Minnesota Farmer


What’s the problem here?

In 2012 Big Oil spent $139,928,996 to lobby our U.S. Congress.  They also donated $71,483,299 to political campaigns.  Then oil companies spent over $150 Million on TV ads during the 2012 election.  Now they come crying to Congress that ethanol is taking a little bite out of their profits this year!  They want the Renewable Fuels Standard (RFS) repealed so they can once again hold a monopoly on our car’s fuel tanks.  Sorry, Big Oil, but I do not feel sorry for you.Big_Oil-598x426

Their arguments,

1) Producing ethanol from corn raises food prices.  Well that one is bogus!  The World Bank reported earlier this year that two-thirds of the rise in food prices since 2004 are the result of the increased price for crude oil.  Now who is raising food prices?

2) Ethanol is bad for our engines.  Ethanol is the most tested fuel in the history of our country.  Brazil has been using 20 to 25% ethanol blends for years and have not had the engine problems claimed by Big Oil.  NASCAR has been running on 15% ethanol in their race cars with no engine damage.  Car manufacturers are gearing up for 30% ethanol so that they can increase both power and economy in tomorrows cars.  Would they do that if it hurt your engine?

3) Ethanol is bad for the environment.  Ethanol was first introduced to our fuel supply to reduce the smog that was choking our cities.  It makes gasoline burn cleaner.  The American Lung Association has endorsed ethanol as the oxygenate of choice for our bodies.  All of Big Oils alternatives to ethanol as an oxygenate have been proven to be really bad for the environment.

ed-ethanol4) Ethanol costs more to produce.  Now who is cooking the books?  Big Oil has been using cheaper ethanol to help lower fuel prices.  When ethanol is cheaper and gas is higher priced, Big Oil puts more ethanol into their fuel to help hold down prices.

In February 2012, Marzoughi & Kennedy of Louisiana State University presented a paper finding that “…every billion gallons of increase in ethanol production decreases gasoline price as much as $0.06 cents. Adding ethanol to gasoline has the same impact on gasoline as a positive shock to gasoline supply.” They further concluded that, “Based on estimation results for the impact of ethanol production on gasoline price, [the amount of ethanol produced in 2011] can lower the gasoline price as much as $0.78 cents per gallon. …This low price means around $107 billion in annual savings for U.S. drivers as a whole.” Finally, Du & Hayes updated their analysis again in May 2012, finding that, “…over the period of January 2000 to December 2011, the growth in ethanol production reduced wholesale gasoline prices by $0.29 per gallon on average across all regions. Based on the data of 2011 only, the marginal impacts on gasoline prices are found to be substantially higher given the increasing ethanol production and higher crude oil prices. The average effect across all regions increases to $1.09/gallon…” [In the interest of full disclosure, the 2011 and 2012 papers by Du & Hayes were supported in part by the Renewable Fuels Foundation].

Despite the findings of these papers and others, ethanol’s impact on gasoline prices continues to be misrepresented by Big Oil (often through the use of a silly E85 energy equivalence calculation that is flawed for several reasons).

Ethanol provides jobs here in the U.S.  The top ten states experiencing the economic benefits of having ethanol plants operating locally are:

State              Jobs (Direct, indirect, induced)

Iowa                               63,532
Illinois                            54,083
Nebraska                        48,402
Minnesota                      34,784
Indiana                           25,350
South Dakota                  22,970
Wisconsin                      15,591
Ohio                               15,167
Kansas                           13,043
North Dakota                   7,810

Sample states falling outside the traditional Corn Belt include:

State              Jobs (Direct, indirect, induced)

Texas                              5,696
Colorado                          4,829
Tennessee                       4,039
Pennsylvania                   3,263
New York                         3,210
California                          2,147

– See more at: http://www.ethanolrfa.org/news/entry/state-by-state-us-ethanol-industry-creating-jobs-economic-opportunities/#sthash.MAaoWg9E.dpuf

Ethanol is produced new every year so the CO2 produced burning it is used for next years plant growth.  It gives car drivers a choice of fuels where E85 and Blender pumps (http://www.ethanol.org/index.php?id=84) are available.

Higher ethanol blends are in the future.  Auto manufacturers are looking at E30 to provide them with the higher fuel economy that are required for cars of the future.  Ethanol will allow them to build a smaller, lighter turbocharged engine that uses the higher octane found in ethanol enhanced fuels.images

While Big Oil whines about losing market share to that upstart ethanol industry, they have been embracing ethanol as the additive of choice to produce the higher octane fuels needed in high performance engines.  When you fill up with premium, you are choosing more ethanol.

So, do I use it?  You bet!  I fill up all of my gasoline engines with E20 at our local blender pump, have been for years now.  Lawn mowers, chain saws, cars and tractors, if they use gas they use E20 here.  It reduces my fuel costs too.

As you can see, I do not feel sorry for Big Oil.  It would be nice if Big Oil would use some of that over $361 million it spent on political campaigns last year to lower fuel prices, but we all know that will not happen.

Michael

 

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