09/03/2009
As 85% blends of ethanol to petroleum gasoline (E85) became
available at certain fuel stations, automobiles were specially designed
to accommodate this new fuel – “Flex-fuel” vehicles. I believe this was
in large part a promotional scheme for the auto manufacturers to brag
about making autos available for ethanol. But it was mostly designed by
“Big Oil” to act as an olive branch to the renewables industry. The
problem is that an 85% ethanol blend makes little sense for several
reasons.
What is missing is a strategy for a real
energy policy using ethanol the way it should be used; as a growing
supplement to gasoline supply. That is, as ethanol production
increases, the amount of ethanol blended into the gasoline supply
should also be allowed to increase. To date, this barrier to higher
blends is referred to as the ‘blend wall’. Because the EPA has yet to
approve a higher blend of ethanol to go into regular automobiles, it
has limited the growth of markets for the fuel. In spite of the fact
that the DOE and other organizations have completed exhaustive studies
indicating that blends of up to 30% can be used by regular automobiles,
we are, in fact, still limited to a 10% ethanol blend for regular cars
in major U.S. cities. Much is being done to change this, and sooner or
later, wisdom and reality will prevail over special interests and the
politics of holding back unwanted progress by the few. Simply put, the
market, based on supply, should be able to determine the blending of
ethanol. Hence, a rational energy policy would allow for blends to rise
as new production becomes available. To the extent the new goals for
production are met, retail fuel outlets and higher blends will be
critical. This will allow for a gradual but practical reduction in the
demand for oil, thereby reducing the power that foreign oil producers
have over controlling the energy markets, and finally breaking the grip
that they have on the American consumer. By way of example, the current
demand for gasoline is around 145 billion gallons per year. Annual
ethanol production is about 12 billion gallons per year.
However, ethanol capacity is 14.5 billion gallons per year. Because of
the blend wall, gasoline is more expensive than it should be and
ethanol is cheaper than it should be. There is a federally-mandated
goal to increase renewable fuels production to 36 billion gallons per
year by 2022. 36 billions of renewable fuels per year is the equivilant
of 2.4 millions barrels of oil per day, or in other words, the daily
oil production of Iraq. Draw your own conclusions as to what this might
do for our country. Where will a significant portion of this new
production come from? Cellulosic ethanol.