The global oil trade is a “contrived market” not subject to the usual laws of supply and demand, and the United States has an “absolute requirement” to use alternatives if it hopes to wean itself off imported oil, former Shell Oil president John Hofmeister said during the keynote speech at the National Ethanol Conference. Read more →
Nobody is happy with the EPA’s ruling on ethanol’s Renewable Fuel Standard made last week. The agency finally published its numbers after dodging the issue for two years and falling far behind on its legal obligations.
“It’s Christmas in May for Big Oil,” said Republican Sen. Chuck Grassley of Iowa. “President Obama’s EPA continues to buy into Big Oil’s argument that the infrastructure isn’t in place to handle the fuel volume required by law. What happened to the president who claimed to support biofuels? He seems to have disappeared, to the detriment of consumers and our country’s fuel needs.”
Gov. Terry Branstad of Iowa, also a Republican, was not quite so negative. “We are disappointed that the EPA failed to follow the renewable volume levels set by Congress,” he said. “But we’re encouraged that the agency has provided some stability for producers by releasing a new RFS proposal, and made slight increases from their previous proposal.”
Even the question of whether the EPA’s new standard represents an increase or a decrease in the required amount of ethanol is under dispute. The original law, passed by Congress in 2007, specified that oil refiners were to absorb 14 billion gallons by 2013, 17 billion by 2014 and 19 billion this year. By 2013, however, it became obvious that the country would be unable to absorb 14 billion gallons without spilling over the “blend wall,” the standard of 10 percent ethanol that’s blended into virtually all gasoline in the U.S. There are concerns that some older vehicles can’t handle higher ethanol blends beyond E10 without sustaining damage to parts.
“By adopting the oil company narrative regarding the ability of the market to effectively distribute increasing volumes of renewable fuels, rather than putting the RFS back on track, the Agency has created its own slower, more costly, and ultimately diminished track for renewable fuels in this country,” Bob Dinneen, president and CEO of the Renewable Fuels Association, said in a statement.
The critics seem to have a point. Blends of E15 (up to 15 percent ethanol) and E85 are being sold across the country without any difficulties. Cars built since model year 2001 are approved to run on E15, and about one-third of automobiles are now flex-fuel, meaning they can tolerate any ethanol blend, up to E85. But the EPA has stuck with the “blend wall” in order to accommodate the oil refiners and automakers, who say they will not honor warranties on engines that might be damaged by ethanol.
The EPA standards announced last week are: 15.93 billion gallons for 2014 (that approximates actual sales for that year), 16.3 billion for 2015 and 17.4 billion for 2017. All these figures are about 5 billion gallons below the original statutory requirements. The last two have caused the most controversy. Ethanol supporters say the EPA is bound by the number in the 2007 law — even though there is a waiver provision. But critics who want to cut back on ethanol use argue that the figure is actually increasing from year to year and is only considered a reduction because it doesn’t match the original projections if 2007.
Really, it’s kind of ridiculous to think that Congress could predict exactly how much ethanol could be sold eight years hence. Typically, they made straight-line projections and assumed that gasoline consumption would hit 160 billion gallons per year by this time and keep going up. In fact, gasoline consumption started to drop almost the minute Congress passed the law, resulting from both improved fleet mileage and the reduction in driving that came with the recession. It now stands at 140 billion gallons. Had the law simply specified that ethanol consumption should be 10 percent of all gasoline consumption, there would be nothing to argue about.
The other place where the law is completely out of whack is in the mandates for non-corn ethanol made from cellulosic materials. At the time it was anticipated that cellulosic ethanol was right around the corner, and Congress specified that consumption should be 3.75 billion gallons in 2014, 7.2 billion gallons by 2017 and 21 billion gallons by 2022. In fact, the cellulosic-ethanol industry produced only 1.9 billion gallons in 2014 and has not increased much since. At one point, the EPA was actually fining oil refiners for not using a fuel that didn’t exist.
There’s little reason for either Congress or the EPA to be meddling in the ethanol market. Ethanol has established itself as an oxygenator and high-octane additive since the banning of MTBE. It would probably be added at a rate of around 10 percent, even without the mandates. E85 has a big price advantage over gasoline and would sell more if it were available. Last week, on the same day that the EPA published its new proposed Renewable Fuel Standard benchmarks, the Department of Agriculture pledged to match state funds for $100 million for the construction of new fueling stations designed to dispense E85. The fuel is very popular in the Midwest and would probably attract customers in other areas if it were easily accessible.
Finally, an export market for American corn ethanol is starting to take shape. Brazil mandates 35 percent of its fuel must be ethanol, but it has had problems with its sugar harvest and has started to import from the U.S. Europe is also getting big on ethanol and is looking across the Atlantic for new supplies.
Ethanol has proved its worth as a fuel additive and possibly as a gasoline substitute as well. All the sturm and drang over the EPA mandates have very little to do with the future of the industry.
Every so often, a new “study” is published that shows why many of oil’s competitors are “bad” in one form or another. Such “studies” are usually widely circulated in the media without much fact-checking. When other experts start looking into the “study,” they usually find that it is anything but scientific (remember all those “studies” that said that smoking is good for you.)
The question each American should ask is, Why are they trying to tell us which fuel we should use? All these studies basically don’t want Americans to be exposed to other fuels (in order to maintain the oil monopoly). Americans are smart enough to decide which fuel is best for them, but that’s what scares the oil monopoly. They don’t want competition at the pump. Take a look at the most recent “study.”
Researchers at the University of Minnesota have stirred up a hornet’s nest by supposedly proving that ethanol is no better than gasoline for air emissions, and electric cars don’t fare much better either, especially if they get their electricity from coal. The study compared the air pollution level of gasoline with 10 alternative fuels and came up with a winner – what they called “renewed methane” — methane captured from landfills, which have no link to fossil fuels.
Air-pollution groups and the ethanol industry pointed out that the study was deeply flawed and based on outdated assumptions.
“On a full lifecycle basis, the study’s results are contradictory to the results from the Department of Energy’s latest GREET model,” the Renewable Fuels Association wrote in a response published the next day. (GREET stands for “Greenhouse gases, Regulated Emissions, and Energy use in Transportation,” a recent standard set by the Department of Energy that attempts to measure all energy use for the different fuels through the entire life cycle. GREET shows ethanol doing fairly well, while the Minnesota study used an older model that is not as favorable to ethanol.)
“There is a substantial body of evidence proving that ethanol reduces both exhaust hydrocarbons and CO emissions, and thus can help reduce the formation of ground-level ozone,” the RFA said. The study “… excludes NOx and SOx emissions associated with crude oil extraction, a decision that grossly under-represents the actual lifecycle emissions impacts of gasoline. Omitting key emissions sources from the lifecycle assessment of EVs and crude oil inappropriately skews the paper’s results for the overall emissions impacts of these fuels and vehicles.”
The study included the entire lifecycle components of ethanol but excluded the lifecycle components of gasoline (like tar sands extraction). This is not a minor omission. It essentially means that the entire report is materially incorrect.
The Urban Air Initiative was also highly critical of the Minnesota report. “The study utterly failed to consider a vast body of research by auto industry and health experts that conclusively show gasoline aromatic hydrocarbons are the primary source of the most dangerous urban pollutants,” said David VanderGriend, president of the Initiative. “The aromatics — which comprise 25–30 percent of U.S. gasoline — are responsible for a wide range of serious health effects, including autism, cancer and heart disease.”
“Urban air pollution, and specifically summertime smog or ozone, is a mix of volatile organic compounds, carbon monoxide, particulates, NOx, and countless other factors. Gasoline itself is a toxic soup of chemicals, but as we add ethanol we clean up that gasoline and protect public health,” added VanderGriend, whose group keeps track of pollutants in cities.
VanderGriend pointed out that ethanol is a source of clean, low carbon octane that is used in federal reformulated gasoline in major U.S. cities. Although it is not required, refiners choose ethanol for its clean-burning properties and its ability to help them meet emission standards. “Excess carbon monoxide has essentially been eliminated in the U.S. due to the presence of ethanol, and ozone violations are at the lowest levels in the history of the automobile,” said the RFA response. According to the EPA, the amount of ozone in the air has decreased 18 percent from 2000 to 2013.
What the Minnesota study completely misses is the role that ethanol is playing in reducing our dependence on foreign oil. People have jumped to the conclusion that because our imports have fallen and because the price of oil has nosedived, we don’t have to rely on oil from countries that oppose our policies at all. Nothing could be further from the truth. We still import about 40 percent of our oil and spend $300 billion in the process. This figure is likely to remain high as oil bounces back from its recent lows. The major chunk of our trade deficit is made up of imported oil.
We still have a lot way to go in freeing ourselves from these responsibilities. All these strategies – ethanol, methanol, compressed natural gas, electric vehicles and others – can play a part. The important thing is to give consumers a choice – as Fuel Freedom Foundation has long recommended. The last thing we want to do is be influenced by studies that are heavily biased against ethanol or any of the other alternatives that threaten the monopoly of gasoline.
Communities around the country that drove the surge in U.S. oil production are becoming victims of falling global prices. Already this month, oil-and-gas servicing companies Baker Hughes and Schlumberger announced a combined 16,000 layoffs, owing to the steep drop in oil prices.
“They gave me 24 hours to leave my house,” John Roberts, a van driver for Schlumberger who was let go in Williston, N.D., told CNN Money.
In North Dakota, where work on the Bakken shale-oil formation had attracted thousands of workers amid an economic surge, Jim Arthaud, CEO of MBI Energy Services in Belfield, said up to 20,000 jobs could be lost in that area alone, and just among companies that service oil and gas drillers.
Prof. Bill Gilmer of the University of Houston told Forbes that 75,000 jobs could be lost in Houston alone in 2015. The city has added about 100,000 jobs a year since 2011.
The antidote to this boom-and-bust cycle of volatile oil prices is to provide a steady, dependable supply of cheap transportation fuel to American drivers for the long term. Increasing the use of alternative fuels will reduce our dependence on oil and protect the economy from the oil-market rollercoaster.
The United States has helped bring down the global price of oil by producing more oil – a lot more – here at home. But that oil, extracted from shale rock, mostly in North Dakota and Texas, is expensive to get out of the ground. As the global price of oil has plummeted, so too have the oil companies’ profit margins, and they’re starting to lay off workers on a mass scale.
To promote the use of more alternative fuels, as a counterweight to oil-price volatility, the U.S. should build up its infrastructure for producing and distributing fuels like ethanol and methanol. There are thousands of jobs that could potentially be created. In 2013, for instance, the U.S. produced 13.3 billion gallons of ethanol, which is blended into the gasoline we all use. The ethanol industry supported 86,504 direct jobs and 300,277 indirect jobs, according to the Renewable Fuels Association‘s most recent data. Those are domestic jobs that support American families, and which can’t be outsourced.
The sector added $44 billion to the nation’s gross domestic product and paid $8.3 billion in taxes, without government subsidies.
If we made such alternative fuels more widely available, we could not only reduce our dependence on oil, we’d create a whole new generation of U.S. jobs that would keep investment in the country and strengthen the overall economy.
A Renewable Fuels Association analysis of model year (MY) 2015 warranty statements and owner’s manuals reveals that auto manufacturers explicitly approve the use of E15 (15 percent ethanol, 85 percent gasoline) in approximately two-thirds of new vehicles. E15 is approved by U.S. EPA for all 2001 and newer vehicles — accounting for roughly 80 percent of the vehicles on the road today.
Read more at: Ethanol Producer Magazine
The Renewable Fuels Association is having a contest to promote E85 ethanol blends around the country.
It’s simple: Post a photo of an E85 pump that shows the price. A random winner will be chosen, and that person will win a year’s supply of the fuel.
As RFA notes, E85 is sold at more than 3,440 stations nationwide.
You can find out where at either the government’s Alternative Fuels Data Center or E85Prices.com.
Ethanol produced in the United States has been the most economically competitive motor fuel in the world over the past four years and has played an important role in reducing consumer fuel costs, according to a newly released analysis by the Renewable Fuels Association (RFA).
