Ethanol Needs Boost From Feds

President Barack Obama’s recent address on the fuel situation gave hope to advocates of electric cars, natural gas and, as we told you last week, propane. But it offered little solace to those in America’s heartland who are the biggest promoters of ethanol. Of course, ethanol is derived by distilling vegetable material -- primarily corn -- so America’s farmers are generally in favor of the expansion of ethanol use. Others claim that creating fuel from ethanol actually uses more energy than it creates, and that it threatens the country’s food supply. The Renewable Fuels Association (RFA), the key trade association of ethanol producers, is certainly gung ho about the fuel, but it is also convinced that the commercialization of advanced ethanol technologies will not happen without meaningfully expanding the market for ethanol-blended fuels, and it would like the federal government to make that happen.

“For the Renewable Fuels Standard’s ultimate goal of 36 billion gallons of renewable fuel use to be realized … additional federal efforts to open markets, stimulate investments in new technologies and assist in the development of infrastructure for these new fuels will be necessary,” said RFA President and CEO Bob Dinneen in prepared testimony before Congress.

Why should the government promote ethanol use? Well, it is renewable and domestically produced, and it uses the current fuel-delivery infrastructure. Curr Tom Ripley ently, ethanol represents approximately 10 percent of the nation’s gasoline, with nearly 14 billion gallons of production expected this year. The RFA estimates some 8.5 million vehicles currently on the road are flex-fuel vehicles (FFVs), which means they can operate on conventional gasoline or on ethanol. This means FFVs are the largest alternative-fuel vehicle fleet in the country, far outnumbering natural-gas vehicles, plug-in hybrids, electric vehicles, and other alternative fuel vehicles. Additionally, approximately 2,700 out of some 162,000 retail gas stations offer ethanol blends above the standard E10 (10 percent ethanol). The problem is that only a relative few of America’s FFVs are typically fueled with ethanol; the remaining ones are typically filled with conventional gasoline.

That’s one of the reasons the RFA would like to see some changes made on the federal fuel policy front. Specifically, Dinneen identified four policy and regulatory steps that are needed to allow ethanol-blended fuels to gain greater market share versus what RFA calls “the monopoly oil interests”:

  • Federal policies should maintain and extend existing tax incentives for higher-level ethanol blends to allow for continued growth
  • The use of E15 and potentially higher-level blends should be approved for use in all gasoline-powered vehicles
  • Congress should expand tax incentives to gasoline retailers for building new refueling infrastructure beyond the existing alternative-fuels infrastructure tax credit
  • Congress should create new consumer-based tax incentives to encourage the purchase of flexible-fuel vehicles capable of utilizing higher-level ethanol blends

The RFA would also like to see legislative action that requires a percentage of new vehicles sold in the U.S. to be flexible-fuel-capable, and it would like the federal government to mandate the installation of an ethanol-refueling infrastructure.

“At a minimum, federal policies should maintain and extend existing tax incentives for higher-level ethanol blends to allow for continued growth, expand tax incentives for refueling infrastructure, and create new consumer-based tax incentives to encourage the purchase of FFVs,” Dinneen testified.

To get even a part of this agenda approved is problematical, however. Neither the president nor his administration is an ardent booster of ethanol. Many in the administration appear to prefer electric vehicles and hybrids to ethanol-powered cars and trucks, so ethanol proponents may find the next couple of years very difficult.

Is Propane the Fuel of the Future?

In many parts of America, gasoline prices have shot up to $4 per gallon or more -- and that rapid increase has had the predictable effect of prompting many consumers to take a second look at alternative energy sources. One of these – propane -- has a long and positive history as a transportation fuel, but it has been often ignored in the hype about “the hydrogen economy,” gasoline-electric hybrids, and dedicated electric vehicles. Even ethanol, which will be the subject of next week’s feature, has received much greater attention than propane. But now there are signs that the worm is turning and that propane’s considerable virtues as a transportation fuel will finally be more widely recognized.

Interestingly enough, it was a recent speech by President Barack Obama -- who is generally seen as a strong electric-car proponent -- that has given the propane backers new hope. The president outlined a variety of goals, including the importance of securing America’s energy supply, saving consumers’ money at the pump and creating a cleaner environment.

“We cannot keep going from shock to trance on the issue of energy security, rushing to propose action when gas prices rise, then hitting the snooze button when they fall again,” said Obama during a recent speech at Georgetown University. “It is time to do what we can to secure our energy future.”

Frankly, those who back propane as an alternative fuel think the abundant gas has the potential to help the president meet all of his goals. Ninety percent of the propane consumed in the United States is produced domestically. While you can count the number of hydrogen filling stations in the entire nation on your fingers and toes, thousands of propane refueling stations across the country make propane gas convenient and available. In fact, proponents claim there are more propane “autogas” stations than any other type of alternative-fuel station, although ethanol boosters may dispute that. One fact is indisputable: Propane is the only alternative fuel with stations in every state.

While propane has found the sledding tough in much of the United States, there are more than 15 million vehicles operating on propane worldwide. According to the U.S. Department of Energy, more than 270,000 on-road vehicles operate on propane across the United States. Of course that is a drop in the ocean compared to the number of vehicles that use gasoline or diesel fuel, but it does prove the viability of propane as a transportation fuel. Frito-Lay, ThyssenKrupp Elevator, Schwan’s, Red Top Cab and SuperShuttle are among the many companies that operate fleet vehicles powered by propane.

“The Department of Energy’s Clean Cities initiative and the White House’s newly announced National Clean Fleets Partnership share a common goal with the propane industry -- to introduce state-of-the-art technology that makes fleets more sustainable,” says Roy Willis, president and CEO of the Propane Education & Research Council (PERC). “In recent years, the propane industry has partnered with Clean Cities Coalitions to develop programs for propane autogas deployment projects, including vehicles and infrastructure.”

In fact, it is in trucks rather than in cars that propane might find a firm and expanding role in fueling America’s vehicles. Light- and medium-duty trucks and vans fueled by propane are available from a number of industry-leading manufacturers, including ROUSH CleanTech for Ford Motor Company commercial vehicles and General Motors commercial fleet products through a partnership with CleanFUEL USA.

The major hurdle for the clean-burning abundant gas might be the prejudice some diehard environmentalists have against vehicles that burn any fuel at all. These all-electric proponents have previously had a likely ally in President Obama, but his most recent words on the subject seem to offer hope to those who think propane can be part of a national energy solution to pollution and the vagaries of foreign oil.

The Real Cost of Ethanol

If you think gasoline prices have skyrocketed recently -- and they have -- you should take a look at the price of corn. It has more than doubled over the last 10 months, far outstripping the pace of gasoline price increases. Why should you care about the price of corn any more than you care about the cost of tea in China? You may not know it, but there is a corn-derived product -- ethanol -- in the fuel that’s sitting in your gas tank right now. Not only that, but the federal government also has ambitious plans for the increased use of ethanol -- again, mostly corn-based -- in our fuel’s future, and it is backing that policy by a series of subsidies that are designed to promote the use of ethanol.

Now, a report from the Energy Policy Research Foundation Inc. (EPRINC) throws all that into question. The report found that high and volatile corn prices will limit the success of the push to expand the use of ethanol via additional stations that provide E15 (15 percent ethanol, 85 percent gasoline) and E85 (85 percent ethanol, 15 percent gasoline) fuel. The report also found that, without a variety of incentives, ethanol would have a market approximately half the size it currently enjoys.

One of the major obstacles to the expansion of the use of ethanol in U.S. transportation fuels is the rising cost of ethanol’s principal feedstock, corn. As we said, corn prices have more than doubled in less than a year, and that’s an increase considerably greater than the rise in crude prices over the same period. Current U.S. policy requiring ever-larger volumes of ethanol blended into the gasoline pool is now running into the cost reality of the rapidly rising cost of corn. Disappointing U.S. corn yields, loss of wheat crops worldwide and increasing domestic and international demand for corn has pushed prices from $3.50 per bushel to over $7.50 per bushel since the summer of 2010. This, in turn, has driven ethanol prices to levels well above the cost of gasoline when adjusted on a gallon of gasoline equivalent (GGE) energy basis. That means that expanding the use of ethanol in motor fuels will not solve the cost problem consumers are facing at the gas pump right now, because fuel with more ethanol in the mix cannot provide a cost-competitive alternative to E10 (10 percent ethanol, 90 percent gasoline), the type of gasoline currently used by most U.S. motorists.

The report says that various ethanol subsidies with an estimated cost of some $6 billion per year encourage its use as a component of our fuels. The incentives have resulted in some reduction in crude and gasoline imports, but these reductions have come at a very high cost. The open question is: Are the benefits derived from using ethanol in our gasoline worth the huge amount of federal dollars that support its use?

The EPRINC report does some complicated analysis to put a value on the amount of imported petroleum ethanol displaces, and it concludes “even without a precise calculation of these costs [grants, loan guarantees, loss of efficiencies in refinery and retail operations, and rising corn prices] the loss of taxpayer revenue far exceeds the benefits from the program by nearly 3 to 1 under the most conservative assumptions.”

That is not exactly an endorsement of renewable fuels or the future “green economy,” especially as the nation struggles to shed itself of the effects of the Great Recession and the federal government is mired in enormous debt.

Turn Your Back on Winter

For most of us who drive a lot, winter weather is an almost constant pain -- like a bunion in your shoe you can’t quite get to heal. First, of course, you have the cold, which is bad enough. But then, when you factor in the snow, sleet, rain, howling winds and dreary hours of darkness, you have a recipe for a season-long dose of dreadfulness.

According to the American Meteorological Society, there are approximately 1.2 million weather-related car accidents in the United States each year. Now they don’t all occur in the winter, but the bulk of them do. Inclement weather conditions -- such as rain, snow, sleet and fog -- demand that drivers maintain increased stopping distances, decrease their highway speeds, and avoid making sudden stops or abrupt lane changes. If they don’t, they have a tendency to collide with each other and with other objects that have the misfortune of being beside them on the roadway. We figure you have two choices when it comes to winter: you can do something about it, or you can ignore it and everything associated with it. If you take the second course -- otherwise known as denial -- here are some items and procedures you can routinely disregard:

Lights
Sure, many states require you to turn on your headlights on when you encounter rain, snow and foggy conditions … and then there’s that old darkness thing. But animals get by in the dark without headlights or taillights, so why can’t you?

Windshield and Windshield Wipers
Think of what driving your car would be like without a windshield. Your vision would be unobstructed by the dirt, grime and filth that routinely soils the expanse of glass. While windshield wipers are designed to address those issues, you and I know full well that they can sometimes make them far worse. It can be like asking Willie Sutton to fix the banking crisis. We say forget about your windshield and windshield wipers altogether.

Coolant
Coolant? It’s winter, isn’t it? Who needs coolant? Aren’t things cool enough around here? When I go outside I often start shivering, and it’s not because Scarlett Johansson just walked by. Yes, your engine does have a very rapid series of controlled burns going on every minute it operates, but during the coldest months of the year, coolant might be regarded as an expensive redundancy. Think Joe Biden.

Tires
Tires do form the only connection between your car and the road. That we freely admit, but aren’t all tires just round hunks of black rubber? Could there possibly be a difference between them, or any reason to pay any attention to them? Some might tell you that new, high-quality tires can allow your car to brake more quickly, handle better and avoid danger on the road, but it could well be you don’t care about that. You’ve got other things to worry about, like whether or not “Parks and Recreation” recorded on your DVR.

As a matter of fact, if you’re prepared to disregard all these items, you might want to disregard driving too. After all, with all these things you have to ignore, it might be easier to just take the bus.

Alternative-fuel Vehicles Don’t Turn Consumers On

The general media loves alternative-fuel vehicles. Hardly a week goes by without another boosterish story about the day when we’ll no longer have to buy gasoline. At the same time, the federal government is on the verge of formalizing stringent Corporate Average Fuel Economy regulations that, by the way, put the onus on carmakers to sell them, so auto manufacturers are more eager than ever to build a market for alternative-propulsion vehicles. If they want to compete in the American market in future years, they are almost compelled to. So, as 2012 is set to dawn, the eyes of the auto industry are increasingly turning to alternative-fuel vehicles. A substantial number of them will be introduced at this week’s Los Angeles Auto Show, but the multibillion-dollar question is: Does the general public want to buy them? Increasingly, it seems the answer might be “No.”

A recent survey conducted by a major third-party automotive website points to this possibility quite clearly. Asked point-blank, “Would you ever consider purchasing or leasing a hybrid?” a resounding 45 percent of respondents replied, “No, I would never consider a hybrid.” In contrast, only 14 percent responded, “Yes, I am thinking about it.” While 14 percent sounds like a decently high number, saying “I’m thinking about it” is a long way from saying “I will definitely buy one.”

So the public is not really interested in buying a hybrid, but what about other green vehicles? There are other technologies that might break the hold that petroleum has on us. Well, it seems they’re not too thrilled with those either. Asked the question, “Which new high-mileage/green tech vehicle are you most excited about?” only 7 percent of readers picked hybrids and plug-in hybrids; full electrics drew an 8-percent response and, oddly, hydrogen/hydrogen fuel-cell vehicles drew a 15-percent positive response -- just as much as EV and hybrids combined. Of course, fuel cell vehicles aren’t even available for sale and probably won’t be for years. The big winners were essentially conventional vehicles. Clean diesels drew 20 percent excitement, and 40-plus-mpg vehicles garnered 32 percent. Some 18 percent, no doubt curmudgeons, said they were excited by “none of the above.”

So what’s the takeaway? The news media might believe that consumers want information about green vehicles. In fact, consumers might really want that info. But what audience members have collectively heard so far about alternative-fuel vehicles has not persuaded them that these cars are something a large number of people want to buy. A great deal of the initial consumer interest in alternative-propulsion vehicles might have stemmed as much from consumers’ desire to drive in the carpool lane as from solidly held environmental concerns. Equally important, as gasoline-engine technology improves efficiency and ups their mpg performance, consumers will see even fewer reasons to buy green vehicles.