Gas Prices Too High? Well, E85 ethanol blend is 40 cents cheaper

GF Herald ^ | Mar. 21, 2004 | Lisa Davis

[wallcrawlr]

Gas prices are rising across the country. But if you have the right car in the right town, you can save an average of 40 cents per gallon by filling with E85. A fuel consisting of 85 percent ethanol and 15 percent gasoline, its advocates say E85 is better for the environment than straight gasoline. Kim Christianson, energy program manager with the North Dakota Department of Commerce, said ethanol offers great benefits to farmers in the state, to the environment, and to the user. "It's a direct benefit not only to folks who produce ethanol, but to farmers and land owners who grow corn," he said.

Cheaper than gas

And, lately, it benefits consumers because of its cost.

"Ethanol costs should be more stable than regular gasoline," Christianson said.

That's certainly the case at Cenex in Devils Lake.

Like everywhere else in the country, gas prices in Devils Lake have increased along with global crude oil prices as OPEC tightens production. On Friday, gasoline prices stood at $1.82 for unleaded or super unleaded.

But the price of ethanol, determined by things such as corn prices and tax policy, has stayed steady. E85 was selling for $1.39 a gallon Friday.

Emil Gregory, manager at the station, said the E85 became available there in January.

He said sales haven't been great - averaging at about 1,000 to 1,500 gallons each month - but Farmers Union Oil feels that a new source of energy, especially one that benefits the state, should be used locally as much as possible.

"We have two ethanol plants in North Dakota, so why not support our own corn growers?" he said.

That was another point Christianson brought up. Because E85 is just 15 percent gasoline, using it also reduces the country's dependence on foreign oil.

Disadvantages

But there are some disadvantages, too.

Christianson said cars running on E85, rather than gas with 10 percent ethanol, see a drop off in the number of miles they can travel per gallon of fuel. And only certain cars can run on E85.

"It can be used in 'flexible fuel' vehicles only," Gregory said.

Most cars that can use E85 were built after 2000. In a flexible fuel vehicle, onboard diagnostics "read" the fuel blend, enabling the driver to fuel with E85 or gasoline in any combination from a single tank.

He said the easiest way is to find out if you can fill your car with E85 is to check your car's manual or to contact your dealer.

But he added that more motor companies are beginning to manufacture cars that can use alternative fuels.

Availability

Although E85 may be better for the environment, it's simply not available everywhere yet.

Stamart in Grand Forks used to sell it, but decided to drop it because sales didn't go well.

In North Dakota, there are five stations that carry E85 in Fargo, West Fargo, Devils Lake, Bismarck and Oakes. In Minnesota, 90 stations carry the fuel, including one in Moorhead.

Christianson said the goal of the governor's office is to get at least one E85 station in each of the major cities in North Dakota: Grand Forks, Fargo, Bismarck, Devils Lake, Minot, Dickinson, Williston and Jamestown.

They also are working with some of the smaller areas to make the fuel available, offering matching grant dollars to assist with the cost of installing E85.

In addition, he said, the two offices are working on a marketing initiative for ethanol to make people aware of E85.

Until then, he said they will concentrate on getting people to fuel with 10 percent blend.

"We really just to want to get word out about ethanol fuel and its benefits to North Dakota," he said.

He said between 25 percent and 30 percent of vehicles that now refuel use an ethanol blend. They hope to increase that number to 50 percent in three years.

• For more information, visit www.e85fuel.com.

[dirtboy]

But the price of ethanol, determined by things such as corn prices and tax policy, has stayed steady. E85 was selling for $1.39 a gallon Friday.

The solution is not to buy ethanol, it is to reduce taxes on gasoline to the same level levied against ethanol.

[sigSEGV]

How much of that is subsidized? You're still paying for it.

[Azzurri]

Christianson said cars running on E85, rather than gas with 10 percent ethanol, see a drop off in the number of miles they can travel per gallon of fuel.

Well, if you're driving less miles per gallon, you're filling up more often, which means you may be paying the same anyway! Depends on what the drop off is, of course.

[dirtboy]

How much of that is subsidized? You're still paying for it.

The primary subsidy for ethanol is actually a tax break - ethanol is not taxed at the same rate as gasoline - because without the tax break, ethanol wasn't competive (it might be marginally competive at current prices). In addition, the corn feedstock receives federal subsidies, thereby increasing the supply and driving the price down.

[Eric in the Ozarks]

Alcohol has fewer BTUs than gasoline.

[LOC1]

It requires more energy to produce a gallon of ethanol from corn than is released by using the ethanol as fuel. Ethanol use contributes. The difference in price is a result of tax subsidies at many levels. Ethanol use is actually harmful to the nation's attempt to be energy independent. It is, however, very popular in the farm states, where voters enjoy the subsidies.

[LOC1]

It requires more energy to produce a gallon of ethanol from corn than is released by using the ethanol as fuel. Ethanol use contributes. The difference in price is a result of tax subsidies at many levels. Ethanol use is actually harmful to the nation's attempt to be energy independent. It is, however, very popular in the farm states, where voters enjoy the subsidies.

[curmudgon1]

Ethanol has approximately 1/2 the heating value of gasoline.
Heating value is the number Engineers use to determine the maximum theoretical efficiency possible from a hydrocarbon fuel used in combustion.
So a mixture of 85% Ethanol and 15% gasoline would result in
a 42% reduction in efficiency or an increase of 42% fuel for the same distance.
Please report the increase in pollutants caused by this increase in Ethanol.
Since I do not report to Archer Danial Midland Corp., I feel free to discuss the truth.

[Eric in the Ozarks]

I'm a practicing peddler of petroleum products by profession.

[BobS]

Bottled water is more expensive than gasoline. Tax That!

[rellimpank]

---as an aside, I'd like to know a little more on the physical production of ethanol--for example, what are the boilers fueled by in the distillation process?

[Eric in the Ozarks]

Depends on where they're located. ADM's plants in Decatur and Cedar Rapids are fueled by coal, burned in fluidized bed (limestone injection to control emissions) boilers. The smaller plants around the midwest are fueld by natural gas. In both cases, it takes more heating value to make ethanol than is in the ethanol. But using a low rank fuel like coal to manufacture a high rank fuel does seem logical.

[mvpel]

There's a federal excise tax credit of 52 cents per gallon of ethanol on ethanol-gasoline blends, so the $1.39 a gallon for E85 quoted in the article actually includes a 44.2 cent tax credit to the blender. On an equal tax footing, therefore, the price of the E85 comes out to $1.841 cents per gallon, two cents more than the gas price quoted in the article.

Who's picking up the difference? You and I, the taxpayers.

Ethanol is a big, fat ripoff, lining the pockets of the agribusiness giants like ADM at the expense of the consumers and taxpayers.

[Eric in the Ozarks]

Ah, yes. Remember when the referred to Bob Dole as the Senator from ADM ?

[rellimpank]

--thanks. That confirmed my suspicion. I have a long time friend in Wisconsin who sold light industrial machinery for years. He was visiting an ethanol plant and casually stated that "you must use a lot of this in the manufacturing process"---The reply was on the order of "oh, no--this stuff is too expensive"---

[rellimpank]

--it also buys farmer votes for incumbent senators of both flavors in the great midwest. I never cease to be amazed on my infrequent trips back to southwest Wisconsin in the summer.

When I was a kid corn, oats and alfalfa were rotated as crops--now it's CORN as far as the eye can see---

[templar]

The solution is not to buy ethanol, it is to reduce taxes on gasoline to the same level levied against ethanol.

That just means paying more taxes elsewhere to make up for the loss and pay for roads and such.

[dirtboy]

That just means paying more taxes elsewhere to make up for the loss and pay for roads and such.

Or we could try the radical concept of eliminating stupid spending that government shouldn't be doing so that our tax dollars go for something useful, such as roads.

[Eric in the Ozarks]

Interestingly, some cheese plants also make ethanol as a by-product. At one Kraft plant in Minnesota, about three truckloads of 200 proof alcohol is produced everyday. Because of the cleanliness of the plant and purity of the product, Kraft's management wanted to introduce their alcohol into various consumer products like mouthwash and aftershave. Trouble was, the ethanol contained an overwhelming spearmint taste and smell, so the cheese alcohol continues to be used as a gasoline oxygenate.

[The Great RJ]

Ethanol production on the Great Plains wouldn't exist without massive government subsidies. Ethanol also isn't as efficient a fuel as gasoline--you won't get nearly as far across the N.Dakota prairie with a tank of 85% ethanol as one of gasoline. Yes ethanol is clean burning and locally produced, but it doesn't make any economic sense and isn't a serious solution to our dependence on foreign oil.

[templar]

Or we could try the radical concept of eliminating stupid spending that government shouldn't be doing ...

Not a bad idea, except that stupid spending fuels a large part of the economy. Cut it and the economy collapses before things can (hopefully) adjust to something else. Road building alone won't make up for the loss of government provided money in other areas of the economy,; only so many roads are needed and anything beyond that gets back into the area of stupid spending. Fuel tax seems to be one of the only (maybe the only) tax that actually end up being used for what it is supposed to be used for.

[IronJack]

I believe that Brazil has been burning a 90-10 mix of ethanol-gasoline for decades now.

[rellimpank]

----as an aside, I recall that a few years ago, the redoubtable EPeffingA cracked down on bakeries, as the delicious smell associated with baking bread is actually caused by ethanol from the action of the yeast--"polluting" our precious atmosphere---

[Fee]

E85 is not competitive because there is no demand for it and it is not mass produced. But using it means we can reduce gasoline demand by 85 percent in cars, trucks and etc. Unanswered question is how much energy was needed to produce E85. If the next twenty years, most cars and trucks have this alternative fuel capability (that should be mandated by government for national security reasons), we might have a growing demand for E85, then mass production will occur and the cost to produce the product drops to a point it will not need subsidies. If successful, the strategic implications are massive. The Arbs and Venezuelans will not hold us hostage. When China, and Eastern Europe starts to develop economically, their people will start to buy cars, and those cars will need gasoline. The US can become a source for them (our farmers, refineries and etc will benefit). In a time of war, this product will allow our society to function.

[Eric in the Ozarks]

Someone said burning alcohol produces NOX or some damn thing...

[rellimpank]

---come to think of it , I wonder what is the feedstock from which all that anhydrous ammonia used to fertilize corn originates?

[Eric in the Ozarks]

Natural gas, mostly.

[WOSG]

Does that cost take into account the TEN BILLION dollar Ethanol subsidy the Govt gives to ethanol producers?

[WOSG]

"The solution is not to buy ethanol, it is to reduce taxes on gasoline to the same level levied against ethanol."

"That just means paying more taxes elsewhere to make up for the loss and pay for roads and such."

I know you didnt mean it this way, but the "paying more taxes elsewhere" is right, in the sense that we pay the OPEC tax.

OPEC is an unusual cartel - it's the worlds' only economic cartel that is a cartel of Governments. What the govts in effect do with their royalty methods of skimming oil profits is to TAX OIL PRODUCTION. Well, we should shift that money from going to Saudi pockets to going to American pockets.

Here's how: We should have higher gas taxes and have an oil import fee. Why? Because right now the money goes to OPEC, but if we tax on top, the price will go up, which will pinch demand, which will rebalance OPEC to force them to cut the price. In effect, we could increase the share of the cost that goes to our Government. Now this will affect marginal demand and supply, but if we were smart, we'd go to OPEC and basically tell them "Keep your prices low or we are going to tax oil use away".

[WOSG]

" If the next twenty years, most cars and trucks have this alternative fuel capability (that should be mandated by government for national security reasons), we might have a growing demand for E85, then mass production will occur and the cost to produce the product drops to a point it will not need subsidies."

There is no 'cost to produce' price reduction in store for E85. It takes more energy to make this stuff than you get out as usable energy.
It is an INHERENTLY INEFFICIENT ENERGY SOURCE.

[SauronOfMordor]

Combine that 52 cents credit, with the absence of the approx 50 cents/gal federal and local taxes, plus the fact that ethanol produces much less energy, and the per-mile cost of driving with ethanol will be much higher, taxes and energy being equal

[P.O.E.]

"Is This Trip Really Necessary?" is considered quaint now, I suppose.

[TMSuchman]

We also must remember that we have a very limited refining capicity, thanks to the enviro-wacko's, and NIMBY [not in my backyard] types, laywers ect...

I do not have any new ideas on how combat this threat at this time. Maybe look back a Teaslea?

[Libertarianize the GOP]

ping

[farmfriend]

Rights, farms, environment ping.
Let me know if you wish to be added or removed from this list.
I don't get offended if you want to be removed.

[E.G.C.]

BTTT!!!!!!

[GraniteStateConservative]

Yeah, corporations will let our government tax oil use away. I'll have what you're drinking.

[Smokin' Joe]

Ironically, North Dakota is an oil producing state also, but oil production does not depend on rain.

The same states which comprise the grain belt would be most adversely affected by prolonged drought. Think dust bowl.

I would be surprised if there isn't some attempt here to find a market for Genetically modified strains of corn (Starlink et.al)which foreign importers won't touch, and which (in at least one instance I know of) have produced severe reactions in humans.

Ethanol also absorbs water, and I wouldn't want to be stranded anywhere in North Dakota in the winter with an iced up fuel line.

I don't understand burning food for fuel when farmland is a diminishing and generally non-renewable resource.

Before anyone turns on the flames, keep in mind that chemicals will keep farmland productive for a while, but (especially in states like North Dakota) wind erosion eventually removes the topsoil base. Only good conservation practices will keep the soil useable.

[Smokin' Joe]

Tax the imports, inflate the price of domestic oil, and increase domestic exploration and production. The reason our domestic industry is not doing nearly as well as offshore efforts (aside from occasionally insane regulation) is that the same price cycles which have people smiling at the pumps one year ans whining the next affect the exploration industry here at home. If you put two million or more in drilling an oil well, you would like to get a return on that investment. Some do not find oil, but the rest are at the whim of a market which has had crude oil prices everywhere from $8 per barrel to $38 for the same oil in the last 5 years.

By taxing imports and not domestic production, this would stimulate drilling for oil right here at home. But save it for an off year, when crude prices are low.

BTW, ND is the nation's # 8 oil producing state, with about 80,000 barrels of oil per day produced.

Tax gas at the pump, and you don't stimulate domestic production, just make fuel cost more for everyone without doing anything to remedy the real problem.

[templar]

Here's how: We should have higher gas taxes and have an oil import fee.

This is the opposite of what the Free Traders advocate for everything else: No tariffs of any kind. Tariffs, they say, will only hurt us.

Anyone know if oil & refined petroleum is covered under GATT or other anti tarrif (anti "protectionist") treaty?

[Old Professer]

Fully saturated ethanol (20% water by volume) won't freeze at 80 below zero F.

It's the excess condensed water in your tank that will freeze in transport to the induction system.

[Blood of Tyrants]

My Plymouth van is already set up to run E85 except that there is no place to buy it.

[Nowhere Man]

Well, if you're driving less miles per gallon, you're filling up more often, which means you may be paying the same anyway! Depends on what the drop off is, of course.

Reminds me of when I ran Twilight: 2000 role playing games.

Twilight: 2000 is an RPG, now alternate history where World War III broke out, both the NATO and Warsaw Pact used nukes in 1997 and around the 2000/2004 era, the US/NATO and USSR/Warsaw Pact are still fighting, although mostly still using vehicles that are barely running on a wing and a prayer and using methanol/ethanol as fuel usually.

I remember in the game itself, vehicles use 3 liters of ethanol for every liter of diesel fuel/gasoline it used and 3.5 liters of methanol (usually the fuel of choice, ethanol takes away from food which starving, war-torn Europe and the world needed) for ever liter of diesel/gas. It was bad enough running a group of soldiers in a Hummer living off the land but it took a lot to keep an M1 tank going. B-)

I think some other poster might have pointed it out but the energy contained in each liter of enthanol/methanol is less than in diesel/gasoline so you use more.

I remember back in the 1970's, I understood that it was rather simple to convert cars to run on alcohol (methanol/ethanol) if you adjusted the carburettors, but most cars don't have them anymore.

Overall, I think it is a good idea but again the free market should be the determining factor which I'm sure at some point in the future, we might be using a blend of fossil fuel/alcohol or alcohol entirely. I know my 1977 Mercury Cougar would be easy to convert if the logic holds true but I wonder about my 1994 Ford Explorer.

A side note, when my father was in the Army, he was stationed at Camp Casey in South Korea in 1955/56 and he remembers in cold weather, they started the Army trucks on gasoline and then flipped a lever to feed the engine the diesel it ran on.

[WOSG]

Tariffs hurt us in many ways, especially if used to "protect" consumers from lower priced goods (= higher standard of living).

But this is about a strategy to replace an OPEC tax with a domestic tax. An analogy would be this - there is something dumber than tariffs and that is to have import 'quotas' that give the profits on the shortened supply product to the foreign importers instead of the US govt.
We should replace all quotas with tariffs, and we should use our 'tariff' power to break the OPEC cartel.

[WOSG]

"Yeah, corporations will let our government tax oil use away. I'll have what you're drinking."

Ethanol martini, shaken not stirred. :-)

[takenoprisoner]

The northstar engine in my car only likes premium gasoline...it was built to perform on premium gasoline. The manufacturer recommends only premium gasoline. This simple reminder is posted just beneath the gas gauge. Can a northstar engine perform up to par on ethanol?

[editor-surveyor]

"Bottled water is more expensive than gasoline. Tax That!"

Here in Kalifornica they do, through a bottle deposit.