Study Finds Certain Ethanol Blends Can Provide Better Fuel Economy Than Gasoline

"Optimal Blend" Is Likely E20 or E30; Coalition Calls for Further Government Research

SIOUX FALLS, S.D., Dec. 5 /PRNewswire-USNewswire/ -- Research findings released today show that mid-range ethanol blends--fuel mixtures with more ethanol than E10 but less than E85--can in some cases provide better fuel economy than regular unleaded gasoline, even in standard, non-flex-fuel vehicles.

Previous assumptions held that ethanol's lower energy content directly correlates with lower fuel economy for drivers. Those assumptions were found to be incorrect. Instead, the new research strongly suggests that there is an "optimal blend level" of ethanol and gasoline--most likely E20 or E30--at which cars will get better mileage than predicted based strictly on the fuel's per-gallon Btu content. The new study, cosponsored by the U.S. Department of Energy and the American Coalition for Ethanol (ACE), also found that mid-range ethanol blends reduce harmful tailpipe emissions.

What subsidies are people wailing about on ethanol?

A tax credit for blending in gasoline ($0.51/gal) and import tariffs that boost the price of ethanol imported from off-shore. I’m not going to complain about tariffs, since they’re the one form of taxation that is supported in the US Constitution from the get-go.

I’m not talking about the military support of oil access as a subsidy. You want to talk about that, go talk to liberals or Mikey Moore.

I’m talking about EXACTLY the same sort of thing you are, but of which you’re either unaware or are deliberately ignoring: tax credits for oil companies.

Oil exploration trusts, as well as pipeline companies, can set up tax shelters in master/limited partnerships to gain tax credits. By your definition of “subsidy” — the oil exploration and transport companies are receiving a “subsidy.”

Examples of MLP’s with tax advantages: San Juan Basin Royalty Trust (ticker: SJT), Kinder Morgan Energy Partners (ticker: KMP).

Full disclosure: I’ve owned both of these tax-advantaged trusts in the past, probably will in the future. I’ve also owned many other tax-advantaged MLP’s and trusts, both in the US and in Canada, in oil, natural gas and coal exploration/transportation/pipelines. Bought at the right time, and in sufficient amounts to justify the additional tax hassle at the time you file your 1040, they return excellent dividends (from 6 to 10% or more) and some losses thrown off (from depletion, foreign taxes paid, etc) you can use against your other income.

If you’ve never owned a MLP/trust that issues a K-1 instead of a 1099, you should check out the additional complexity BEFORE you buy one of these. Once you hit the “buy” button to buy one, you’re going to get a K-1 and the attending complexities.

You talk of the ethanol subsidies being “massive and permanent.” Let’s put aside the weight and density of money for the moment and deal with the permanence of these subsidies. The latest “farm bill” is already proposing reducing the blending tax credit to $0.45/gal.

Wait? I thought this was supposed to be permanent? How is it that the Congress is already proposing reducing this if this “subsidy” is permanent?

re: Consumers “forced” to buy the product. Consumers are also “forced” to buy cars that meet minimum crash standards that add mass to vehicles, thereby reducing the mileage. Consumers are denied choices of vehicles by emissions laws (eg, the idiotic Californian diesel emissions standards) that results in consumers being denied the opportunity to purchase very high mileage autos (50+MPG) from Europe.

If you want to complain about what consumers are forced to purchase, I’d go after the mass and diesel issues, which are costing consumers far more fuel and money than ethanol is.

Ethanol’s profit margin, BTW, has come way, way down in the last two quarters, both due to the higher price of corn inputs and the rapidly decreasing price (and increasing quantity) of ethanol out there. In some reports I’ve seen, the margins for ethanol are only slightly higher than XOM’s margins now. The oil industry has a PR problem they alone can solve, and not by buying stupid ads on NPR or PBS. Other fossil energy companies are expanding all the time - coal bed methane wells are spreading across Wyoming and Montana like jackrabbits, and new coal mining operations are opening in Wyoming and Montana.

I’m not talking about the military support of oil access as a subsidy. You want to talk about that, go talk to liberals or Mikey Moore.

Fair enough. There are ethanol supporters on this site who contend that military support is a subsidy to oil. We have no disagreement on this point.

An import tariff is still a tax. I do not want the import tariff on imported ethanol. What is the justification for an import tariff on imported ethanol?

You make a good point about oil exploration trusts. Real estate also has lots of special tax treatments. I suspect that ethanol production including farming has special tax treatments also. I am in favor of starting over on the entire income tax mess. I want to eliminate the corporate income tax or at least substantially lower rates across the board.

On balance, the oil and gas industry has no unfair advantages. The industry pays taxes at every stage of production, has numerous restrictions on development, and has many regulations. I am in favor of lessening these burdens so that supplies of oil, gasoline, and natural gas can increase.

You make some good points. All of these mandates are ridiculous. However, individual consumers want to buy autos and gasoline. I do not see any demand for ethanol except for the mandate. So I see the ethanol mandates as much worse.

Prof— You don’t know a horses rear from a tractor
tire. When Big OIL, speculators, and OPEC oil
ministers sponser hundreds of articles by numbrains
in the last few weeks, you can be sure that ethanol
is the right thing. It is way over a buck a gal less
pump gas prices and its 450,000 barrels of production
per day is holding down prices of the gas it is blended
into. It is a source of competition for OPEC and BIG
OIL and they don’t like. You complain of the tax credit
BIG OIl gets to blend and blame ethanol. That is crazy, blame BIG OIL who buys the congress. You say ethanol don’t need it, it is getting phased out and ethanol will still
be used more. The oil companies get 20-30 times tax
credits for their oil operations as the ethanol credit........why don’t that result in cheap gas....
well it does as gas might be a buck more without it.
The import tariff don’t mean beans as Brazil has hardly
any to spare to import.

My V8s get better miliage with ethanol blend as it
makes for cleaner burn, more efficient. It allows
earlier combustion timing for better power.
I for one want ethanol. I for one like the cleaner
air we have in part because we use oxgenators, and that is mainly the mandate, to clean up emmissions. And it adds
to the fuel supply.Farmers have increased corn production
in 10 years for feed and food 31%, plus the amount used
ethanol. There will be 7 billion gal of ethanol this
year, but the same process will produce high proein animal
feed that will make over 14 billion lbs of meat and other
products. Plus their still is the other 3/4 of the
corn crop for feed and food. There is no shortage just
higher prices driven up by speculators, like they have
done to oil. Granted it makes it hard for taxed types
to buy food to help the starving in Haiti, etc, so they
could take up a collection among speculators, oil execs,
ME terrorists, profs, etc, and deliver the food.......Ed

The inEd

When Big OIL, speculators, and OPEC oil ministers sponser hundreds of articles by numbrains in the last few weeks, you can be sure that ethanol is the right thing.

I have no idea what you are talking about. Big Oil is a term of the left and ethanol boosters. The money is on the other side with big corn. Your strong bias is showing.

That is crazy, blame BIG OIL who buys the congress. You say ethanol don’t need it, it is getting phased out and ethanol will still be used more.

Your statement is absurb. If big oil buys congress, why are the rats threatening to impose a windfall profits tax? Why can't the oil companies explore in ANWR and the outer bank? The ethanol tax credit is not being phased out. It may be lowered slightly from $0.51 to 0.45.

My V8s get better miliage with ethanol blend as it makes for cleaner burn, more efficient.

I am not sure about the ethanol blend. I have seen no data to suggest that ethanol blended gas gets better mileage. Typically, the mileage penalty is between 10% to 25%. There is a strong debate about the environmental impact of ethanol. Ethanol is being blamed for smog in Denver. The positive environment impact of ethanol are slight at best.

I for one want ethanol. I for one like the cleaner air we have in part because we use oxgenators, and that is mainly the mandate, to clean up emmissions.

I have no problem with your demand for ethanol. The problem is that people like you force the vast majority like me who do not want to use ethanol. The ethanol boosters and rats are forcing ethanol on the rest of us. The usage of ethanol is going far beyond its original use as an oxyenator. The oxyenator requirement was passed into law in 1996. We now have a mandate for 7 billion gallons going to 15 billion gallons.

You are mistaken if you do not think that the ethanol mandate has not had an impact on the price of corn and other farm commodities. The mandate has shifted the demand curve. There are certainly other factors involved also. Without the mandate, the price would drop substantially over the long run.

Here is the challenge to all the ethanol boosters. If your product is so great, drop the mandates, tax credit, and import tariff. The silence is deafening on this challenge. The corn belt is now living under a huge entitlement. The result is a boondoggle with high fuel and high food prices. Things sure are great on the farm however (at least with corn farmers).

It will be phased under the political pressure at a dime a year or more. I’m a right wing gun nut, I ain’t a lib.
I feel that as long as the public good can force me
to wear seatbelts, and if I get a new car it has to be
front wheel drive junk, and the costs of the stuff
on the car to get millage and safety, is pushed on
me, then the public good can force the use of fuel
that burns cleaner. My old Regency 98 got an extra
mile per gal with 10% blend. Anybody who ain’t an
egghead, knows that if a car goes down the road with cleaner emmissions that it will be more efficient,
with fuel of nealy the same btus per gal. Reg gas
is 115,000 btus. 10% blend is 111,000 btus per gal.
If the oxygenator gets the blend to burn 8% more efficient
you have gained back any btu difference and gained
4% more.

“Big Corn”-——Geez, the stupidest thing I’ve ever heard.
There was 14 billion bushels last year. A whole year,
a whole stinking year. There is that many gallons of
oil used up, from foreign and domestic, every 12 days.
And the same value of product comparing oil to corn, used
up every 18 hours. Oil is big corn is dinky.
That is why due to the small amount of value it represents
that the speculating money has affected it so bad.
Oil is big, corn is small, the high oil is what is making
the raising of corn nearly 605 moe in 3 years.
And if tht speculators got out of corn, by geing forced
to risk more on options, and the same for oil the
price of corn and oil would drop. Corn to a median price
so rthat the idle land can be put to use.We could the
3.5 billion bushels of corn ra to get ethanol needed
and more than that for feed/food, and big increases
in wheat, soybeans. etc. Just a median corn price and a
decent price on fuel(oil).

14 billion bu corn at 4.25 dollar average last year, got
farms 60 billion. It cost 50 billion to raise of
which fuel fertilizer, and other inputs affected by
oil , took up 4/5 of that. So you can see who is big,
and it ain’t corn. 3 yrs ago 12 billion bushels at
at about 2.50 price supports and all for 30 billion
of which cost were almost 30 billion, of which oil
got 3/4. No corn ain’t big..... oil is. And oil and
speculators are the driving forces in this country.ED

Very interesting. Though I don't know about the 20 -30 percent ethanol possibilities. Ten percent makes good sense though. A couple of posts ago someone complained about ground water pollution resulting from ethanol production. Duh, MTBE can be tasted at concentrations of less than one part per billion by most people. That stuff is nasty, it has to be replaced. There is a lot of it in our gas too, like five to ten percent.
Let's look at the food thing now. In 2002 we produced about 11 billion bushels of corn and used about 1 billion of those for ethanol production. This year we will produce 14 billion bushels and use about 3 billion for ethanol.The production of wheat. soy, sorghum, and all other major grains and feed crops is within yearly norms, some up a bit some down a bit. The bottom line the cost for the corn in your box of cornflakes has risen from about 6 cents to about 9 cents. Just like oil prices , and partially because of oil prices we are getting hosed at the supermarket.

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