The ethanol tax

Ethanol plantFor all the talk about the ruin to be caused by the gas tax increase in Minnesota, comparatively little is said in the state these days about the “ethanol tax,” which has had a significant impact in the cost of operating a vehicle and may, according to some people, have a role in rapidly increasing food prices.

For the last few months, I’ve been conducting an unscientific experiment: filling up my car with regular gasoline and comparing the performance with the ethanol blends I’m required to use in Minnesota.

Although Wisconsin drivers get a choice, lawmakers are considering an ethanol mandate, which would require 10 percent of gasoline to be a blend of ethanol, rising to 25 percent by 2025. Here’s a copy of the legislation. Minnesota, on the other hand, requires all gasoline sold to be at least 10 percent ethanol.

I snuck across the border several times to fill up the 2004 Chevy Cavalier (the official car of News Cut) with ethanol-free gasoline. The result? My car got about 32.6 miles per gallon. The Minnesota blend gave me almost 29 miles per gallon, a 12% drop in performance.

Calculating current prices (the average price of gasoline in Minnesota now is $3.235. In Wisconsin it’s $3.40), driving 1000 miles on Minnesota gas costs $111.55 (11.2 cents per mile). On Wisconsin gas, 1,000 miles costs $104.29 (10.4 cents a mile), a $7.26 savings, even though the difference in the price of a gallon is almost 17 cents. The “ethanol tax” works out to 2.3 cents a gallon.

In addition to the increased fuel costs to consumers, taxpayers also support ethanol producers with a 20-cents-a-gallon subsidy. The feds chip in another 51 cents a gallon.

My little experiment showed me that I spend an additional $80 or so a year at the pump because of ethanol. It’s not a huge deal, although some of the rhetoric surrounding similar numbers in the gas tax debate suggested it’s the difference between me keeping and losing my home.

But the “tax” is about to go higher. In 2005, there was no bigger supporter of a 20-percent mandate than Gov. Pawlenty. He signed a bill raising the requirement for ethanol in a gallon of gasoline to 20-percent by 2013.

Six Republicans in the House this year ran into trouble for supporting an increase in the gas tax. In 2005, however, 48 Republicans voted for what’s turned out to be “the ethanol tax.”

The concerns about the ethanol mandate, of course, are years old. An MPR story in 2002 documented the steamrolling of politicians by the ethanol lobby.

As MPR’s Cara Hetland reported last fall, the ethanol mandate is an economic development program for farmers. And Cargill today reported an 86-percent jump in profits. Good for them. Consumers? Not so much.

But there is plenty of dispute about the effect of ethanol on food prices and, hence, its role — if any — in inflation. Last week, Texas A&M released a report that suggests that corn prices — corn is used to make ethanol — would have risen substantially anyway as petroleum-based costs — fertilizer, for example — went up. The report said higher corn prices “do have a small effect on some food items.”

Update Mon. 10:14 p.m. – An article in Tuesday’s New York Times doesn’t let ehtanol/biofuels quite so easily, and invokes the U of M’s C. Ford Runge:


C. Ford Runge, an economist at the University of Minnesota, said it is “extremely difficult to disentangle” the impact of biofuels on food costs. Nevertheless, he said there was little that could be done to mitigate the impact of droughts and growing appetites in developing countries.

“Ethanol is the one thing we can do something about,” he said. “It’s about the only lever we have to pull, but none of the politicians have the courage to pull the lever.”

  • bea

    Thank you for bringing this up (and doing your own bit of research!). I sincerely hope that after the elections we can re-examine the rush to ethanol. This has been a golden opportunity handled very poorly. We should at a minimum switch to cellulosic ethanol, to take the pressure off of food prices at home and around the world.

    Of course, historically, the one thing guaranteed to bring political change is out-of-control food prices. I hope we have the courage to correct our course quickly.

  • bsimon

    bea writes

    “the one thing guaranteed to bring political change is out-of-control food prices.”

    Not to threadjack, but according to Michael Pollan (author of The Omnivore’s Dilemma) out-of-control food prices are exactly what the Nixon administration was responding to when they rewrote Ag policy that rewarded over production of food (keeping prices low). If corn weren’t so cheap, it wouldn’t be a very appealing ingredient in ethanol.

  • http://comuse.blogspot.com Allen

    We can’t just switch to cellulosic ethanol because there isn’t a single viable production plant out there for it!

    Even if cellulosic ethanol were being produced on a large scale today there is no guarantee that it wouldn’t impact food prices. For years the USDA miscorrectly claimed that ethanol production would not affect food prices? Why? Well, they said it’s because the corn used for ethanol isn’t fed directly to humans. Of course the chickens and cattle and swine we eat or the cows and chickens we use for milk and eggs somehow wouldn’t be affected by rising feed prices. And of course no farmer would forgoe planting wheat or soybeans if they could make more money planting corn.

    ya… well, that’s happened. Sure, there are other factors but ethanol is one of the major forces behin price rises if not the single largest factor. There are no guarantees that farmers would not forgoe growing other crops in favor of ones that could be used for cellulosic ethanol. Yes, it show promise of being more efficient but with the huge jump in volume the politicians are shoving down our throats it’s still going to be a large strain on productive farm land. And that’s assuming that we find ways to productively produce it on a mass scale. Until it’s down we may as well dream about cold fusion.

  • Paul

    I am really concerned with this “new” fuel. Ethanol, regardless of corn or cellulose, uses massive amounts of ground water. Are we really going to deplete our aquifer so we can drive? Are we going to choose between feeding people and operating a vehicle. The debate, once again is driven by money and quick fixes instead of careful, honest, open dialogue. It’s how we got into Iraq and countless bad, past decisions. It seems to me we’re just exchanging problems.

  • Tim

    Lets build a massive network of flumes, we could use gray water to propel us. No fuel needed just gravity.

  • bsimon

    ” No fuel needed just gravity. ”

    And a rewrite of the laws of physics as envisioned by MC Escher

  • Jim

    Ethanol – the emperors new fuel

  • Doug

    This post is generating much discussion which is good – but with all do respect, Bob, your “research” wouldn’t get you into the second round of the science fair.

  • Derek

    Isn’t it also true that the main reason why GM has so many flex-fuel vehicles is because it can claim that its 15mpg FFVs get 100mpg of gasoline. This allows them to sell more guzzlers because they’re not considered ‘gas guzzlers’, rather just e85 guzzlers. This is just another example of consumers getting duped from the true constituents of our politicians, the lobbyists.

    The more ethanol/ gallon, the worse fuel economy every vehicle will get and the reasoning is simple; ethanol is less energy dense.

  • MDSedgley

    Ethanol = political kickback to farmers and Big Ag.

    Is it ironic that the “free market” Right subsidizes ethanol? Lowers Fed Fund Rates? Bails out investment banks? They shall reap the effects of central planning, economic failure.

    Germany (see this weeks der speigel online) just dumped its ethanol program. Its too bad the grandsons of German immigrants have lost their common sense.

  • Bob Collins

    //Bob, your “research” wouldn’t get you into the second round of the science fair.

    No doubt. The first round probably has the kid with the exploding volacano, right? Figures.

    The “research” isn’t intended to be the centerpiece of an intellectual exercise. It’s merely to evaluate the effect of the mandate on my wallet and bank account.

    The two places were “real life” happens. :*)

    I’m beginning to wonder if there’s a “freedom to buy ethanol-free” gasoline movement out there…. somewhere. Maybe with every fill-up, they’d give you an incandescent light bulb.

  • GregS
  • http://www.cleanairchoice.org Bob Moffitt

    Why do you hate America, Bob? (wink)

    I agree that your milege figures sounds wrong — although GregS is mistaken that the E100 they use at the Indy 500 offers BETTER mileage. No doubt it is cleaner, burns a little cooler in those million $ engines and is safer than other fuels (less likely to go BOOM in a crash).

    You could have done a gasoline vs deisel test and found that diesel gets more MPG than gasoline. So we all have been paying a hidden “Gasoline Tax” for years!!! Where’s that headline, newshound?

    It’s not “cool” to attack gasoline, I guess. Repeate after me: “Ethanol is responsible for everything wrong in the world.” Lather, rinse, and repeat endlessly…

  • Bob Collins

    I don’t think everything that’s wrong with the world is ethanol’s fault. I do believe it takes as much money out of my wallet as the gas tax increase (currently) does and I find it interesting that the outrage over that money isn’t consistently held across political lines.

    I’m also surprised there isn’t a “freedom to pump straight gas” movement.

    Unles……

    The outrage isn’t…..real.. Is that possible? that’s it’s about poltics? Nahhhhh :*)

    Greg, I’m familiar with aircraft and ethanol, but there ae only a few pistons flying in ethanol and it’s a huge issue. Current pistons fly, actually, on 100LL. Ethanol blended gas, for those who have engines configured to burn auto gas, doesn’t burn hot enough to deliver the rated power.

    Another concern with an alcohol blend is separation as the aircraft flies to higher altitudes.

    Generally speaking, pilots are glad the farmers are making dough, but on this particular “movement,” they balk at sacrificing their engines in the air to make it happen.

  • GregS

    I’m also surprised there isn’t a “freedom to pump straight gas” movement

    There is no such thing as “straight gas”. All gasoline has octane and oxygenator additives. In the past this used to be mostly lead, but that made kids sick. Then it was MTB but that contaiminated the ground water.

    Now it is Ethanol and people are complaining. I am not sure what they are fretting about. Do they want the lead and MTB back?

  • GregS

    I don’t think everything that’s wrong with the world is ethanol’s fault. I do believe it takes as much money out of my wallet as the gas tax increase (currently) does and I find it interesting that the outrage over that money isn’t consistently held across political lines.

    Blame the refinery.

    The rack price of Ethanol is well below that of gasoline. If the blender does not pass along the savings that is not the fault of farmers or Ethanol refiners.

    As for the “outrage”, I doubt there will be any politically speaking, especially from Obama supporters.

    The small towns of Minnesota onced looked very similar to the bitter cesspools of “guns and religion” that Barak was so bitter about.

    Now we have Ethanol and everything is turning around.

  • http://www.cleanairchoice.org Bob Moffitt

    Er, interesting blend of subject matter, GregS.

    I think Minnesota’s small towns are big enough to have ethanol, guns and God, if they choose…

    The “outrage” over the gas tax struck me as odd, too. The price went up two pennies a gallon and every news outlet did a big story on it. A week later, Twin Cities gas prices jumped 20+ cents overnight without any aparent reason and no one said “boo” about it.

    We are all well-trained slaves to oil aren’t we? I can’t claim the moral high ground on this issue — I drive a gas-burner, too, like most Minnesotans.

    Interesting that gasoline consumption trends are stable or even going downward for the first time in decades. BTW: MN E85 sales will set another record this year.

  • Bob Collins

    Folks like me don’t much care on who we should blame. It only matters was is.

    and you’re right, Greg, we have rural economies coming back. But isn’t it the same sort of transfer of wealth that Republicans usually object to? If Reublicans get all worked up because of incandescent light bulbs, why aren’t they all worked up because Minnesotans don’t have the freedom to choose not to use ethanol?

    It’s sort of a rhetorical question, of course, the answer is because it benefits their constituency.

    Given that farmers are makingmoney and that ethanol producers are making money, is it time to stop subsidizing a gallon of ethanol?

    A little consistency is all I’m looking for here, of course.

  • GregS

    Bob…….

    You apparently have not heard the Jason Lewis wing of the Republican Party on the subject of subsidies for Ethanol.

    They sound like mad dogs going at a leg of mutton.

  • GregS

    In other words — they don’t like it.

    There really is no economic reason for Ethanol subsidies. It is something that should be gotten rid of.

  • Bob Collins

    Heh heh.

    I neglected to answer an earlier question. I filled up 3 times in Wisc. and 3 times in Minn… same stations for each. I drive and old man — 55 on cruise control ALWAYS on the highway.

    it was mostly highway driving with one or two trips to the local hardware store. I made sure the tires were inflated to 34 psi always. I also changed the oil at an even interval.

    Like I said, it’s not meant to be scientific, these are just the results my wallet got.

    I think it’d be great to have the Great News Cut challenge for those who want to report similar experiences; maybe the results will be different.

    What do you say, folks? Are you game?

  • http://www.cleanairchoice.org Bob Moffitt

    Terri Gruca at WCCO-TV did a more scientific test (of E85 vs E10 in a flex-fuel vehicle)

    http://wcco.com/video/?cid=135

    To be fair, Ethanol-hater Scott “Call me Rube” Goldberg at KARE-11 had a different outcome with his unscientific test.

    http://www.kare11.com/news/investigative/extras/extras_article.aspx?storyid=267612

  • GregS

    I neglected to answer an earlier question. I filled up 3 times in Wisc. and 3 times in Minn… same stations for each. I drive and old man — 55 on cruise control ALWAYS on the highway.

    We still don’t know whether we are comparing apples with apples. You might have to speak with the EPA.

    When you buy gas in Wisconsin, Hudson or there abouts I gather, you may be buying rural formulated gasoline, not gasoline formulated for an urban area. There are special mandates for the Twin Cities area, which if you remember way back had notoriously lousy air quality.

    The 10% Ethanol blend is set up for compliance with EPA mandats, mandates that may not be in effect in Western Wisconsin.

    What you may be testing is how well, clear air gasoline works versus the older stuff.

  • Bob Collins

    Why is E85 vs E10 a more fair test? It’s comparing one blend of ethanol with another blend of ethanol. I’m comparing one blend of ethanol with no blend of ethanol.

    Regardless of methodology, the reality is that I saved money when buying my gas in Hudson than in Woodbury.

    So while people might point and say “oh, look, ethanol leads to a lower price per gallon,” that doesn’t mean filling up saves you money. It doesn’t, at least for the last two months for me.

    Clearly YMMV, but I don’t hear anyone jumping aboard the request for people to do their own test and report their results. C’mon, whadaya say, fellow scientists?

  • http://www.cleanairchoice.org Bob Moffitt

    It was more fair because of the more controled environment on the track vs. highway. However, it is true that the WCCO test looked at diferent fuels than you did, so I concede your point.

    There is a specific difference between E85 and E10. E10 is officialy designated (by the EPA) as an oxygen-enriched gasoline. E85, on the other hand, is a bona fide alternative fuel (also per EPA).

    Here in MN, E10=gasoline for most people. E10 we have, and E10 it will remain.

    By all means, drive to Hudson to save your pennies per gallon, if that’s what is most important to you. I prefer to use the Minnesota blend, and I prefer life on this side of the river.

    You seam to see it as “lack of choice.” I see it as “cleaner air and 10 percent less gasoline consumption for an entire state.”

  • Bob Collins

    //Here in MN, E10=gasoline for most people. E10 we have, and E10 it will remain.

    Well, until it goes to E20.

    What’s important to me is having some actual data for the average person on what ethanol actually costs us.

    And also debunking the theory that a 10 percent means 10 percent gasoline use. It doesn’t, although I recognize that’s the marketing of it.

    It means there’s 10 percent less gasoline in a tank of gasoline, but doesn’t account for the additional gasoline you’d have to pump to get the same distance.

    And, as the original post pointed out, the fretting about the gas tax increase doesn’t seem to compare with the “tax” we pay because of an economic development program for farmers.

    That doesn’t mean one is bad and one is good, it means that there’s a reality in all of this that the special interests on both sides would rather not recognize.

  • Grant Rollins

    What do you think the price of regular gasoline would be if we were not producing ethanol? We are adding to the fuel supply and more supply means lower price.

    The so called “tests” mentioned above mean nothing to me. I have done my own as well. I have a 2006 Ford F-150 FFV that I always burn E85 in and see about a 15% drop in MPG vs. regular(E10 here in MN)

    I also drive a 1996 Olds Cutlass to work alot. I always run E10 because that’s all we have in MN and. I have recently experimented with higher E blends by pumping in different amounts of E85 with my E10 to try blends up to E50. I did not see my MPG fluctuate hardly at all. I get around 23 with that car no matter what I put in it. Recent studies have shown that certain blends of E20 and E30 can maintain and in some cases increase MPG.

    Before ethanol the only oxygenate in gasoline was MTBE which was found to be poluting the groundwater. Ethanol fixed that.

    As for the amount of water an ethanol plant uses, the average plant uses less water than an 18 hole golf course! Think about that next time you drive by the links! Oil refineries use water too, more than you would think.

    Ethanol is here to stay for awhile I would say. Why would any American not be pro-ethanol? Farmers don’t blow up buildings…they don’t hijack planes…they don’t kill people.

    Even if a person spends an extra $100 a year from ethanol so what, it’s $100 that was put back into the loacal economy. And if $100 is going to make you miss a mortagage payment and lose you house you were pretty dumb to get yourself into that loan and you deserve it. When will peopl learn that they can’t have a huge new house, 2 new cars, and every other thing they WANT. Get smart people and live responsibly!

    It’s refreshing to see some life being brought back into rural ecomonies.

    I am from a rural community.

    I am a farmer.

    I grow corn.

    I burn ethanol.

    If anyone wants to learn more then by all means email me and I can write you pages on the subject.

    I just get really fired up when people start to bash ethanol when the blame lies elsewhere…

  • JohnM

    If you want the real facts go to the U.S. government site where you can put in your type of flex fuel vehicle and state and see what your operating costs difference is between E85 and straight gasoline. You’ll see that most cars get between 25% and 30% less gas mileage with E85. Since the difference in cost per gallon isn’t that much, the cost difference is significant. For an F-150 truck the gas mileage drops from 14.86 miles per gallon to 11.16 miles per gallon. Factoring in the cost difference in one of the states beginning with an “A,” the cost was $800 per year driving 15,000 per mile. Yes, you actually put out less CO2 and used less gasoline, but you took a hit in the pocketbook for doing so. Here’s the website.

    http://www.eere.energy.gov/afdc/progs/cost_anal.php?0/E85/

  • daryl

    i dont plan to let my flexfuel chevy ever use E85. why? its not in the area pumps, costs more, less MPG, still pollutes, raises prices on milk, food,ect, takes 4 acres of corn to drive that E85 car for a year.

    we need to drill the gulf, drop ethanol and drop different gas blends to get prices lower.

    be aware E20 may ruin your engine.

    this info at klif.com every sat 9-1pm CST.

  • JohnM

    Re: What do you think the price of gasoline would be without ethanol and ethanol adding to the supply means lower price.

    The price would be the same if there were ethanol in gasoline or not. It is widely acknowledged in the marketplace that the price of both oil, and especially gasoline, have nothing to do with supply and demand. It has to do with the devaluation of the dollar causing even more commodity speculators to get in the market, thereby causing the price to go up. It’s kind of like real estate speculators flipping houses and driving the price up to where the bubble finally burst. Think about it, when is the last time you saw a gas station out of gasoline?

  • johnM

    In fact, the U.S. Department of Energe has conducted extensive tests comparing the costs of operating flex fuel vehicles with regular gasoline and E-85. Using E10 lowers gasoline mileage slightly, but using E-85 drops it between 25% and 35%. The difference in operating varies per state depending on the relative cost per gallon of regular/E10 and E85, but in the states of Minnesota and Wisconsin, the DOE tests show a $300+ per year increase in the cost driving an F-150 for 15,000 miles. Check it out for your car at

    http://www.eere.energy.gov/afdc/progs/cost_anal.php?0/E85/

  • johnM

    http://www.eere.energy.gov/afdc/progs/cost_anal.php?0/E85/

    Go to this Dept. of Energy website and you can calculate the cost of operating any flex fuel vehicle in any state where E85 is sold. It depends on the relative prices for regular/E10 and E85. For Wisconsin and Minnesota for an F150 the it costs more than $300 per year to drive 15,000 miles, mainly because the E85 only gets 75% of the gas mileage, dropping from 14+ mpg to a little over 11 mpg.

  • johnM

    And, according to this article in Business Week, gasoline supplies are up and demand is down, but the price has increased. In addition, speculation in gasoline futures was less than $10 million in 2000 and is now $250 million. Note: You have to copy and paste the entire address in with no spaces were the line breaks are, in order for it to work.

    http://www.businessweek.com/lifestyle/content/apr2008/bw2008041_945564.htm?chan=top+news_top+news+index_dialogue+with+readers

  • Bob Collins

    //Even if a person spends an extra $100 a year from ethanol so what, it’s $100 that was put back into the loacal economy.

    Your producer is getting 51 cents PER GALLON from the federal goverment as a subsidy. Most of the money comes from the most populated areas. So that money isn’t going into the local economy.

    Look, I’m happy the rural farmers are doing well.

    But there’s a difference between a sound and effective energy strategy and a “tax” to help the rural economy and the two are not the same.

    If the goal of ethanol is merely to help farmers, so be it. Just say it we’ll chalk it up to another social program, only this one is for people who wear flannel. But there’s very little evidence to support the contention that somehow ethanol is saving the average working stiff money.

    Forty-one republicans — many of them the same ones screaming bloody murder about the gas tax and its effect on the working stiff — had nothing to say about the effect of the “ethanol tax” when they voted for it.

    Why not?

    The fact that we’ve headed down this road and we STILL can’t agree on what the point of ethanol is suggests a REALLY poor public policy.

    So whether we have ethanol or not isn’t the point of the original post. The point of the original post is whether the special interests involved are going to be more honest about what we’re doing.

    If it’s REALLY a good deal, they won’t need to resort to claims which depend on the declining math skills of the general public to make sense.

    Gas was $3.35 on the way home tonight. Ugh. Time to get the bike out.

  • Bob Collins

    Folks:

    You can use html in the comments section… MUCH better than trying to paste in a long URL.

    Now back to our topic.

    I blame Jessica Lange and Sam Shepard for this mess. :*)

  • Marteau

    So, OK, imagine no ethanol. In that case, either the Twin Cities is out of compliance with the Clean Air Act and our air quality is consdierably worse, OR maybe we’re still using MTBE as an oxygenate and we’re (knowingly) polluting our ground water with a known carcinogen.

    And, we would consume ten percent (or whatever your figure is, Bob) more gasoline, not a drop of which we produce here. Would gas prices go up becasue of increased demand?

    There would have been no investment in ethanol plants in Minnesota, meaning a loss of 11,000 jobs and $3 billion dollars less going into the state’s economy every year.

    Less demand for corn means lower prices for farmers, which would add billions in dollars of increased farm payments across the country under the Farm Bill. How does that save the taxpayer money?

    And, should terrorists blow up the largest crude oil terminal in the Mideast, there is absolutely no infrastructure to build upon that will allow us to ramp up an alternative to our precious oil, and no ethanol research available to help get our economy back to some semblance of normal. Wood-powered vehicles, anyone?

    I get tired of ethanol being blamed for everything from athlete’s foot to bad radio programming. It’s not perfect, but it’s renewable, locally produced and it’s available now.

    The alternative is more of the same – which is what the oil companies are working relentlessly toward making us accept.

  • Grant Rollins

    I really need to stop getting into these blogs(makes my blood pressure to high) but I can’t help it when a bunch of idiots start making flase claims. Whether or not ethanol is the most economical solution at the moment it is the only solution right now. The amount of research being done is huge and adds to the ever increasing efficiency of ethanol. This industry has created alot of good paying jobs. I wonder how much revenue is generated from the taxes these plants pay? I would like to see that figure.

    I’m just sick of all the morons who think ethanol is such a bad thing. You know what, there are hundreds of government programs that are so incredibly wateful or flat out not needed. Why don’t you ethanol haters go and pester these programs and leave the fuel solutions to those who know the true story.

    As I was sitting in my semi this morning waiting to unload corn at POET in Lake Crystal I looked at all the cars in the parking lot and thought wow, alot of people work here. That’s a good feeling. I’m very glad I’m a part of the solution.

  • Bob Collins

    Idiots and morons? We really can’t afford to resort to that in intelligent debate.

    I would encourage you, Grant, to put the vitriol down and try to disagree on the basis of research, preferably your own.

    You may for example, disagree that I posted that a gallon of gas with ethanol actually costs ME more than a gallon of gas without ethanol, and that’s fine, I welcome that.

    But in this country, the method of discourse — sadly — tends to counter that with which we disagree through name calling and repositioning.

    You’ll note that in my questioning of the facts surrounding ethanol, I didn’t say anyone was an idiot or a moron because I don’t think they are.

    I think they have a different opinion and MAYBE even have some information to share that would be valuable.

    I would encourage you to engage in this way.

    I doubt, frankly, that ethanol is perfect. I doubt that it is inherently evil. I think kthat it’s probably somewhere in between, and where that is I expect the audience of News Cut to help decide.

    You are in a unique position to help do that.

    Both sides should put down the “yur either with me or agin’ me” mentality.

    There’s common ground on all issues we face, we just have to get back to the old days of being interested in finding it.

  • Bob Collins

    //There would have been no investment in ethanol plants in Minnesota, meaning a loss of 11,000 jobs and $3 billion dollars less going into the state’s economy every year.

    That’s a great point and it gets to the public policy aspect of the general ethanol debate: whether it’s a rural development program. If it is, then the debate needs to be focused on that.

    For example, a few months ago, the state gave back payments to ethanol producers for cuts made during the budget crisis earlier part of this decade. A promise is a promise, the theory went.

    And that’s fine, but the MinnesotaCare recipients who were thrown off health care didn’t get put back on so shouldn’t there have been a public policy debate about who is supposed to sacrifice what? And can’t that only occur if we acknowledge what percentage of the ethanol discussion is more about economic development of a private industry with public money?

    //Less demand for corn means lower prices for farmers, which would add billions in dollars of increased farm payments across the country under the Farm Bill. How does that save the taxpayer money?

    Again, a great point. But doesn’t that question also play into the subsequent conversation about the role of the taxpayer in private business? Carl Pohlad gets taxpayer funds and people go crazy. Ethanol producers get taxpayer money and it’s OK because it’s rural Minnesota.

    That’s part of the fascinating part of this issue for me is the inconsistency of the public policy discussion. We’re ready to revolt because 6 Republicans contributed to raising the gas tax by 3 cents, but not when 41 Republicans vote for a higher ethanol mandate.

    “It’s about jobs,” they might — and do — say. But isn’t road and bridge construction about jobs, too?

    So how do we get consistent on all of these things?

    //I get tired of ethanol being blamed for everything from athlete’s foot to bad radio programming. It’s not perfect, but it’s renewable, locally produced and it’s available now.

    I usually get lost in the hyperbole because nobody is blaming ethanol on everything. Merely pointing out that it adds — not lowers — the cost of running an automobile is stating only a fact — in this case a fact about *my* wallet. YMMV. As I’ve said numerous times, I’m just looking for a more honest discussion, rather than the “Why do you hate America” response that my esteemed — and well-liked, I might point — comment/colleague Bob from alamn good-naturedly asked, which actually was meant — I think — to point out that it’s not always asked with good nature.

  • J. W.

    Regarding the ethanol subsidy – in addition to those already listed should also include the incentive the State of Minnesota gives to station operators to install E85 pumps. Tax dollars pay for 50% of the cost.

  • http://www.cleanairchoice.org Bob from ALAMN

    I’m glad you detected the “wink and a smile” in my comment, Bob. That is one of the big problems with e-communications — the intent isn’t always delivered with the words.

    I’ll be attending tonight’s Energy and National Security Forum at MPR tonight, so maybe I’ll see you there.

    In response to “JW,” that’s not accurate. Station owners pay the lion’s share of the expense of adding an E85 or biodiesel pump in MN. State station grants are capped at $15k per station, but the average grant paid is about $8k.

    In the past 10 years, an estimated $9 million has been spent on adding E85 pumps in MN. As I said earlier, station owners pick up the largest share of the costs, followed by federal agencies like the US Dept. of Energy, the Minnesota Corn Growers Association, General Motors, local foundations, etc.

    Overall, the state has paid about 15% of the total bill for adding 350+ E85 stations in Minnesota, making us the alternative fuel leader in North America. Reps from other countries (Thailand is coming this month) often visit to find out how the “Minnesota Model” works so well.

    Full disclosure — I know these fact because my employer (American Lung Association of Minnesota) is the administrator of the state grant program, and we also help coordinate the public-private partnership that brings in the private and federal dollars.

    Bottom line — we have attracted more private investment and federal support than any other state to create an efficient E85 infrastructure — our bipartisan suport of biofuels (and the seed money from the state grants) made this happen. At least $4 million of the $9 million came from out-of-state sources like the Feds or GM.

  • Grant Rollins

    I’m sorry, I didn’t mean to insult anyone. I just get really fired up about this subject. I really hate to read or hear people making claims about the production and performance of ethanol that are simply not true. Let’s be honest, even well respected organizations have come up with some pretty bogus studies over the years linking unlikely and unrealted “causes” to bad results. It seems that there are plenty of questionable links between ethanol and current problems. The one about American farmers being responsible for the destruction of the rain forest in Time Magazine a while back was a good example. It talked about how they are clearing forests in Brazil and the like to farm crops on. This is not the fault of the American farmer. They have been clearing the rain forests for centuries, before ethanol, and they will probably be doing it long after the ethanol boom is over. I just don’t like the way they place the blame on us. Let’s just say that Time went down a couple pegs in my book for that one.

    I appreciate the arguement of both sides and I will defend ethanol and the American farmer tooth and nail. I will try to keep the outbursts to a minimum from now on.

  • Bob Collins

    //I’ll be attending tonight’s Energy and National Security Forum at MPR tonight, so maybe I’ll see you there.

    There’s an Energy and National Security Forum at MPR tonight? On a night when the Wild are playing?

    Grant, not a problem, glad you’re still here. You SHOULD defend ethanol and the American farmer tooth and nail. (Disclaimer: My sister was a farmer for many years and up until the last few weeks, when her company merged with Blue Seal Feeds, she traveled the backroads of Maine helping farmers).

    However, I think one of the problems is the perception that the two are linked in the policy discussion. Hypothetically speaking, what IF ethanol didn’t have any real economic advantage but DID help the American farmer. Does that change things?

    Similarly, what ARE the responsibilities — my way of public policy — to help what is essentially a private business with a wide economic footprint. We as taxpayers help the housing industry by way of mortgage interest exemptions because the industry ripples through the rest of the economy so much.

    As for the production and performance claims, keep in mind as I indicated in the orgiinal post, MY survey was unscientific but the results WERE my results. They’re not made up. (I’m still looking for volunteers to test the theories, though).

    Gas this morning went up another 10 cents. It’s now $3.45 a gallon.

    Good to have you here, Grant.

  • Grant Rollins

    Thanks Bob, glad to be here.

    I guess if people are going to be skeptical of ethanol the least they can do is take some action and do research as you have done. The ones that get me are the people who say something like, “ethenol gives you 30% less fuel economy” and then I ask them, “have you ever tried using it?” When they answer no I just kinda laugh.

    Support your arguements…

    Good day.

  • http://www.cleanairchoice.org Bob from ALAMN

    “There’s an Energy and National Security Forum at MPR tonight? On a night when the Wild are playing?”

    I know — crazy, huh? I’m coming early to get a parking place and a seat at Mickey’s Diner before the hockey crowd takes over downtown. The puck drops at 8 p.m. tonight, so I can catch the third period on the radio on my way home.

    Go, Wild!

  • Bob Collins

    Criminy, Bob, I haven’t been home at a reasonable hour once this week and now that you’ve alerted me to this event, my guilt forces me to live-blog it.

    Oh well, I can’t bear to watch the Wild once they get down 1-0 anyway.

  • Tom in Dallas

    Hey Bob, I live in Texas, but I decided to add my own 2 cents. In the Dallas Ft. Worth metro area, there are 4 counties with a 10% Ethanol mandate. It is a little easier for us to do our own tests.

    I have frequent opportunity to drive the same trip to an adjacent county, and I have been able to conduct similar tests. I have tried to carefully eliminate the differences in highway driving vs. city driving, for example, by driving the same trip, but filling up at the same place several times in a row.

    I also see a similar difference between real gas (country gas) and 10% ethanol (city gas).

    I get about 13MPG in my truck on city gas, and 16MPG on country gas. This means that my net consumption of gasoline is greater when there’s only 90% of it in a gallon.

    At 13 MPG, I burn 100 gallons of city gas to go 1300 miles, and that is only 90 gallons of actual gas.

    At 16 MPG, it only takes 81 gallons to go 1300 miles. Where is the net savings to the country when I use 9 gallons more gas to go the same distance?

    This calculation totally ignores the actual cost in petroleum of creating the ethanol, and this is a substantial cost.

    This same effect occurs when I drive different vehicles. However I don’t normally drive smaller vehicles out there very often so I have not made as controlled of a study.

  • Bob Collins

    // Where is the net savings to the country when I use 9 gallons more gas to go the same distance?

    My friends up thread will say the net savings is in the emissions. There was an interesting comment at tonight’s forum meeting on energy that it being a transition fuel, it gets us used to having different choices at the pump (although I would say giving us the choice of E-10, E-85 AND no ethanol would be an even more impressive array of choices. (g) )

    There is no denying that ethanol has been good for farmers and God knows they needed help and I sure don’t minimize that.

    And I also have the nagging question, if we don’t try THIS, would we be trying something else? If so, what would that be.?

    You now what, though? I’m fascinated that COUNTIES set the ethanol mandate in Texas rather than the state. Is there a big debate at the county level on ethanol in the same manner there’s a big one at the county level here on the sales tax for transportation?

  • George

    It appears Bob’s creative writing skills are much more refined than his analytical skills.

    I’ve driven over half a million miles on E10 and have seen NO difference in fuel economy. I have also driven 50,000 miles with E85. The difference using E85 on the highway, the way I dive, is indistinguishable. City mileage drops maybe 5%.

    The controlled trials with E10 and E20 don’t support Bob’s conclusion either. In fact, some blends using ethanol will improve fuel economy. It depends on the blend, the car, and how you drive.

    The other thing that gets swept under the carpet is ethanol is a higher performance fuel than gasoline. When blended with gasoline, it allows the use of lower grades of gasoline that can not be used alone as fuel for your car. Not only does ethanol displace gasoline use, it extends the fuel supply by allowing lower grads of gasoline to be used.

  • Bob Collins

    It appears Bob’s creative writing skills are much more refined than his analytical skills.

    I’m not sure what any of that means but I’ll explain it once again. My experience was just that: my experience. Suggesting that the experience was made up doesn’t really advance the discussion, George.

    Your experience on the other hand, is different from my experience and it differs from Tom’s experience above. That doesn’t mean that the norm is your experience. It doesn’t mean that the norm is my experience.

    It means the anecdotal relaying of our individual expereiences should be the basis for curiosity to do its thing.

    It’s true the “controlled tests” with E10 and E20 may not support my conclusions but my conclusions are actually my experience. I don’t live life in a controlled test, I live it on I-94. The increased cost I experience doesn’t go away just because of a controlled test (by the way, provide a link to the details because the only controlled tests previously cited here weren’t between non-ethanol and ethanol, it was because E-10 and E-85).

    So it doesn’t really make sense to say “you really didn’t spend more on Minnesota gas than Wisconsin gas because controlled tests with othre vehicles had different results.”

    I really did. And people who say i didn’t spend more money can only be correct by sending me a check for $.028 per gallon pumped. (g)

  • Pat

    The best estimate is that every gallon-equivalent of ethanol takes about 4/5 of a gallon-equivalent of other fossil fuel to make it.

  • Gary Dikkers

    Bob Collins said: “For the last few months, I’ve been conducting an unscientific experiment: filling up my car with regular gasoline and comparing the performance with the ethanol blends I’m required to use in Minnesota. The result? My car got about 32.6 miles per gallon. The Minnesota blend gave me almost 29 miles per gallon, a 12% drop in performance.”

    Bob,

    I’ve been checking my mileage with and without E10 closely for the last four years, and my experience is much like yours:

    Driving a compact pickup with a 4-cylinder engine I usually get about 32 mpg while driving at steady highway speeds and using gasoline. When using E10, my mileage drops to about 29 mpg.

    That means on a trip of 320 miles I would burn 10 gallons of gasoline. If I used E10 for the same trip, I would need just a bit less than 11 gallons.

    But, 90% of that E10 would be gasoline. That means when I burn 11 gallons of E10, I burn 9.9 gallons of gasoline.

    Whether I buy gasoline or E10, I burn almost exactly the same amount of gasoline, but if I use E10, I have to buy 11 gallons of fuel.

    I now buy E10 only when I really need gas, and have no choice.

    If you’re interested I have statistics from the USDOT/FHWA showing there is a significant difference in fuel mileage between Minnesota and Wisconsin. I live in Wisconsin and long ago concluded Minnesota’s E10 mandate is — in effect — a hidden tax on your drivers. Good for MNDOT perhaps since they collect more tax revenue on the extra fuel Minnesota drivers must buy because of the mandate, but not so good for your drivers.

    You’ll find many people with experience similar to yours at this website: Lower mileage with E10

    Regards,

    Gary Dikkers

  • http://www.memphissports.proboards85.com Rick Johnson

    You use 120,000 BTUs to produce a gallow of fuel that has less than 85,000 BTUs of energy. Yep that is a great concept. Then factor in you get less energy from a gallon ethanol than you do a gallon of gasoline or methanol. You have to stop and ask yourself why is it that they use fossil fuels to produce ethanol instead of using ethanol. By the time you factor in the energy cost of growing the corn and then going through the multiple refining steps it takes to go from 92% water 8% corn to 99.8% ethanol, It is without a doubt the most illogical choice for a renewable fuel source. This is without factoring the effect it has on food supplies.

  • http://www.E85Prices.com Dan McCullough

    Hello Bob,

    My greatest frustration is that nearly all ethanol slam News stories use a big image of E85. Nice to see e10 take the heat for a change

    E85 represents just 1% of all ethanol produced the rest goes to oxygenation/ E10.. as additives.

    To top it off the 51 cents blenders credit goes to..drum roll please.. the Oil Companies ! They do most of the blending .

    Why isnt the Ethanol Industry up in arms over this? Because along with their own production credit they have a ready buyer for 99% of their production..

    I’d love to defend the ethnaol Industry .. I do believe ethanol can be part of the solution (when used an as alternative fuel) to telling OPEC to take a hike . But the reality is ethanol it is far more financially beneficial for ethanol to produce an additive then it is to invest in developing out alternative fuels like E85 and actually compete.

    With e10 there is no “choice” no compettion between ethanol and oil ..simply peeing in the pool if you will by using ethnaol as an additive.

    As far as you guys losing 10-12% on e10.. Nice to see their are fisheman around ;)

    I have a 2003 Suzuki Aerio that I run E60 (splash blend) and lose maybe 4-5% and E85 I am adding is always in the 17-21% less per gallon range so I am coming out far ahead.

    2003 T Bird running E30 .. If there is a loss it isnt noticeable.again with the price spread in the 20% range ..easily offsets anything mpg loss anyways.Have run 4 vehicles on E85 (and or higher blends generally e60 range) ..not one ever being a Flex Fuel vehicle..

    Food Prices…

    The economist from the U of M that you quoted also said..

    I dont think anybody knows precisely how much ethanol contributes to the run-up in food prices, but the contribution is clearly substantial,? a professor of applied economics and law at the University of Minnesota, C. Ford Runge, said. A study by a Washington think tank, the International Food Policy Research Institute, indicated that between a quarter and a third of the recent hike in commodities prices is attributable to biofuels.

    It’s laughable..Here he is trying to link ethanol as the main contributer to increase in food prices.. and yet they post 1/4-1/3rd of the increase is due to ethanol.. Umm OK so maybe if we change the wording around we get a less alarmist view and somehting closer to reality..

    The fact remains that 3/4ths -2/3rds of the increase has NOTHING to do with ethanol.

    Oil went from $27 a barrel in 2003 to $120 range to day .. and yet the story is ethanol ? !

    Clearly corn ethnaol has contributed but to a far lesser degree than the media keeps pushing.

    That said I have no real love for ethanol as an additive (e10) because all it really does is create far to fast pace un-necessay growth that leads to speculation that leads to higher corn prices.

    The entire ethanol Industry needs to be placed in a position where they are competing with oil instead of sleeping with oil. Instead of blending ethanol as an additive …ethanol should only be used as an alternative fuel ..as a fuel of choice .. Creating an entirely new fuel market competing against the Oils gasoline products. That how we get lower prices at the pump for everyone when we have a Choice – Coke or Pepsi

    .Phase out ethanol subsidies for E10 unless that ethanol is produced from cellulosic material

    2. Maintain ethanol subsidies for E85

    3. Move the billions in credits we pay the oil companies to blend E10 to the installation of E85 pumps/tanks as well as installing blender pumps

    4. Blender Pumps- are ideal in that it allows the retailer to offer blends from e10, E20, E30, E60, E85 as well as a unleaded product.(again consumer choice)

    It gives the consumer Choice and creating competition for each fuel..thus lowering the costs of all fuels.

    It shifts the blenders credit closer to the retailer..which could then be ethanol company or an oil company.. moving the current blender credits away from oil and to the retail location would be the incentive.. ethanol and oil companies to install the blender pumps .

    To get the credit they have to blend with blender pumps AT the retail level.

    We have roughly 150 ethanol plants producing 7 billion gallons of additive and only 70 million gallons of any real alternative fuels (E85) .

    GM/Ford say half they production will be E85 capable in a little over 3 years .. and ethanol instead of investing in building out Stations/ Pumps is being allowed to cash in on creating an additive..

    If we move the subsidies away from e10 and to e85 then almost over night the demand for corn falls ..the speculation ends . It would take at least 5 -10 years for E85 (and other higher blends e30, E60) production to get back to the curent 7 billion gallons produced. The gowth would be far more rational keeping the get rich speculators at bay while still offering good solid long term growth .AND all the while giving consumers choice .

    By the time E85 would need any serious production cellulosic ethanol will be well past it’s toddler stage and contributing substantially to total ethanol production. GM is invested in Coskato whos process can take industrial waste incuding tires and turning even those into cheap ethanol

    The less money we are sending to funding OPEC and their blood soaked oil fields the better off we will be long term ..

    Look we sent VP Cheney just 3 weeks ago to Saudia Arabia begging for more production .. we the hell is our pride as a Nation ?

    Surely others are tired of having become subservient to the Middle East and to their Oil ?

    What do we get get 40% from that region? Thats all we need to replace to make me happy and I believe most Americans happy.. Same with this Iraq nonsense .. I believe most Americans would have been perfectly satisfied to spend $2 and have Bin Ladens head on a platter instead of this Iraq nonsense

    I’d trade ANWAR if we stopped making additives and turned all the ethanol production to E85 (or even E30, E60) As long a it is a real choice at the pump and Ethanol and Oil were placed in actual competition.

    Personally I dont have an problem paying 30 cnets more for my eggs to see this happen …

    E85 Prices

  • Wael ElAawar

    Hello sir, I have a project in USA of Ethanol I’m looking for investor 15.000.000$ to be partner with us .

    Now we are renewing the Ethanol project till 36.000.000 Gallons .

    Or I need 4.000.000$ to be credit and we will return it back in one year and we will offer you 8% from the project.

    you can contact me for my Email waelawar@gmail.com and you can call me for 009613273892.

    Now I’m in Lebanon Beirut.

    Best Regards

    Wael

  • Jeff

    What do you think happens to the “corn mash” when the process is complete? It is fed to animals. Hence no loss in food. Also since the gas is removed has it also not reduced the “gas” in cow farts? A leading cause of greenhouse gas.

    It just makes sense to remove the gas before it is fed to animals.

    Jeff

  • Dan

    I’ve been running E10 in my 2003 Chevy Silverado 1500 5.3L for about a year and a half now, ever since certain regions in Texas began mandating its use. I occasionally (6-8 times a year) fill up with the 0% ethanol stuff when I leave the E10 regions (cost is about 5% more for the gas with no ethanol)… I’ve CONSISTENTLY seen a 9-12% reduction in mileage due to the E10. I check my mileage with every tank (I have to – the fuel gauge is broken so I use the trip odometer, then fill up at a pre-determined mileage). No, I am not forgetting to account for highway mileage vs city mileage.

    E10 – 13.3 city / 16.5 highway

    E0 (the good stuff) – 14.6 city / 18.5 highway

    I custom blended about an E45 (calculated) using E10/E85 once. The check engine light came on pretty much immediately – I got 10.5 – 11 mpg or so, but the truck ran great. The check engine light went back off when I diluted the ethanol content back down to around 25-30%.

    So I figure if E10 costs 5% less but results in 10% worse mileage, then I’m probably not saving money. Maybe this is due to the way the “older” (2003) engines are tuned…

    On a side note, my motorcycle (carbureted V-twin) runs a bit rich on E10 but perfect on E0. The mileage seems to be about the same…