For an alternative fuel that has proven itself viable in other countries, ethanol just can’t get no love in America, despite a new study that reports that blending ethanol with gasoline saved Americans up to $0.89 cents per gallon.
A recent joint study by the Iowa State University and the University of Wisconsin showed that, on average, the 10% ethanol mixture in gasoline pushed down the price of gasoline by an average of $0.25 cents a gallon, and in the MidWest more like $0.39 cents a gallon. Wholesale prices of gasoline were reduced by $0.89 cents a gallon, as ethanol production accounts for 10% of all gasoline sales now.That kind of money adds up when you consider that the average American family buys around 900 gallons of fuel per year. The average family spends about $2,400 a year on gasoline; without ethanol, that price would be closer to $3,200.
The paper, sponsored by the admittedly biased Renewable Fuels Association, also examined what gas prices would look like if ethanol was removed wholesale from the gasoline supply. The result would be gas prices between 40 and 90% higher than they already are, meaning prices in the $5.50 to $7.70 a gallon range.
As a rule, I take any study with a grain (or burlap sack) of salt, and obviously the RFA is probably delighted with the results of this study. On the same token, this is kind of a common sense study. A lot of ethanol is still made from corn, which remains heavily subsidized even as oil prices hover around $100 a barrel. Now, if you had asked me, I would think ethanol knocks off closer to 10% off the price of a gallon of gas, which these days amounts to closer to $0.40 cents a gallon. Ethanol isn’t free, I realize, and running E-85 can actually be quite expensive.
But I am all for anything that reduces our dependence on oil, including ethanol. In may not be the panacea for all our energy problems, but in places like the MidWest ethanol certainly makes more sense than electric cars. And it just so happens it is saving us all a hefty chunk o’ change. If we bumped the blend up to 15%, which studies show has no detrimental affect on older vehicles engines ,(still salty on that one too) we’d probably save even more loot. I won’t hold my breath, but I will hold on to the hope that common sense will eventually overcome partisan politics (I almost wrote parmesan politics. Guess I’m hungry!)
Source: Domestic Fuel | Image: Micheal Cote | Creative Commons Attribution 2.0
Chris DeMorro is a writer and gearhead who loves all things automotive, from hybrids to HEMIs. You can read about his slow descent into madness at Sublime Burnout or follow his non-nonsensical ramblings on Twitter @harshcougar.
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Ethanol may reduce dependence on oil, but if it is produced from food crops it raises the price of food for people around the world and increases food insecurity. Producing ethanol from food crops is illogical and dangerous short-term thinking. The kind that got us into our current disastrous climate climate. A law should be passed immediately that biofuels can only be made from waste or non-crop materials.
@ Jonathan
The fact of the matter is, our nation and our economy is as dependent on fuel as we humans are dependent on food. Ethanol has made great in-roads towards reducing edible food turned into fuel, but the cost of gasoline affects the cost of food moreso than ethanol production. I do agree, turning food into fuel is not the best of ideas, but neither if importing oil from half a world away. Given the option, I’d rather grow our own fuel than import oil from Saudi Arabia.
What if growing our own fuel requires we import more oil from Saudi Arabia?
@ Colin
What if farmers ran their farm equipment on ethanol? Then they’d be farming their own fuel, thus cutting out oil altogether.
I like that idea. Two problems though:
1) Farm equipment doesn’t run on ethanol. It runs on tax free diesel. Biodiesel is the obvious replacement here, but it’s nowhere near price-competitive.
2) Currently, producing one BTU worth of ethanol requires more that one BTU worth of gasoline. So running equipment on ethanol, to produce ethanol, to power the equipment actually adds to our demand of Saudi oil. At the end of the day, you’ve reduced land and capital productivity, and there’s still no ethanol to burn in automobiles.
I hope both change very soon!
No, the TRUE cost of ethanol should be exposed, by eliminating government subsidy, so that consumers can choose how best to use crops simply by buying fuel and food.
You can say you support corn ethanol for fuel from some wacky environmental perspective all you want (wacky because corn farming is land and water intensive, not wacky because environmentalism is wacky), but trying to say that it’s saving the United States money is just plain fraudulent. This study completely ignores the $0.45 mixing subsidy paid to oil companies just for complying with ethanol mixing requirements. Additionally, it ignores the $3 billion federal subsidy to the ethanol production industry. Another cost they choose to ignore is the higher cost of food caused by diverting agricultural resources towards fuel production. With the real cost of ethanol factored in, it very likely costs more than it saves.
Corn used for ethanol production is field corn typically used to feed livestock. Wet mill ethanol production facilities, also known as corn refineries, also produce starch, corn sweeteners, and corn oil — all products that are used as food ingredients for human consumption. Ethanol production also results in the production of distiller’s grains and gluten feed — both of which are fed to livestock, helping produce high-quality meat products for distribution domestically and abroad. There is no shortage of corn. In 2004, U.S. farmers produced a record 11.8 billion bushel corn harvest — and some 1.3 billion bushels (about 11 percent) were used in ethanol production. Additionally, the 2005 crop was among the largest on record. 2007 will yield the largest corn crop since the 1940s. In other words, there is still room to significantly grow the ethanol market without limiting the availability of corn. Steadily increasing corn yields and the improved ability of other nations to grow corn also make it clear that ethanol production can continue to grow without affecting the food supply.
“As a rule, I take any study with a grain (or burlap sack) of salt …”
LOL! That’s why you’re the KING, man!!
Just want some clarification is it 89 cents or 0.89 cents per gallon the $0.89cents is a slight mix up of currency definition (both cents and dollra at the same time)
@ Stephen
It is 89 cents (as in, 11 cents short of a dollar) per gallon.
Ethanol: the process of turning oil into gasoline and natural gas into ammonium hydroxide, then using the gasoline (plus sunlight, plus over-worked land) to turn the ammonium hydroxide into corn, then using more natural gas (for heat) to turn the corn into a gasoline substitute.
I am shocked. Shocked! to discover that the University of Iowa thinks America needs to grow more corn.
What these studies never take into account is the fact that gas mileage is reduced when Ethanol is added. The bottom line is that if it takes more gallons to go the same number of miles, it reaches a point where there is either no savings or it ends up costing more.
According to http://www.fueleconomy.gov; “However, since ethanol contains less energy per volume than gasoline, FFVs typically get about 25-30% fewer miles per gallon when fueled with E85.”
The same problem exists with emissions testing. If we need to burn more gallons to go the same distance, we are actually putting out more greenhouse gas emissions.
From http://www.renewableenergypartners.org: “The Argonne National lab has concluded use of corn-derived ethanol can reduce lifecycle greenhouse gas emissions by 14-19 percent when compared to gasoline. E85 is a higher performance fuel with an octane rating of 105-110. E85 users will notice a mileage and range reduction of 10%-30% because a gallon of ethanol contains only 70% as much energy as a gallon of gasoline.”
Run the numbers with your own vehicle’s gas mileage and see if there is really any savings. My numbers come up telling me it costs more per mile to run on E85 and puts out more greenhouse gas emissions than gasoline would have.
@ Jason
You’re right about having to use more E85 to go the same distance as gasoline. However, this does not apply to lower blends of gas and ethanol like say, E15. Anything to reduce our dependence on oil is right by me, and in certain areas of the country (especially the MidWest) ethanol makes a lot of sense.
False. Just false. Ethanol has less energy per volume than gasoline, regardless of mixture! Come on!
Colin, it isn’t that simple. Ethanol reduces the energy content of E85, but it can increase the octane level and an E85 flex-fuel car can be slightly more efficient than a car that is not flex-fuel. So you lose 25% in energy but you get back 5-15 in efficiency. It is still going to take more E85 than E10 to get you somewhere, but it won’t take 25% more, depending on the car and the flex-fuel capability it could be as little as 5% and as much as 20% more fuel needed.
True, but so is my comment. The idea that the energy content ratio between ethanol and gasoline doesn’t apply at lower blends is just mathematically incorrect.
Lower blends have higher energy density, but also lower octane, thus lower efficiency gains.
Go read the study–it takes energy density into account. i.e., the 89 cents savings is on an energy-adjusted basis…
I suppose that it might be in the interest of foreign oil producing kingdoms to keep the price of oil low for food producing nations ( USA?) so that food prices don’t get so high that their populace rebels. If ethanol can be increasingly produced from waste products and the engines burning ethanol can be optimized for burning ethanol ( check out Ricardo engineering?) then ethanol becomes a more reliable and better utilized fuel source for many applications.