Free Enterprise Zone, The Freeman, Michael Heberling
From its minor role as an oxygenate additive for gasoline, ethanol has become the darling of Washington. Politicians embrace ethanol as a miracle elixir. All the fashionable energy buzzwords can be applied to it. It is “green power”; it’s “renewable” and will provide “energy independence” for America. Legislation has been promoting ethanol nonstop. The Energy Policy Act of 2005 required that our fuel supply have four billion gallons of ethanol in 2006 and then increase to 7.5 billion by 2012. Next came the Renewable Fuel Standard Act of 2006 calling for even more ethanol in our fuel supply. Building on the old adage that you can never have too much of a good thing, the Energy Independence and Security Act of 2007 increased the ethanol requirement even more. It mandates using 36 billion gallons of biofuels in our gasoline by 2022.
Given the euphoria over ethanol, it is hard to imagine that there could be a downside. Unfortunately, ethanol has numerous and significant problems.
For starters, ethanol is an inferior energy source. Ethanol has 35 percent less energy by volume than regular unleaded gasoline. One gallon of E-10 gasoline (which contains 10 percent ethanol) is 3.6 percent less efficient than pure gasoline (ethanol-free, E-0). In other words, as the percentage of ethanol in a gallon of gas goes up, the realized miles per gallon go down. As a result, E-15 is 5 percent less efficient than E-0 gasoline and E-20 is 7.7 percent less efficient. E-85 gas is between 25 and 30 percent less efficient than pure E-0 gasoline.
On average, E-10 gas is 10 cents per gallon cheaper at the pump than regular E-0 gas. E-85 is even cheaper—70 cents per gallon less. This cost-per-gallon comparison is, unfortunately, very deceptive. A more telling measure would be to compare the cost per mile driven for each fuel type. Craig Clough notes that a “flex-fuel” 2007 Chevy Tahoe (capable of handling any ethanol-blend fuel) averages 14 MPG on regular E-0 gas and 10 MPG on E-85 gas. What would it cost to go on a thousand-mile trip using these two different types of gas? The cost of the trip using regular E-0 gasoline (at $3.70 per gallon) would be $264.29. Using the cheaper E-85 gas (at $3 per gallon), the same thousand-mile trip would cost $300—that’s $35.71, or 13.5 percent, more. Translation: Because of the lower energy content in ethanol, consumers actually pay more because they will need more gallons to go the same distance. So if a gallon of ethanol burns cleaner than a gallon of regular E-0 gasoline, but you need to burn more gallons of the ethanol-blended gasoline to go the same distance, how does this result in less pollution? Or does it? Ethanol has another pollution problem. It is more volatile than gasoline (meaning it evaporates far more rapidly), making it a major contributor to smog.
Ethanol also has some nasty properties that politicians and the Big Corn lobby would rather not talk about. For starters, ethanol is corrosive to some metals, rubber, fiberglass, and plastic. This leads to higher maintenance costs and the need to replace parts sooner than would otherwise be the case. Older car engines, boat engines, motorcycles, snowmobiles, and small gas-powered tools (chain saws, snow blowers, lawn mowers, and weed whackers) are especially vulnerable to ethanol corrosion. Fine particles of rubber, plastic, or metal flow through the fuel system. These particles eventually clog the engine’s fuel lines, fuel filter, carburetor, and fuel injector. Ethanol can also cause an engine to burn out because it runs hotter.
Later-model cars and trucks were supposed to have been re-engineered to mitigate the corrosive properties of the E-10 ethanol-laced fuel. Ed Wallace, writing in Business Week, finds that this is not necessarily true. “Not only is ethanol proving to be a dud as a fuel substitute, but there is increasing evidence that it is destroying engines in large numbers.” He goes on: “It now appears that in just a few years since the government forced ethanol use on the country, engine and fuel system failures caused by ethanol are causing major damage to more and more new and used vehicles.” Wallace concludes: “Sadly, when a truly bad idea is exposed today, Washington’s answer is to double-down on the bet, mandate more of the same, and make the problem worse. Only this time around motorists will be able to gauge the real cost of ethanol when it comes time to fix their personal cars.”
Ethanol has two other properties that further complicate the process. Ethanol and gasoline do not bond chemically. They simply coexist in the fuel system in an “oil and vinegar” relationship. While ethanol may hate gasoline, it loves water. The term to describe this is “hygroscopic,” or “water soluble.” Ethanol attracts and absorbs water. As long as the amount of water in the fuel system is small, this can be a good thing: In the winter it limits the possibility of a fuel line freeze-up. However, as the water content gets higher, the new ethanol/water compound sinks to the bottom of the fuel tank. This process is called “phase separation.”
If we continually drive our cars (or cut our grass every week or so) these ethanol-unique characteristics will not normally be an issue. But after about 90 days (the shelf life of E-10 gasoline), problems begin to manifest. The result: “bad gas.” The engine won’t start or there will be “missing” or “sputtering” problems. This is the reason you don’t want to leave gas containing ethanol in the lawn mower over the winter.
Because of the separation and corrosion problems, ethanol cannot be transported through pipelines. It requires its own separate and costly distribution channel dominated by rail and trucks to keep it apart from the gasoline as long as possible before retail.
Unconscionable Burning of Food
Ethanol’s biggest problem is largely ignored. Burning food as an energy source is unconscionable in these circumstances. Using corn to feed humans and livestock, and to fuel cars, is having obvious negative implications. In 2007 we burned 15 percent of our corn crop as ethanol. According to the Investor’s Business Daily (IBD), “Ethanol and its subsidies amount to a hidden and nefarious tax on food. The higher use of ethanol accounted for up to 15 percent of the rise in food prices between April 2007 and April 2008.” Congressional mandates to increase the use of ethanol even more will only exacerbate this problem. To meet the massive artificial demand for corn created by this government energy program, we can either: 1) switch crops (soy to corn) and keep the cropland acreage the same (which will cause all food prices to skyrocket) or 2) increase the amount of acreage available through large-scale pristine habitat destruction. Neither is satisfactory.
According to IBD, “[I]t takes about 1,700 gallons of water to produce one gallon of ethanol. Each acre of corn requires about 130 pounds of nitrogen and 55 pounds of phosphorous. Increased acreage means increased agricultural runoff, which is creating aquatic ‘dead zones’ in our rivers, bays, and coastal areas.”
Ironically, a case could be made that ethanol is not really “renewable green power” at all but rather a “fossil fuel” in disguise. You don’t just squeeze corn to make ethanol. The distilling process to convert corn starch to ethyl alcohol is energy intensive. According to Matthew Wald in the January 2007 Scientific American, to create 100 units of ethanol energy in the distillation process, you need 45 units of fossil-fuel (coal or natural gas) energy. Michael Wang, an environmental scientist at the Argonne Laboratory, calculated that the amount of fossil fuels is even greater if you look at the whole process (planting, fertilizing, harvesting, and distillation). According to Wang, to produce 100 units of ethanol energy, you need 74 units of fossil fuels.
Hide the True Cost
Given all these expenses—energy to make energy and a separate logistic system—how does the ethanol industry make any money? It doesn’t.
Were it not for the massive government tax preferences (a 51-cent-per-gallon tax break) and government protection (a 54-cent tariff on imported ethanol), this industry could not survive. That’s in part because countries like Brazil—the world’s largest ethanol producer—can produce it more efficiently using sugar cane. On a yield-per-acre basis, the amount of ethanol produced from Brazilian sugar cane is nearly double that derived from U.S. corn.
Even with all this help, the industry asks for still more. Last year the ethanol producers’ association, Growth Energy, petitioned the EPA to allow ethanol blends as high as 15 percent. For the majority of the cars and trucks in the United States, the highest ethanol level allowed by the EPA is the 10 percent blend. Anything above that could void existing car warranties. The exceptions are flex-fuel/dual-fuel vehicles, which can use E-85 gas because they have special stainless-steel fuel tanks and other upgraded fuel system parts. Besides the overused environmental and energy independence angle, Growth Energy claims that this change will create thousands of new jobs.
Revealingly, there is always one reason missing from the case for ethanol. We always hear that it is good for the environment, or it’s good for family farmers, or it creates jobs. But no one ever says that ethanol is good for the consumer. That’s because it isn’t. At the pump the consumer pays more to get fewer miles per gallon than with gasoline. Behind the scenes the consumers’ tax dollars are used to shore up a failing industry that drives up the cost of food and of maintenance of all engines that ethanol touches. It is time to admit that promoting ethanol as a fuel source has been a catastrophic mistake. We need to cut our losses and let the free market, not the government, determine winners and losers in the energy sector.
Michael Heberling is president of the Baker College Center for Graduate Studies in Flint, Michigan.
Copyright © 2010 Foundation for Economic Education. Used with permission.