 25% less energy than regular gasoline (approximated as E10). Therefore, drivers can achieve price parity with E85 when it is priced at a discount of at least 25% to regular gasoline. (Some will argue that the discount doesn’t have to be this large to drive E85 sales; I am just setting the discount according to energy content).

However, over the past few years, this has seldom been the case. According to, the current national average discount for E85 is 18 percent. The discount is greater across the Midwest as might be expected closer to the source of production, but South Dakota with a 29 percent discount is the only Midwestern state reporting an E85 discount of greater than 25 percent.

US ethanol policy has certainly been good for the Midwest, but the good times could vanish if the US ever abolished the RFS — which is what some lawmakers would like. If I happened to be a Midwestern governor, I would work to better ensure I am in control of my own destiny. In fact, I would want my entire passenger car fleet to be powered by E85. That would render the RFS moot. (Cummins is even working on “an E85 powertrain concept for medium-duty truck operation.”)

A massive migration to E85 would be expedited if a >25 percent discount relative to gasoline could be sustained over time. This could be accomplished with a revenue-neutral tax scheme that raises taxes on regular gasoline, while offsetting them elsewhere and exempting E85. Consumers would demand E85. E85 vehicles would be in high demand, and consumers would flock to gas stations that offer E85.

Case Study: Iowa

Take Iowa as a basis for an exercise. Currently, the average price of gasoline in Iowa is $3.20. The statewide average for E85 is $2.48 – a 22.5 percent discount to regular gasoline. If we wanted to move that discount to 27 percent, we could increase the price of gasoline to $3.40 – an increase of $0.20/gallon from the current price.

This could be achieved with a $0.20/gallon increase in the gasoline tax. That would give Iowa a state gasoline tax of $0.42/gallon, which would still be lower than that state gasoline taxes in New York, California, Connecticut, and Hawaii — while driving consumers to buy a locally produced alternative.

To offset the increased cost of the gasoline tax, the government could reducing income taxes or sales taxes. Or, they could simply rebate some or all of the actual gas taxes paid. A family with a $1,000 increase in taxes could get that back when they file their state income tax return. The discount would still drive E85 sales as most people would opt to have their money now, and not have to save gasoline receipts. But for someone who, for whatever reason, was unable to opt for E85, the option is there to get those excess gasoline taxes back. The government should more than make up for that loss of revenue as higher ethanol consumption supports more jobs in the state.

Conclusion: Courage Required

Would it be easy to implement? No, any time you are messing around with gasoline taxes, there is going to be a knee-jerk reaction from short-sighted people who can only focus on what’s directly in front of them: higher gasoline taxes. Implementing a policy like this would take courageous and visionary leaders willing to defend the idea on the basis of the greater long-term good. But because the discount across the Midwest is already greater than the national average, it might only take an increase of a dime to see E85 demand skyrocket. (I realize Midwestern demand for E85 has been growing anyway, but I am targeting a demand change of an order of magnitude).

The alternative is that failure to take control of their own destiny will leave it in the hands of the federal government, and they may ultimately decide that what’s good for the Midwest – the RFS — isn’t necessarily what’s good for the rest of the country.

Link to Original Article: Solving the Midwest Ethanol Problem

By Robert Rapier. You can find me on TwitterLinkedIn, or Facebook.

  1. By Benjamin Cole on February 19, 2014 at 1:00 am

    An interesting post, though I take issue in a couple of places.

    1. It is not only some Congressmen who oppose mandated use of ethanol—it is some economists too! In general, free markets are best. I readily concede there are national security and environmental issues in play here, beyond the free-market ken. However we seem to have plenty of fossil fuels in the USA and the greenness of ethanol is much disputed. Ethanol has become just another rural sop, in a Rural America that is already heavily subsidized.

    2. The E85 Midwest cars would probably still have to be fuel-flex. My anecdotal talking to friends etc, is that Americans want cars that can go anywhere and never run out of fuel. Battery-range issues, and fuel compatibility issues are high, despite the fact that most driving is commuting or close to home. An American wants to drive cross country on a whim, I guess.

    3. If we are going to mandate ethanol, I would like to see the introduction of pure ethanol- or methanol-only cars, as PHEVs. They could use much higher compression ratios. In time, I think we will see 100-mile range on PHEVs within a decade. Then the price of fuel is not so-so important—a guy driving 100-mile range PHEV is not going to fuel up very often. Maybe only for those cross country or weekend trips.

    • By Robert Rapier on February 19, 2014 at 10:21 am

      “In general, free markets are best.”

      The presence of, and wide disparity in gasoline taxes from state to state means that the markets aren’t really free. I am just suggesting that for a state like Iowa — which is to ethanol what Saudi Arabia is to oil — they could get themselves out from under the constant concerns about federal ethanol policies by tilting the playing field in their favor. I think if they jacked up gasoline taxes by $0.20/gallon, in a few years the whole state would be running on E85.

      • By Clee on February 19, 2014 at 8:43 pm

        “I think if they jacked up gasoline taxes by $0.20/gallon, in a few years the whole state would be running on E85.”

        But if to get people to switch to E85, you exempt E85 from the fuel tax and everyone switched, there would be not enough people paying the fuel tax anymore. It’s the same argument that electric vehicles decrease fuel tax revenue and must be forced to pay some other way.

        • By Robert Rapier on February 19, 2014 at 8:54 pm

          But it should drive a lot of jobs in state, increasing income tax revenues and property tax revenues. The government would have to figure out the net impact, and react accordingly. But the loss on gasoline would be partially made up in other places.

      • By Benjamin Cole on February 19, 2014 at 11:56 pm

        Now that I reconsider that, maybe it is a great idea. I am surpassed Iowa does not do it—well, except that gasoline taxes are evil in states with long drives—which is one reason why the USA never taxes gasoline much. Rural senators will not stand for it.

    • By Optimist on February 19, 2014 at 8:42 pm

      Dunno Ben,
      1. Free markets are great, but in real life no market is completely free. As RR states, why leave yourself at the mercy of that bankrupt drunk, Uncle Sam? Far better to tilt the market slightly in a way that protects local jobs.
      2. Eh…? I think RR means flex-fuel cars running on E85, most of the time. I don’t think E85-only cars exist. Why make such a thing?
      3. This comment directly contradicts the comment above it. If E85-only makes no sense, E100 is dead in the water.

      • By Benjamin Cole on February 19, 2014 at 11:54 pm

        Yes, my affection of 100 percent ethanol or methanol cars is not reasonable. I just like the idea of a car running purely on non-oil fuels.
        Also, higher compression ratios bring about more fuel efficiency. A pure ethanol car, PHEV, would mean the higher price of ethanol was easily offset by higher compression ratios and the batteries…but probably just a pipe dream of mine, and I concede that,

        • By Optimist on February 20, 2014 at 2:03 pm

          That irrational hate of oil is one of the main reasons America will never have an energy policy worthy of the name. If renewables are ever going to make a dent, there best shot would be as drop-in replacements (unlike ethanol) processed and sold by the same old Big Oil, using existing infrastructure, which would make the transition affordable.

          You want higher compression? Switch to diesel!

  2. By davidhouston on February 19, 2014 at 10:00 pm

    The best course would be E0. Did the author really say that E15 had 25% less energy than E10?

    • By Robert Rapier on February 19, 2014 at 10:04 pm

      No, the author didn’t say that at all. He said “E85 contains about 25% less energy than regular gasoline.”

      • By davidhouston on February 19, 2014 at 10:58 pm

        “E85 contains about 25% less energy than regular gasoline (approximated as E10).” He lost me when he jumped from E15 to E85
        But since E10 contains 15% less energy than regular E0 gasoline E85 contains 36% less energy than E0. Without the current subsidy for blending, E10 would be more expensive than E0, so I imagine E85 would be much more expensive for even less BTU content.

        • By Robert Rapier on February 19, 2014 at 11:06 pm

          Well, “he” is me and it didn’t occur to me that it might not be clear what E85 was. So I added a clarification to the post. The other thing is that E10 doesn’t contain 15% less energy than E0. It contains about 3.5% less energy.

          • By Don Heichel on February 20, 2014 at 2:37 am

            You play Big Oil’s game when you focus on BTUs in a gallon.

            Focus on the Octane, Ethanol 108, NatGas 130, gasoline complete with carcinogenic aromatics 87.

            google: Technology Review (MIT’s Mag), More Efficient Ethanol Engine to read “Regular flex-fuel engines are unable to exploit these properties because they are optimized for gasoline and run at lower cylinder pressures, says Cruff.”

            That’s another way of saying lower compression ratios for gasoline than Ethanol.

            • By Robert Rapier on February 20, 2014 at 9:37 am

              I have actually written about this, and nearly included a discussion in this article. The reason I didn’t is that the article was getting kind of long, and more importantly, early on it will be important to maintain flexibility. If you optimize for E85, you aren’t going to be able to burn gasoline well or perhaps at all. That’s OK if there is a lot of E85 availability everywhere you will be traveling, but in most cases that would be a limitation today.

              See this article I wrote covering this topic:

            • By Don Heichel on February 22, 2014 at 3:22 am

              Your distribution point is accurate. But cutting Ethanol use to continue spewing carcinogens from our exhaust pipes is such an old Big Oil liability… tiresome to keep the Groundhog type re-do daily with gasoline.

              Good to see a commercial cellulosic plant that actually works at Vero Beach, Fl. Seems they used Range Fuels gasification front end & came up with a better idea for the back end of the process. More of this is coming, that’s why we can’t stop opposing Big Oil’s filthy gasoline broken Ethanol record.

          • By Forrest on February 20, 2014 at 8:22 am

            The e10% energy loss can be compensated with better tire pressure management. Back a few years during the fuel crisis when POTUS recommended to public to air your tire up not that bad of an idea. During those years I calculated 10% ethanol btu loss about same as low tire pressure. But, E10 is not the same or comparable to E0 of yesteryear. RBOB blend stock invented for ethanol per reduction of the higher vapor pressure chemistry within the mix, is itself lower BTU. Slightly, but since the base fuel is 90% of mix a contributor to slightly less MPG. Nontheless, the base stock is a good value to consumer as petrol industry can produce it in more abundance and cheaper. Petrol likes E10 combo.

    • By Don Heichel on February 20, 2014 at 2:30 am

      Just another tool of Big Oil who does not understand Octane’s role in developing power from the internal combustion engine.

      “So-called flex-fuel engines use a mixture of fuels, the most common combination being around 15 percent gasoline and 85 percent ethanol. But these engines tend to pay a 30 percent efficiency penalty because they are optimized to use gasoline” (google: Technology Review (MIT’s Magazine), more efficient ethanol engine [to read the entire article])

      Run only E85, change the compression ration to 12.5 to 1 & loose the carcinogenic gasoline without any energy efficiency penalty.

  3. By Don Heichel on February 20, 2014 at 2:21 am

    Ricardo Engineering has built a V-6 E-85 engine that has more power than the diesel V-8 that came with the pick-up originally.

    Ethanol’s 108 octane is poorly understood, but if you build the engine to run only E-85 the compression ratio can go from 9.5 to 12.5 to 1. Google: E85 Motorcycle Leaves Critics in the Dust, Holly Jensen to see what the proper compression ratio does for power.

    If you run the correct compression ratio, there’s no power loss & the E85 is cheaper & cleaner because it has that extra Oxygen atom in its molecule.

    Gasoline needs octane boosted by carcinogenic aromatics, think about that next time you’re stuck in traffic with fumes all around you.

    Get rid of the cancer causing aromatics, go E85! (or Natural Gas)!!

    Natural Gas octane is higher than diesel at 130, that’s how Honda gets the same mileage from its NatGas Civic as its gasoline Civic even though Exxon has internet hit pieces on NatGas that say it has only 67% of gas gallon equivalent BTUs.

    Big Oil wants you to hate Ethanol & keep inhaling its carcinogens…

    • By Forrest on February 20, 2014 at 9:13 am

      It would have been smart move for economy and environment to spur technological development with ethanol fuel engine by creating an open class of non regulated tail pipe emissions for 500+ hp sport cars and 50 mpg+ auto’s burning E85 minimum fuel only. EPA compliance cost are huge for low volume models.
      As you know the current technology of flex fuel vehicles are engineered for maximum efficiency with E10 with flexibility of burning E85. This is horrible condition per comparison of fuel use. Yes, transportation technology is barely started to exploit ethanol fuel attributes. Analysis predict a slow trend to exploit efficiencies for increasing ethanol blends, but are excited upon the trend. E30 appears to be most promising blend per conventional technology. The fuel a sweet spot emitting lowest pollutants and enough octane to deplete engine technology. MPG maxed out, with lessening mileage with either more gasoline or ethanol. Ford is sneaking new technology that appears to be a game changer. I would describe the engine as variable displacement, an off shoot of Eco-boost. The physical displacement of engine doesn’t change, but the engine combustion chamber air supply does. It’s a bifuel, where conventional gas intake produces great mpg for low hp needs. Higher hp needs utilize increasing use of DI E85 where upon the excellent chilling effect of ethanol will induce larger air intake and keep combustion temps down. Also, the larger air mass per ethanol will spool up turbo to double the intake charge. The engine more efficient than diesel, cost less, and lighter. Also, another developing engine tech for E85 accomplish similar engine variable displacement strategy by utilizing ethanol’s ability to burn within high dilution rates of EGR. This is important to MPG as the engine is always designed to produce HP required per a small percentage of driving needs. Most, engine displacement wasted per air emissions requirement to always balance oxygen with fuel for complete burn. So, the majority of driving would benefit from small engine or low rpm. Enter the 10 speed transmission and EGR gas. Filling the combustion chamber with inert exhaust eliminates oxygen for low hp needs. Ethanol is superior fuel for this. Also, ethanol a superior fuel for torque. Higher torque equals better mileage. If ever the transmission and engine designed to exploit the ability of ethanol to produce torque…it would surpass gasoline mileage.

      • By Optimist on February 20, 2014 at 6:35 pm

        It’s a smart move “for economy and environment” to convert food into fuel? AND to do so with utmost inefficiency, i.e. fermentation followed by distillation? Only Uncle Sam would actually pay people to do that.

        You make some interesting claims about ethanol as a fuel. Q: Would better/more complicated controls not add the same benefits for any fuel?

        And in the unlikely scenario that ethanol is this highly unique fuel, we need to find more efficient ways to produce it, using a cheaper, non-food feedstock. A fossil fuel, maybe? Natural gas?

        Once you’ve achieved that, you can start working on delivering a renewable fuel, maybe using biogas from a landfill or wastewater treatment plant as your feedstock.

    • By Optimist on February 20, 2014 at 2:13 pm

      Keep up the irrational hate for Big Oil, Don. It is sure to contribute to sensible energy policy…

      Of course we should burn our food as fuel. That will really show Big Oil!

  4. By Forrest on February 20, 2014 at 10:36 am

    The ethanol industry “strategery” (SNL) on the path to usurp the RFS for stability and growth. They realize the infrastructure must be accommodating to increase ethanol sales, long term the only solution for expansion. While the ethanol producing states are more motivated to burn E85, they to need infrastructure as well. Also, their population is typical, meaning they will have the same hurdles for increased sales. Besides, ethanol continues to be a national priority brought on with Pres. Bush to stabilize the fuel markets as we were experiencing tremendous fluxuations at gas pumps. We needed more competition which even a low percentage of alternative fuel provides. This cost stabilization and other cost factors have been calculated at up to $1.50/g per one economist. The nation has set a course upon changing energy mix across all sectors. This should be a positive economic future development as long as the course is not to expensive. Meanwhile the traditional energy sources should continue development and be exploitated. We would feel silly if future invention obsoleted coal and oil and we never sold these resources per maximum economic benefit. We have a crushing national debt that requires immediate attention per oil revenue! Remove export restrictions ans sell as much as possible.

    I sympathize with petrol for tying up their economics with RFS as it won’t always be efficient, but short term an excellent device to support ethanol sales. The open market a better allocator for resources, just the ethanol industry is going up against a intransigent competitor in control of most fuel supply infrastructure.

    • By Optimist on February 20, 2014 at 6:46 pm

      Horse manure: if ethanol is supposed to stabilize prices at the pump, why won’t we import from Brazil? Or is it not supposed to stabilize prices to the point where it hurts those “rugged, heartland individualist” welfare queens?

      The credibility of the people who do those “$1.50/gal” calculations only collapse further with every statement they make.

      The last paragraph is downright laughable: how is it that the unsubsidized free market player is the bad guy while he competes against an industry created entirely through subsidies? Sure, Big Oil is a large and skilled competitor, but unlike Big Banks, Big Auto and Big Ag he grew through his own hard work, not generous government handouts every time the free market threatened his bonus.

  5. By ben on February 20, 2014 at 10:43 am

    Fascinating how the dialogue here seems to confirm the advent of a mid-to-late 20th century attitude toward the prerogatives of government where activities in the states, communities and private sector are subservient to an impact on the public treasury. Wow, talk about the tail wagging the dog!

    In general, some devolution of initiative from the central government to the states remains a healthy instinct. Regrettably, some of the exceptions for a nationalization of policy issues of the past half-century (some of them quite justified) has left an impression that Washington knows best. Well, guess what, they don’t. And, in fact, in some instances they haven’t got much of a clue. Some of the misjudgments that we’ve seen with the Solyndras and Range Fuels, does in fact undermine the public’s confidence in alternative energy and in the integrity of Washington politicians and bureaucrats. Many might say that’s not all bad. Instinctively, I’d agree, if I didn’t think too much of an erosion in our trust in government may be a slippery slope leading to unintended consequences.

    Rapier’s thoughts on a reconstruction of current RFP policy has some merit. I’d welcome an overt investment/capitalization strategy with “rewards for results” that promotes sustainable growth for the Midwest and beyond. Embracing dynamic analysis in a policy framework that doesn’t view energy development/economic growth as a dubious proposition, but as a central tenet is key. If we are to keep moving America away from a dangerous dependency on vulnerable energy supplies while reversing an unhealthy concentration of power in central government, we must adopt reforms that empower localities, private citizens and privately-owned enterprises.

    There is little doubt that we can do much better than our current arrangement. What we have witnessed out of Washington with the advanced biofuels mandate has been little short of laughable. No, make that pretty damn embarrassing! One hopes Chairwoman Landrieu will lean into this one a bit more aggressively in the days ahead.

    Let’s keep nudging the ball toward sensibility and that means toward home & hearth and not the wilderness called Washington.


    • By Optimist on February 20, 2014 at 6:53 pm

      “If we are to keep moving America away from a dangerous dependency on vulnerable energy supplies…”
      One word: Fracking.

      It’s done. The ethanol industry is just an irritating embarrassment. Very expensive, yet too small to make a dent.

      But, you can’t have your cake and eat it: It took $100/bbl to make fracking worthwhile.

  6. By TimC on February 20, 2014 at 1:22 pm

    If farm state politics dictate that we must have a corn ethanol industry, then why doesn’t Congress subsidize installation of ethanol-to-gasoline (ETG) units at dry mills? This would allow them to become true biorefineries, converting yellow dent corn to RBOB gasoline and E10 blend. Voila, no more blend wall, no need to replace the US auto fleet with high-compression flex fuel vehicles, no need to install E85 or blender pumps at gas stations, and no corrosion issues with pipelines or fuel tanks. High corn prices will keep farmers happy, jobs at dry mills will be preserved, dependence on imported oil can be reduced, and the RFS can be forgotten, as the ethanol industry will be free to grow as big as economics allow. Might be worth at least trying in a demo plant, maybe in Iowa.

    • By ben on February 20, 2014 at 5:45 pm

      I don’t believe Congress or the White House erected any obstacles to ETG project-applicants for American Recovery and Reinvestment Act (P.L. 111-5) grant funds via DOE/USDA. Truth is, resources for this sort of initiative have been available along the way. Don’t get me wrong, I very much believe that it will take the economics of more localized production/distribution of Corn Belt refineries to achieve an efficiency that hopes to compete with fossil fuels. As all who read this blog, the energy efficiency of ethanol is not an attractive tale.

      In response to ‘Forrest in the Trees,’ I’ll only add that the history of the RFS and RFS II is a remarkable saga of Potomac River “sausage making” (Bismark). The odyssey began in earnest during the first Bush administration and, a decade later, hit turbo-charge with “W ” who, as a Texas Proud son of the Oil Patch, was hardly a fan of all this “corn liquor” as he called it back in the day, became quite a bit more enamored as he started doing the math with his man Rove on the Electoral College. Conservative ideology be damned, “thar’s gold in them there corn fields!”

      Now, he never went so far as VP Gore to say that as a child, “…..I’ve hoed it, chopped it, shredded it…..” but he did find his way to promote the boundless potential of switchgrass ethanol and other sources of homegrown bioenergy. Recognizing his need for those within his own Republican Caucus, let alone finding some common ground with the Tom Daschles and Dick Durbins in the senate, was key to the political log-rolling that is Washington politics.

      I could go on, but I think we ought to just stick with Rapier’s approach to the arguments: “Just that facts, sir, just the facts.” Speaking of facts, I might commend to anyone interested the analysis provided by Capt, Todd “Ike” Kiefer, USN (now retired) on the subject of ethanol’s merits as a 21st Century energy source to strengthen America’s security:

      Lord knows his scholarship does far more than my modest abilities on this important topic.

      Hope this provides a carrot or two for the stew. It really is a collective enterprise in getting all the ingredients together in the hope of achieving the most broadly beneficial result.


  7. By Forrest on February 21, 2014 at 8:11 am

    Last year Iowa increased sales of E85 by 20% as compared to 2012. The Midwest states do have tax and revenue policies to increase ethanol sales and distribution, but increasing sales requires a balance of production, distribution, information, and auto technology. Improvements to all of these are steady increasing, but most value obtained when they are in balance. Forcing a few states to consume entire production of ethanol would result in waste of resources. Forcing that much change just inefficient.
    All state should adapt road tax on fuel per btu content as diesel fuel with high btu content would result in more road miles. That’s just a fairer burden.

    Ethanol plants produced 13.3 b gallons last year from 4.75 b bushels of corn and 150m bushels of sorghum. Production plants produced 35.5 metric tons of high protein feed of which is valued at $9.1b, about double of 2010 figures. Another $700m from distillers oil. Farmer sales per ethanol $29 billion. Total farm crops value $217b. Livestock value $182b, an increase of 82% since 2000 (what fuel vs feed problem?). Farmers income up per better value of corn, Federal farm program cost mostly gone…..this paraphrased from Bob Dinneen, RFA speech 2/18/2014.

    A majority, 65%, of gas stations are single owner run stations with no deep pockets to change pump and tank makeup for ethanol unless a big payback. The gas pump manufacturers have spotted a trend and believe gas stations will pull the extremely low volume mid octane fuel and replace with E15 as this lower cost fuel with attributes of mid octane fuel growing fast. I personally think this the big angst of E15 with petro as they love E10 and hate E15. Pump manufactures such as Wayne and Debarko expect flexfuel dispensers to gain popularity with the single hose blender the most desirable. Gas stations can have a wide array of custom pump options per the flexibility of manufactures. With 2 tanks, one full of E10 and the other with E85 a wide range of fueling options. I believe this arrangement is most useful per setting up independence or fair competition upon the fuel market. Ethanol infrastructure often blends ethanol with natural gas for distribution. This pathway independent of petrol as natural gas requires no refining and fits well with attributes of ethanol. One pump manufacturers expects E15 to eventually become the standard fuel. Also, the heritage gas pumps are already certified for this fuel per expectations of future market makeup.

    • By Forrest on February 21, 2014 at 9:22 am

      Make that 35.5 million metric tons of high quality protein feed from ethanol production. The ethanol feed co-product alone would rank as 4th largest corn cop trailing U.S. (of course), China and Brazil. Also, distillery grains improve the animals fat makeup health benefits to consumers, especially with grass as main component. Corn fed beef is tasty, but more grass (the natural food of bovines) produces balance of omega 3 fats actually healthy food supply. Starch is close cousin of sugar and while produces juicy fat steers…..not that healthy for humans.

    • By Robert Rapier on February 21, 2014 at 9:36 am

      “Forcing a few states to consume entire production of ethanol would result in waste of resources. Forcing that much change just inefficient.”

      I couldn’t disagree more. Transporting low energy density ethanol all over the country is highly inefficient. Far more efficient to use it close to the source of production. Further, the major point here is that if the Midwest moved toward E85 as their major transportation option, they have helped insulate themselves from global oil prices, and they have ensured their own markets. The federal government wouldn’t be able to destroy their market completely by eliminating the RFS.

      Right now, the way ethanol policy is set up the ethanol industry perpetually has their hands out. Just look at Bob Dinneen’s constant calls on the federal government to force people to consume more ethanol. That creates a perpetual welfare situation for the industry.

      • By Forrest on February 21, 2014 at 10:36 am

        Granted the plan would cut down on transportation cost, yet were talking ethanol levels above E10. The blend wall for the nation not that great of a hurdle and most independent evaluations claim so. The mid western states are happy to sell more E85, but couldn’t spend the required amount of revenue for the mission to consume the entire production. These states have same priorities as others. I don’t view the RFS as corp welfare as much as corp guarantee of market. The EVO from EPA reviews production capability and adjusts RFS numbers accordingly. They attempt to void high cost of petrol to comply. That’s why the cellulose ethanol numbers reeled back. Grain for ethanol in good supply, makes no sense to reel those numbers in. Cellulosic ethanol production from multiple sources expected to go on line shorty with low production. These producers need stability per their enormous investment. Don’t forget consumers across country don’t all abore ethanol. Some purchase the fuel even if uneconomical. I just don’t see a problem with the countries approach. Even the ethanol producers know the RFS will not last indefinitely. They have strategy to mature and stabilize upon free open market. It is bad governance to put national programs such as alternative energy, then capitulate upon industry pressure or politics. Remember, the wrath upon the Republicans for dumping Jimmy’s corn ethanol and the stay the course intelligence of Brazil who suffered not an energy crisis back then? E10 won’t go away it’s a good fuel and save consumers a boat load. Appears, E15 will replace much of the mid-grade fuel and eventually replace E10 as standard. E85 is an alternative fuel and works well at gas stations to blend all the lower ethanol fuels. Their is a tremendous rate of innovation per ethanol. The analogy comes to mind with the recent competition of Public Ed, whom don’t appreciate competition from the new kid on block.

        • By Robert Rapier on February 21, 2014 at 10:44 am

          “I don’t view the RFS as corp welfare as much as corp guarantee of market.”

          When the government forces others to pay for your livelihood, that is welfare.

          “Appears, E15 will replace much of the mid-grade fuel and eventually replace E10 as standard.”

          It won’t. This is what the ethanol industry is pursuing, but it ultimately creates exactly the same unsustainable situation that exists today. My proposal would be long-term sustainable for the ethanol industry. It would create long-term markets locally that the federal government could never take away. An E15 mandate is just another federal government crutch that can disappear if sentiment turns against it. It’s a band aid, where my proposal is a cure for the industry.

          • By Forrest on February 21, 2014 at 11:22 am

            You’re strategy is viable upon introduction of the fuel. Currently, to much invested to change course and we can’t say the problems with your solution until attempted. One in hand is better than two in the bush. State experimentation is valuable as it results in less costly mistakes and has more ability to change/adapt new plan. I do think the E10 is a good national blend. The efficiencies have been worked out on that one. Stabilizing that blend for a whole host of reasons a good move. Now, building high blend fuel market in the Midwest to consume the rest? As insurance upon loss of RFS? I do know building some incentive for automotive to develop a high efficiency ethanol model would work and would spur technology development. I think a good strategy for turning consumers on to ethanol per what fuel stations are familiar with the irrational judgement of consumers whom drive miles to save a penny a gallon. BTW, this is a good lesson on how to bring down the cost of health care….post your prices. So, these gas station owners are excited to push low volume mid-grade out and replace with attention grabbing price decrease of 5-6 cents/gallon E15. We had a town north of here some years ago did this. Selling mid-octane fuel with 15% ethanol at a dime less/g. They had two stations next to state highway and always 2-4 cars per line waiting for fill and I was one of them.

            • By Robert Rapier on February 21, 2014 at 8:54 pm

              “So, these gas station owners are excited to push low volume mid-grade out and replace with attention grabbing price decrease of 5-6 cents/gallon E15.”

              There have been lots of news stories about the near non-existence of E15 sales because gas stations don’t want to assume the potential liability given automakers refuse to warrant the vehicles against damage.

  8. By alpha2actual on February 21, 2014 at 12:23 pm

    I’m astounded that none of the comments address the issue that the 40% of the U.S. corn crop diverted to Ethanol price effect on the global market and the attending increase corm prices has moved 20 to 30 million developing country inhabitants from food insecurity to starvation status.

  9. By ben on February 21, 2014 at 2:00 pm

    Wow, Rapier is a very patient, correction, make that gracious, fellow in his indulgence of the ramblings from the Man in the Trees! His citation of an 82% increase in livestock prices since 2000 is hard evidence of his failure to apply coherent analysis or draw very sensible conclusions “(what fuel vs feed problem?)” PLEASE tell me that he’s just kidding! Regrettably, he just keeps on splashing through the puddles with so many examples of disjointed logic that it’s pretty sad.

    I must confess that his observations about the virtue of the ethanol pack was laid bare with: “They have strategy to mature and stabilize upon free open market.” This is such an amazing flight from fact to fancy that it merits little more than a deep-in-the-belly laugh. Have I got a bridge to sell this cat! My close associate who was present at the signing of the Clean Air Act Amendments of 1990, with it’s original oxygenate by content provisions, can offer great stories on what the Corn Growers and earliest members of the RFA were–and still are–saying behind closed doors in meetings with farm state senators and reps (former and current). This tidy circle of lobbyist-collaborators actively pitted Detroit against API’s membership on how the regulatory burden (costs) for emissions compliance would fall: Would it be the engine or the fuel? We know how it turned out and remains to this day, as we wait on the nexgen of flex-fuel vehicles. And to think, we’ve had a major bailout of the automotive industry in the interim. Some gifts just keep on giving! Finally,
    we are on the cusp of a major transition of fleet vehicles, freight hauling platforms and, yes, even modest progress with POVs. All of this is long overdue.

    So, RR, deserves an award for exhibiting remarkable patience while the Forrester has earned qualification for an educational grant to a school where they teach, among other things logic. Hey, that is being gracious!


  10. By Roger DePoy on February 21, 2014 at 3:14 pm

    “This situation could have been avoided — and could still be avoided — but the ethanol industry continues to chase policies that will ensure that they remain dependent on the federal government to create their markets”
    Mr. Rapier has never penned a more cogent thought than this. Let’s divorce the ethanol market from the federal government, and let it stand on its merits. I will now go back to my research of its merits…

  11. By CarbonBridge on February 21, 2014 at 3:44 pm

    Wonderful and detailed ETHANOL article Robert. I read through it just after the article was published online. Now three days later, I am not surprised to review 35 comments of ensuing discussion. Batch fermented corn ethanol has its fans and detractors. It always will…

    Having toured over 80 corn ethanol plants, I’m very familiar with BATCH FERMENTATION including Distillers Grains as co-products. Amid the very real Food vs Fuel issues, what excites me the most about Corn Ethanol (and other alcohols) is its ability to dilute into water and feed micro-bugs and green plants and trees with a free lunch and thus easily biodegrade. This element plus 108 octane just flies in the face of cancer-causing aromatics like Benzine.

    Discussion and Chatter on this present column reminds me of similar discussions several years earlier on your blog. Congrats!

  12. By Tom G. on February 21, 2014 at 10:57 pm

    After reading many of the posting below I have this question. How difficult is it to convert an ethanol plant to a biobutanol plant. It would seem to me to be a pathway to a more powerful fuel with less of the harmful or corrosive effects of ethanol.

    Could someone with say a chemistry background please speak to this issue. Thank you.

    • By Robert Rapier on February 21, 2014 at 11:00 pm

      Really different processes. You might have some savings over just building a grassroots butanol facility, but it wouldn’t be a huge savings. GEVO is trying to retrofit ethanol plants to produce iso-butanol, but again the chemistry and the separation of the alcohols are very different.

      I personally don’t think biobutanol can be made at a price point that people would use it as fuel. The petrochemical process is much cheaper, and it is far too expensive to use the butanol as fuel.

  13. By ben on February 22, 2014 at 10:45 am

    Biobutanol is all about the production of specialty chemicals for much lower scale production than that routinely associated with transport fuels. What is curious about several projects receiving funding courtesy of the great early 21st Century bonanza called the American Recovery and Reinvestment Act (PL 111-5) is their promotion as the commercial scaling of cost-competitive, transport fuel production. Some taxpayers are anxiously awaiting this competitive production at scale in the hope of supporting our energy security interests.

    Alas, as we peer into the big tank there is precious little making it to the pumps. And let’s not hold our breath for any to make it to the transport market anytime soon. Why direct your subsidized production to the fuel tank at a loss when you can make a tidy profit with specialty chemical applications. Hey, bait and switch is the only way to fly. All the other suckers willing to put their investments fully at-risk these days really are just a bit too old-fashion for the way the game gets played these days in financial centers where “pump & dump” is the primary object of selfish ambitions.


  14. By Forrest on February 22, 2014 at 11:12 am

    Getting back to Robert’s premise on ethanol sales and future. There is a big risk to alternative fuels, that being the waning support of public once gasoline supply increases and prices fall. Environment aside, most issues are pocketbook issues. The country does have a habit of short sighted solutions. If the political sands sift, priorities shift, as each succeeding administration wants change that they can claim fame for themselves. Now, in fair competition starch ethanol would have the advantage of cost, but petrol could easily crush a developing competitor. They have weighty political pull and our political class not the virtuous public servants the pro fed government enthusiasts proclaim. Also, the propaganda industry is as insidious current day as in the past. It reminds me of the analogy of airlines consolidation for efficiency of scale, but more for efficiency of price control. Government if operating properly should maximize small business competitiveness. Also, to enact for the purpose of maximum open market competition. But, alas these small businesses have no deep pockets to maintain favorable regulations. Corn ethanol is not the big argo business which how they are sometimes portrayed. First the industry has diversified ownership and all of it national and most of it local small business. I think the RFS in it’s simplicity is a powerful tool to empower ethanol and do so with the advantage to consumers of saving money. But, I will concur it does cost petrol. When supply barely met demand the country would suffer immediate effects of any hiccup within international supply problems. We suffered even within seasonal demands. Petrol was not hurt per increased cost of oil as markup percentages remained the same for ever increasing cost of goods sold. But, consumers got fed up and voted with dollars and votes for politicians to improve economics. Energy industries began to invest in R&D to solve the problem. Were reaping all of this effort present day and future looks even brighter. But, petrol must be totally P.O.’d at the loss of market control per RFS, delay in pipeline, brewing environmental headache regs, and the inability to export oil to manage their business efficiently. North America is soon to be an oil cartel of it’s own and to suffer the nonsense of regulation to blend ethanol is to much. Ethanol is destroying their potential profitability. The first step to protect ethanol is to team up with petrol and remove the export laws. While Robert’s plan would be a disaster plan of last resort, present day efforts may be better spent separating ethanol from the petrol supply. Meaning the separate gas tank at gas stations with flex fuel pumps that give the consumer choice of blend. But, we should understand cellulosic ethanol is most vulnerable to loss of stability and support. Their production is low and investment costs high. Very easy to scare investment money away. This industry needs some years to solve growing pains and write off investment costs. While some of the chemistry is old, the industry is developing completely new processes. Much invention will play into their success. The country may become a world leader and may be in process of achieving a very desirable new industry. Lets not be reckless with the progress.

    • By Robert Rapier on February 22, 2014 at 11:24 am

      “They have weighty political pull and our political class not the virtuous public servants the pro fed government enthusiasts proclaim.”

      Agribusiness and alternative energy spends more money lobbying than does the oil industry:

      • By Forrest on February 22, 2014 at 11:55 am

        What did ethanol spend?

        • By Robert Rapier on February 22, 2014 at 12:47 pm

          I don’t think they broke it down just by ethanol. It was ag lobbying versus oil lobbying. The point was that this idea that the oil lobby was all powerful is kind of rebutted by the fact that the ag lobby spends more money. Corn spends a lot of money lobbying, which trickles down to ethanol.

        • By Russ Finley on February 22, 2014 at 2:08 pm

          You tell us and be sure to calculate lobbying money spent/unit energy consumed compared to fossil fuels, and don’t forget to factor in the fossil fuel component of making corn ethanol.

  15. By Forrest on February 23, 2014 at 7:47 am

    Well, problem solved! Just read the EIA report for light vehicle fuel projections 2040. Gasoline retains the largest portion, but loses much. Diesel fuel makes biggest inroad. E85 grows tremendously to 2%. Hybrids vehicles grow in popularity but still the common auto with typical power plant the most popular. Battery car, plug in hybrid, propane, NG, and fuel cell numbers grow but very small percentages. Diesel fuel grows the most. Ethanol to gain a whopping 2 billion gallons of production and cellulosic still way below 1 billion gallons. So, that tells me petrol is expected to win the RFS regulation removal and stall ethanol to present day production facilities. Most of ethanol utilized for E10 blend agent and some E15 midgrade sales. E85 increases in popularity as well as flex vehicle sales. All of the competing alternative vehicle fuels growth rates are minimal as compared to fossil fuel use. Increase in efficiency for the light duty transportation fleet does the lions share of displacement of fossil fuels. The future pretty much hear.

  16. By ben on February 23, 2014 at 12:33 pm

    Citing projections from EIA on light vehicle fuel projections for 2040 is akin to Malthus conjecturing on the inevitable loss of a large segment of Europe’s population within a generation due to agriculture’s inability to keep pace with that era’s population growth. EIA has meager capability to do much more than extrapolate from historic averages. This is hardly an indictment, so much as a mere acknowledgment of institutional limitation–a constraint that EIA’s senior management will surely concede.

    Any revelation that not much is likely to change in the next three decades is not too much of a revelation. What may prove more revelatory is that a great of unanticipated change will occur far beyond that which is currently contemplated. That is a certainty. Why the unbridled faith in a wave of dramatic change? I guess we might attribute it simply to a nexus of entrepreneurship, systemic-technical innovation and international commerce. Changes, most of them tied to digital computing/telecommunications advancements, in how we learn, work, play and care for ourselves continue a recalibration the likes of which we’ve not witnessed since the advent of industrial machinery and the fuel to power these force-multiplying contraptions.

    There is a inclination (some might say bias) on the part of many to dimly view modernity as sort of quixotic, zero-sum game (MIT Sloan School’s Lester Thurow inviting such in The Zero-Sum Society, 1980) where the advantage to some is little more than a reciprocal setback to others. While such a perspective is hardly at odds with what the average man senses in his gut, it actually belies the slow and, admittedly, uneven tide that chronicles the “progress” of humanity. In short, Malthus was wrong. You might say, dead wrong. :)

    We are on the verge of some remarkable changes that will soon sweep away a
    wide array of old assumptions about the trajectory of future course. I dare say ethanol development will not figure prominently in these dynamics. The big question is not whether a sea-change is coming, but whether we will somehow remain
    socially-institutionally abreast of such change. If one was to cast an eye towards our capital city, well, I dare say we might have some second thoughts on the
    seaworthiness of the ship of state’s crew:)


  17. By Forrest on February 24, 2014 at 8:17 am

    Reading the EIA projections of changes to fuel supply to the year 2040, the things pop out to my novice understanding…

    1. Not much can be predicted upon the future reserves of natural gas or oil, nor the technology advancement to harvest. This is the biggest guesstimate of future.

    2. CAFE regs appear to bastardize the efficiency of open market decision making. First the efficiency based on MPG appears to be silly. BTU consumption would be a better bench mark and better yet if based on life cycle analysis. The way it’s set up now an electric utility running at 30% efficiency, burning coal to provide power to the recharging station is rated a perfect fuel for MPG calcs?
    Increasing CAFE mpg requirement will force fleet to diesel fuel and force refineries to retool to cracking capability to swing more diesel per gallon of crude. Doing so will generate less gallons output as diesel has more energy….so are we fooling ourselves with CAFE standards? Apparently the car fleet will use the same crude oil either gasoline or diesel. Also, there is a natural and a sensitive efficiency based on true market demand for oil products per price and yields of crude oil refining. The CAFE is screwing this process up. Also, the ethanol market shrinks as more diesel engines enter the market (are we going backwards with our energy stability law efforts?). Gasoline is losing the CAFE battle with the burden of RFS requirement to blend more low BTU fuel with gasoline that is already losing the battle as compared to diesel. Can you imagine a new extremely low MPG fuel made from CO2 and sunshine that could be produced for pennies being axed by CAFE standards that suggest an engine burning coal tar or bituminous would be wonderful per the extra BTU/gallon?

    3. Auto industry has no incentive to build efficient higher blend ethanol engines as engineering looking to the obvious dictates of government to utilize diesel fuel. Same with the alternative fuel market dropping cellulosic ethanol for GTL, CTL, and BTL processes to make jet and diesel fuel. Same with automotive eagerness to build flexfuel vehicles.

  18. By ben on February 24, 2014 at 3:58 pm

    In response to the Forrester:

    1. Actually a fair amount is reasonably predictable though hardly definitive. We tend to underestimate the emergence of alternative scenarios where old assumptions falter on the rocks of innovation. yes, EIA, is doing little more than offering a best-guess estimate.

    2. Yes and no. CAFE is a policy reflected in regulation that alters the free market’s facilitation of private action alone. To suggest that there are no energy savings resulting in the wake of such policy is inaccurate. The old axiom: “you get more of what is subsidized and less of what is taxed” remains true. CAFE imposes additional cost for energy use and, thus, it has reduced liquid fuel energy consumption. Does that mean the government’s calculations of net savings are accurate? No. But neither does it refute the premise that substantial savings have resulted from implementation of the policy.

    3. Detroit has little incentive to build engines for fuels that have not proven themselves effective substitutes to fossil fuel-based transport fuels. Ethanol is a blend fuel with current and prospective volumes only miniscule in comparison to transportation requirements. At such time that viable alternatives become available (at dependable costs and volumes), you can fully expect Detroit engines (via OEM or through conversions) to utilize these supplies. Do not expect cellulosic-based fuels to effectively compete with several alternatives due to baseline, process energy requirements rather than any “politics” of other sources. Truth be told, the politics of ethanol have been the merchant’s thumb on the scale for over two decades.

    The truth may not be convenient, but in the words of the Good Book, “….it shall set you free.”


  19. By Forrest on February 25, 2014 at 7:43 am

    The EIA commissioned by fed mandate with big $ with a heavy population of analysis a good harbinger of future fuels market. The report expects diesel fuel to make huge gains upon light vehicles and do so at a cost to gasoline. While ethanol makes a 2 billion increase to 2040, ethanol has an uphill battle as gasoline vehicles become less popular and MPG increase per CAFE requirements equates to less gasoline upon market for ethanol to be sold as blend agent. However, E85 increased sales all the way to 2% of fuel market and increase sales of E15 more than offset the loss.
    Ethanol boxed into a corner as increased sales very tough. Flex vehicles do not increase much in popularity. Either to lack of E85 or the high cost to EPA for certification. Also, the biggest culprit is the CAFE standards based in gallons instead of the better indicator BTU. As posted below the gallons indicator not as good indicator of efficiency, conservation, fuel supply nor environmental damage. Having less fuel in tank mandates/demands forces usage of more energy dense fuel, such as diesel. The actual energy consumed doesn’t change upon fuel, but per auto’s efficiency. Also, it appears per our current fleet of refiners and crude composition, pushing more diesel out the pipe requires a overhaul of technology as the normal market is twisted per federal mandate….forcing inefficiency upon fuel market of producers. Auto makers and other federal agencies have demonstrated and communicated, ethanol boosting octane increase upon gasoline fuel supply needed to improve efficiency. That the lower BTU of ethanol deficit can be overcome with better engine technology and put on par with gasoline. So, this would be great for consumers, environment, stability of fuel supply to march down this road. It will push the best of gasoline as extra ethanol will pull better MPG out of the fuel and in the process pull ethanol to par. Increasing either ethanol or gasoline will result in less MPG. The chemistry of 30% ethanol with gasoline accomplishes this, with the additional benefit of minimum pollutants. Increasing or decreasing either, results in more. So, per current prices spread of over 25%, ethanol would drive the cost/gallon of fuel down dramatically. We save all the way around! Leave the diesel for heavy truck and airplane use, we have a better path.

  20. By Forrest on February 26, 2014 at 10:47 am

    To cast a brighter light upon the low consumption of ethanol- First E85 fuel is already cost competitive. Compare $3.26 E10 to $2.77 E85 which is actually E74. A 18-19% loss in mileage as some combustion benefit upon ethanol fuel. E85 can go down to E51 which would make the fuel more attractive per economics. Also, E85 a super high premium fuel and when compared to expensive high test gasoline fuel even more attractive. Consider the petrol’s super premium racing fuel sells for $8/gallon and not as good as E85 upon racetrack. Wow!

    E85 availability is good and quickly becoming better. That being said, availability will also, quickly meet demand. IOWs no problem here in the works. Same for ethanol production…supply will quickly meet demand. The enzyme 2rd gen ethanol looks to be on solid ground, lots of good cost trends the past four years. The feed stock supply, processing cost, and environmental footprint looks terrific and about on par with corn ethanol cost, but with better environmental benefits.

    Automotive would be elated to utilize E85 product upon the ever increasing production of turbo engine cars. Auto driver experience day to day would benefit from a doubling of low rpm torque. High blend ethanol engines achieving diesel torque values. Horsepower sells, but actually customers want torque and it’s a better driving experience and better economy to achieve high torque at 1,500 to 2,000 rpms. Downsizing and down speeding engine great for fuel mileage per decrease in pumping loss and friction.
    Auto manufacturers focus like a laser on regulations. They produce a regulated product. They must live upon that condition. If instead government commissioned automotive manufacturers to reduce emissions upon their open market ideas, we would have a sensible way forward, but that did not happen. The CAFE, green house, and California regs cost is mushrooming. The regulatory industry calculations, assumptions, and certification fuel, play havoc within industry. They change and always increase in bureaucracy, complexity, and politically. The problem of ethanol is the regulation industry. We hear publicly, that ethanol is lousy fuel and only used per federal mandate. Nothing could be further from truth. Also, per my understanding of diesel fuel benefits of single fuel and easy compliance per the certification fuel….makes me think an single fuel E85 engine auto would win the regulation battle. A fantastic fuel for regulation industry would be single fuel E100. Regulation industry runs the show and the industry is suffering with lack of leadership within that industry. The way it stands petrol in the future loses gas sales, but more than makes up for it in sales of diesel and NG. The RFS forces more renewable fuels within the petrol pipeline of which ethanol is one choice, but an attractive choice per cost and production. Problem is EPA has put a door stop in the path and created a blend wall.

  21. By Forrest on May 5, 2014 at 10:07 am

    Michigan ethanol producers appear to be distributing E85 fuel per Roberts marketing plan. They utilize Interstate freeway system for production plant to gas station distribution. Yellow hose plan supported by both gas station owner and E85 supplier guarantee E85 prices at a full dollar below unleaded. This is good cost effective solution as the typical gasoline blenders often times charge premium costs to distribution and blending activities of ethanol. This is to be expected as they are wholly in business for petrol fuel and not particularly sensitive to competition of their bread and butter supplier of livelihood.
    But, this marketing plan still a meager attempt to persuade buying public of value of ethanol fuel. The public is only treated to lower cost and ideals of fueling with environmentally friendly domestic produced renewable fuel. This is good, but public still thinks the ethanol is a compromised inferior fuel, that at times can be dangerous to engine and always less efficient. The truth is far from this, but will agree that the system is rigged to perpetuate the myth. Ethanol is a more efficient fuel than both diesel and gasoline per btu basis if fully exploited as diesel and gasoline presently are. We have no engines or transmissions optimized on ethanol fuel. We have flex vehicles than run regular fuel with abilities to burn E85 at a compromise. What would a higher blend ethanol auto look like? High pressure exhaust turbo charged air induction to boost compression and/or 15:1 on up to 30:1 compression ratio’s. Transmissions tuned to high torque of ethanol engine and engines utilizing 30% more EGR gas for low horsepower needs. Engines would decrease in size. Mileage would remain similar to gasoline engine experiences, but pollutant waste stream greatly reduced. Cold start up ozone producing exhaust should be a easy challenge to meet.
    But, back to Robert’s post on “Solving the Ethanol Problem”. I just read a book promoting bio-diesel fuel that mention history of petrol and ethanol. Come to find out Henry Ford was a big proponent of ethanol fuel and claimed the same present day attributes of the fuel. He started the nation’s first ethanol plant for the purpose of promoting a local produced farmer friendly fuel. The nation was producing 25% of its fuel as ethanol when the prohibition forced foreclosure. Henry Ford described E30 fuel as the most desirable, you know the same E30 described modern day as most desirable for pollution control and engine efficiency harvests. So, if the political class would have the intelligence to listen to Henry Ford back in the day we would be sitting in tall cotton modern day. No ethyl unleaded poison to environment nor MTBE. More efficient engines and higher mileage auto. Less air pollution and health harm chemicals. To this point must add the ethanol problem is mostly lack of moral fiber of regulators/politicians as this fuel has historically not achieved crony capitalism status of international corporate wealth advantage. Sure, gasoline a wealth generating industry for U.S. history not to be ashamed of, just it would have been much better with ethanol alongside. Present day, the start up of getting back in U.S. ethanol fuel market would have been a ton better and cheaper for nation if federal regulators would have (and can still accomplish) moving premium and mid grade fuel to E15 and E30 fuel blends. That’s all. No blending E10 or even E85, just a guarantee to auto industry E15 and E30 would be available to public for future needs of high performance engines. The lower cost ethanol blends would be very attractive to public. Efficient engines and transmissions would double the attractiveness.

    • By Forrest on May 5, 2014 at 10:50 am

      A good promotion of competition would occur if ethanol kept separate from petrol as well. No monopolies of fuel market. One tank for petrol and another for ethanol with blender pump sitting between. We should have fast trac blender pump regs as the pump technology not new. Instead the cost of blender pump per regulations very expensive modern day. Delay was long and expensive. It seems all of the government entities want to get a piece of the control and wealth action for bestowing blessings.

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