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US Won’t Use Ethanol Congress Ordered

From an unfazed New York Times:

U.S. Unlikely to Use the Ethanol Congress Ordered

By MATTHEW L. WALD

November 27, 2009

WASHINGTON — Two years ago, Congress ordered the nation’s gasoline refiners to do something that is turning out to be mathematically impossible.

To please the farm lobby and to help wean the nation off oil, Congress mandated that refiners blend a rising volume of ethanol and other biofuels into gasoline. They are supposed to use at least 15 billion gallons of biofuels by 2012, up from less than seven billion gallons in 2007.

But nobody at the time counted on fuel demand falling in the United States, which is what has happened during the recession. And that decline could well continue, as cars become more efficient under other recent government mandates.

At the maximum allowable blend, in which gasoline at the pump contains 10 percent ethanol, updated projections suggest that the country is unlikely to be able to use all the ethanol that Congress has ordered up. So something has to give…

In theory, the Environmental Protection Agency has the power to solve this problem by tweaking the mandates imposed by Congress, and it may act as early as next week.

Each potential solution would anger one interest group or another, so the agency has been subjected to fierce lobbying, including from members of Congress lining up behind various factions. One possibility is to raise the maximum proportion of ethanol in gasoline to 15 or 20 percent.

But that idea is opposed by some carmakers and pollution experts. They contend that high ethanol blends can cause damage to cars, including making catalytic converters run hotter…

Another possibility is that the agency could waive the mandates requiring use of a large volume of biofuels. But that would anger farmers, who sell a great deal of corn to ethanol factories, and the members of Congress who represent them. It might also undermine the efforts of companies that are investing millions in factories to make ethanol from waste materials, like corncobs, straw and garbage

Perhaps the easiest way for the country to absorb all the excess ethanol would be to make wider use of an ethanol blend called E85, which contains 85 percent ethanol and 15 percent gasoline. Most cars on the road cannot use it, but in recent years, millions of “flex-fuel” cars have been sold, especially by General Motors. (Any car with a yellow gasoline cap can use E85.)

The problem is that at current prices, E85 does not make economic sense for drivers, and most of them use regular gasoline in their flex-fuel cars. That means gasoline stations have little incentive to install pumps for E85. The fuel can be found in the Corn Belt but is not readily available elsewhere in the country.

Gasoline was selling on average Thursday for $2.63 a gallon, while E85 was selling for $2.23 a gallon. That might make E85 sound like a bargain, but cars go fewer miles on a gallon of ethanol than of gasoline. Adjusted for that factor, E85 on Thursday was effectively 31 cents a gallon more expensive than gasoline.

A return of $4 gasoline might change things, by making E85 a relative bargain and spurring wider use. So would an unexpected spurt in total fuel demand. Otherwise, it is not at all clear how the nation’s coming surplus of ethanol can be absorbed.

Ah, the joys of a command economy.

But isn’t Congress omniscient? How could they get something like this wrong?

Thank goodness this could never happen with something important, like healthcare.

Notice how The Times suggests that all of this could be solved if only gasoline cost $4 a gallon.

Never mind that most cars can’t use E85.

They just want gasoline to cost $4 a gallon.

This article was posted by Steve on Saturday, November 28th, 2009. Comments are currently closed.

6 Responses to “US Won’t Use Ethanol Congress Ordered”

  1. Rusty Shackleford says:

    I’m not saying I know more than anyone.

    I’m not saying that I’m somehow brilliant or even the least bit savant.

    But I will say that after examining this a few years ago, reading about it, etc, I came to the conclusion that it was not do-able on a practical level. That there would not be the magical flood of ethanol the greenies expected, to say nothing of the economically backward way this was approached (dictated rather than arrived at by free market demand).

    Simple proof that government directives slung onto the people will prove out that the people will go the other way.

    Besides, my “clunker” truck that got 15 mpg with regular gasoline got 13.3 with ethanol-tainted regular. 1994 Ford F-150 with a 351 fuel-injected engine. Thanks, government for helping me waste my money. Such efficiency.

  2. Perdido says:

    $4. gasoline is coming. Bet on it. And way sooner than many (most) think.

    After gasoline is over $4. and people realize that their cars will indeed run on E85, designed for it or not, they will start burning it. Then the catalytics will begin to fail. Then they’ve gone full circle on the pollution issue.

    Brilliant.

  3. take_no_prisoners says:

    I have a win-win proposition. Take all the excess Ethanol, water it down to 40% ethanol and sell the watered down ethanol at my local Georgia liquor store for $6/gal ;-). I guaran-damn-tee you demand would be through the roof! Repeat this maneuver in all 50 states and the U.S. territories and they wouldn’t be able to make enough!

  4. The Redneck says:

    Can someone find the quote where Algore, back in the 90’s, was pushing for $5-a-gallon gas? I remember folks were talking about it back when Algore was trying to blame Bush for $4.50-a-gallon gas a few years back.

    By the time you’ve finished growing, harvesting, and processing biofuels, they’re not only less efficient economically, they also produce more pollution than regular gasoline. Biofuels are a feel-good measure that harm, not help, the environment.

  5. canary says:

    Does anyone know how to test gas, to make sure you are getting 100% gas? and not getting ripped. Ethanol is bad on plastic parts of auto’s too.

  6. mr_bill says:

    Aside from the poor fuel economic effects of the ethanol dilemma, there is a great deal of harm done to the US food market by this ethanol mandate. The artificial demand placed on corn to meet the orders from Congress has caused an increase in all grain prices and consequently, everything downstream like milk, cereal, meats (from grain fed herds) and just about anything that uses grain in the process somewhere. Its simple supply and demand economics: More corn is (artifically) demanded and the price goes up, farmers plant less of other crops to ‘cash in’ on the higher corn prices so production of other crops falls. In turn the smaller quantity supplied for these other crops causes the price to rise.


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