Timothy Gardner and Rebekah Kebede of Reuters [via the Calgary Herald ] claim that an increase in America's output of cheap, subsidized ethanol, along with additional gasoline refining capacity coming online, may lower U.S. gas prices. According to the U.S. Department of Energy, American production will rise by 130k barrels of ethanol per day in 2008 (up to 550,000). Gardner and Kebede note that the government subsidizes blenders to the tune of $0.51/barrel of blended ethanol, and that "the subsidies have made ethanol cheaper than gasoline and a much sought after component for blending into motor fuel." Another factor that could contribute to falling prices: the slowing of American demand for gasoline. While demand grew by 1.3 percent annually from 1971 to 2007, growth has slowed down 0.7 percent in 2007 and the government forecasts a paltry 0.4 percent for 2008. And what of transportation costs and logistics? (Ethanol can't be transported via existing pipes; it must be transported by diesel burning tanker trucks.) Or consumer reluctance to use corn juice once they figure out the (often hidden) fact that 85 delivers significantly less bang-for-the-buck? Nothing.
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Seeing as how on E10 (90% gasoline 10% ethanol) I get 90% of the mileage I get on real gasoline, the ethanol might as well be dumped down the drain. Unless you charge me $0 for ethanol or actually PAY me to take it, it cannot possibly lower gas prices.
screw ethanol welfare: i want my tax money back.
Ethanol from corn makes no sense unless you’re going to run in the Iowa primary.
“Forget oil, the new global crisis is food
But Mr. Coxe warned U.S. corn exports were in danger of seizing up in about three years if the country continues to subsidize ethanol production. Biofuels are expected to eat up about a third of America’s grain harvest in 2007.
The amount of U.S. grain currently stored for following seasons was the lowest on record, relative to consumption, he said.”
http://www.nationalpost.com/news/story.html?id=213343
Excluding taxpayer subsidies from the calculation, since E85 gets about 25% poorer fuel economy than gasoline, as long as it’s 25%+ cheaper than gasoline, it’s going to lower fuel costs for consumers.
My brother has a 2007 Avalanche and he’s dabbled with E85 a few times for grins and giggles, and the economy does work out to very close to a 25% penalty. So if E85 is 30% cheaper, he’s coming out ahead in terms of the price at the pump.
“Excluding taxpayer subsidies from the calculation”
You will also need to exclude skyrocketing grain prices or raise the subsidies. What a mess.
Good luck bringing MTBE back. They labeled it a danger to the environment and cleared the way for lawsuits against any company that uses it in fuel. ADM probably spent quite a bit at the Emperors Club for that.
Again, I feel obligated to say, don’t throw out ethanol altogether. Corn ethanol definitely has is problems, but there are other more efficient ways of creating ethanol that are much more sensible. I for one am a fan of gasification, which gives the ability to create liquid fuel from nearly any source of long chain carbon – including trash.
Keep in mind Brazil runs very well on high ethanol fuels, and its economy is booming. If we have an efficient way of producing ethanol (not from corn), it can definitely be feasible as a gasoline substitute.
Farmers have benefited greatly from increase corn/wheat/soybean prices the past few years, when in the past few decades they were hurting in a state of “welfare” from government subsidies. My father took a stab at farming in the late 70’s, but even though he thought it was his calling, he went back to engineering. He kept the land that I have now, because he had the same mindset so many other farmers had, “demand will catch up with supply by sheer population growth.” Something like ethanol brought this about quicker, and even though my neighbor farmers know ethanol is a “total crock of sht” (one of them in their actual words about a year ago), they fully embrace it, because the equipment is SOOO expensive and they want to leave a legacy other than vast amounts of land for their children and grandchildren.
Even though higher prices benefit me because less people are growing hay and cash renting land is (almost) a profitable practice, I don’t want to see these continued high prices, but that being said, I think farmers deserve 4-5-6 years of artificially high prices to weather them to population catching up to capacity.
“Keep in mind Brazil runs very well on high ethanol fuels, and its economy is booming.”
The USA produces more ethanol than Brazil.
Economy booming is relative. The average Brazilian lives on a tiny portion of what people in the USA take for granted.
Gasoline/oil is a world commodity, not just a US commodity. Even if our demand for it goes down from E85 China’s and India’s is still rising. The price will not go down on regular gasoline.
Keep in mind,too,that Brazil is slashing and burning rain forests to plant more sugar cane on the “reclaimed land”.
So much for the idea that burning ethanol is “better” for the environment than burning petroleum.
Not sure what your complaint is this time … to the extent Ethanol does replace refined gasoline, and therefore increases the supply of retail automotive fuel, of course it will tend to put a down vector on the price of gas. Do you not understand the concept of supply and demand?
Of course the effect may be just noise among other factors, such as the huge Motiva gasoline refinery expansion in Texas and the possible declining demand for gasoline in the US, but the point is not fundamentally wrong.
The only mistake is that the certainty of the headline doesn’t match there mere possibilities mentioned in the article, but questionable headlines are typical of your profession and TTAC is hardly blameless.
Actually if you understood supply and demand you would realize that a shortage of grain and huge increase in the grain price will result in a huge increase in the ethanol price.
I have to respectfully disagree, Kevin. First, go back up to the top and read NICKNICK’s comments; they are absolutely true. I’ve been trying out/experimenting with E10 even “way back” when it was called gasohol, and since the feedback oxygen sensors came on board virtually all cars in 1984, the oxygenate (i.e. ethanol) component of the E10 is more or less completely wasted in conventional cars. Some cars dislike E10 so much, the mileage drops 20%; some just drop 10% (which essentially means you may as well not bother with ethanol).
So dumping ethanol production may well allow the US to REDUCE oil imports in the real world. But we’ll never find out, will we?
Ethanol production is a total and utter waste. Not to mention the oil it takes to produce it, the fact that huge amounts of nitrogen fertilizer is being added to the Mississippi river and is known to be causing a large dead-zone in the Gulf of Mexico to grow substantially larger.
We also know that food prices are increasing all over the world, and already causing privation and possibly starvation.
Will someone in the United States Government please read this and stop the ethanol insanity? Worse yet, will someone in Minnesota please start a recall campaign against the Governor, who wants to push E20 into all fueling stations in the state, and void every new car warrantee in the state?
Yes, NICKNICK, I also want my tax monies back.
Kevin,
I guess you missed the fact that the academics are still arguing about whether ethanol production yields any net return, or whether you actually use more oil to produce a gallon-equivalent of gasoline (that would be 1.5 gallons of ethanol due to its lower energy content). The problem is that the researchers on both sides appear to be biased. That said, the net yield is close to zero, meaning you put a gallon of oil in, and you get about 1.5 gallons of ethanol out. So much for ethanol displacing anything. And bear in mind, in the process you have diverted high-value FOOD into low-value (we just burn it) FUEL.
RayH,
Do you have any evidence that population growth is catching up with food production? Remember Malthus has been wrong for two hundred years. Or did you expect him to suddenly be right? Ain’t gonna happen. As soon as we give up the boneheaded FOOD->FUEL schemes, food prices are coming down. Supply and demand as the man said.
kph,
Ethanol has a lower energy value than gasoline, absorbs water (which leads to a bunch of problems including, but not limited to corrossion, separate transportation requirements, special vehicle requirements, etc.) and it increases the vapor pressure of a gasoline-ethanol mix (leading to more air pollution, evaporative loss, etc.). Whatever the fuel of the future, ethanol ain’t going to be it.
Especially since you can now make gasoline from cellulose (the kiss of death to cellulosic ethanol).
zenith,
I don’t think sugar is ideal neither, I just brought up Brazil as an example that an ethanol-based infrastructure is feasible. What I’m really hoping is for current techniques that work with trash or waste as a feedstock will scale up. I realize converting anything to liquid or gaseous fuel is going to cost energy, but waste is, well, wasted. And it can be better utilized.
Engineer,
I think the process referred to in your link still relies on sugars, not cellulose. Typically these enzymatic processes work much better with sugars, and I’m generally, I’m not a fan of this route.
I suppose we can convert any form of carbon to another. However, it’s generally easier and more efficient to produce simpler fuels like ethanol and natural gas than it is to produce gasoline. Either way I don’t think we can replace gasoline completely, but it is good to have an alternative if it doesn’t come at an excessive cost.
Isn’t “cheap, subsidized” anything kind of an oxymoron? We pay for it one way or another.
kph,
We should only replace gasoline when we find an alternative that is cheaper or significantly better and preferably both. Ethanol is not that alternative, especially when you factor in that with its lower energy content ethanol needs to be less than 2/3rds the cost of gasoline to be cheaper per unit of energy. E85 needs to be less than 75% of gasoline. AFAIK, this has not happened anywhere, yet, in spite of generous subsidies (your tax dollars at work enriching rich political lobbyists). Why do our elected muppets keep believing this will change in future?
You are perhaps right about the processes I referenced. But their are others such as Choren and Range Fuels. I know Range Fuels tend to confuse people by playing the cellulosic ethanol card, but really they are about gasification of *whatever* and producing mixed alcohols which in reality means less ethanol (and more butanol) is better.
And ethanol production by fermentation is by no means efficient. It takes a lot of heat energy to distill the ethanol out of the dilute fermentation broth. Thermochemical production beats fermentation hands down.
Yes, I mentioned gasification in my first post, it looks like we agree that this is better than fermentation. And butanol may also be better in that it tends to cause less corrosion. I think my fear is that people dismiss biofuels altogether when there are ways to generate fuel from waste, and even plastic.
I’m somewhat of two minds when it comes to using biomass for feedstock, though. Seems like energy from the sun is better harvested directly, rather than used to grow something just to be burned or converted to fuel.
One more thing, just to complicate matters a bit more… ethanol may have less energy content than gasoline, but it tends to burn more thoroughly. So E85 has about 25% less (energy / gallon), but typically you lose only about 20% (miles/gallon). Ultimately that leads to a higher (miles / input energy) for ethanol than gasoline. Which suggests that if you were to synthesize a fuel, there should be plenty out there that are better than gasoline. I don’t think I know enough about all the different fuels to suggest what that should be, though.
kph,
Yes, gasification shows a lot of promise. The obvious starting point would be gasification of wastes: clean up the environment and get a feedstock at less than $0/ton, i.e. people will pay you to take their wastes of their hands. Not enough wastes to completely replace our oil use, but as good a starting place as any. Something like 80% of landfill waste is organic, i.e. prime fuel feedstock.
On biomass: it may not be the most efficient solar collector, but it is self-replicating, which is helpful. Ultimately, the most efficient fuel crop would be algae, grown in the ocean, where there is enough area to make a difference.
Sure, there may be better fuels than gasoline (or diesel) out there, but ethanol is not the one. A better fuel, also needs to be cheaper (or at least not more expensive) i.t.o. $/mile travelled.