03.25.2014 Found this link just now. While most modern and current cars are no longer at risk of damage from ethanol mixes in gasoline, the economics and ecology of that dumb idea do damage many!

01.08.2014 Even Snopes.com has updates on this stupid mistake...

At the end of 2013, the EPA announced it was reducing the amount of ethanol that must be blended into gasoline in 2014 (in part because the overall demand for gasoline in the U.S. has dropped), requiring transportation fuel companies to blend 15.21 billion gallons of ethanol into the nation's fuel supply in 2014, down from 16.55 billion gallons in 2013. Critics of the EPA's blending requirements pointed out that the announcement came just four days after the Associated Press published a lengthy investigative article documenting substantial environmental harms caused by ethanol which concluded that "The ethanol era has proven far more damaging to the environment than politicians promised and much worse than government admits today":
Ethanol mandates have spurred farmers to grow corn on relatively unproductive land that remained undeveloped prior to the mandate, the Associated Press observed.

“Five million acres of land set aside for conservation — more than Yellowstone, Everglades and Yosemite National Parks combined — have vanished on Obama's watch. Landowners filled in wetlands. They plowed into pristine prairies, releasing carbon dioxide that had been locked in the soil. Sprayers pumped out billions of pounds of fertilizer, some of which seeped into drinking water, contaminated rivers and worsened the huge dead zone in the Gulf of Mexico where marine life can't survive," the Associated Press reported.

“The consequences are so severe that environmentalists and many scientists have now rejected corn-based ethanol as bad environmental policy. But the Obama administration stands by it, highlighting its benefits to the farming industry rather than any negative impact."
Last updated: 14 January 2014

02.05.2008: Thanks, Rolling Stone Magazine:

"The Ethanol Scam: One of America's Biggest Political Boondoggles" From Issue 1032 , JEFF GOODELL, Posted Jul 24, 2007 1:36 PM

05.15.2007: Thanks, zFacts.com,

Corn ethanol: 2/10 of 1%, max GHG reduction

THE LIMITS OF CORN

UC Berkeley's Renewable and Appropriate Energy Lab, is pro-ethanol, and they do good work. They have reviewed about 10 of the best ethanol studies, corrected them, and produced the best compromise estimate. Their value for GHG reduction is even lower than the one used by zFacts. It would put the GHG savings at less than 0.1% in 2017 when corn ethanol has pretty much maxed out.

Berkeley put the GHG savings at 13% in their Science article, then corrected it to 8%. Then the Academy of Sciences published a new study in July 2006, and came in at 12%. zFacts used the more optimistic 12%.

Using this value, the energy in ethanol, the amount of ethanol that USDA says can be produced in 2017, and DOE's total GHG emissions for the US, you will find a reduction of 0.13%. zFacts rounded that up to 2/10 of 1% to be generous in our headline.

The bottom line for climate change and corn ethanol:
Maximum feasible corn ethanol production will have an undetectably small affect on GHGs, but will have serious negative environmental impacts.
Besides failing to help with GHGs and having serious environmental problems, corn ethanol subsidies are very expensive, and the political backlash in the next few years, as production and subsidies double, will damage the effort to curb global warming. "

02.03.2007: Thank you, Agora Financial's Rude Awakening, dailyreckoning.com

A Corny Idea
By Byron King

Did you know that corn is a type of food? If you do, then you may have keener insight than some people who write headlines at The New York Times. I mention this because of the rather curious headline above a Jan. 5, 2007 article in the business section of the Times: "Rise in Ethanol Raises Concerns about Corn as a Food."

Huh? OK, let me see if I follow the logic. The background issue is that the world needs to find substitutes for its depleting supplies of oil and natural gas. We know that. We also know that ethanol is one of those potential oil substitutes. People have been running vehicles on ethanol for well over a century. And we know that a lot of corn is presently being diverted to manufacture ethanol. Even so, doesn't corn remain a food first and a fuel second?

The Old Gray Lady framed the food-versus-fuel issue in the first paragraph of the story:

"Renewing concerns about whether there will be enough corn to support the demand for both fuel and food, a new study has found that ethanol plants could use as much as half of America's corn crop next year."

What? The U.S. will use half its corn crop next year to manufacture ethanol? This raises a kernel of concern with me.

As I am sure you all understand, corn that is used to manufacture ethanol will not be available for other things, like eating. Nor will this ethanol-destined corn be used to feed other animals, or turned into other foodstuffs, let alone exported to raise foreign exchange for the U.S. And of course, the price of corn will rise.

So corn-based food, and products derived from corn, will become more expensive. And I know, so you don't have to remind me, that farmers will respond to the price signals and grow more corn. But I hope you also realize that the farmers will do this by using more tractor fuel, fertilizer, pesticide, herbicide, and myriad of other substances derived from oil and natural gas. There is no free lunch...or free corn.

The U.S. currently has 116 ethanol plants in production. But new plants are sprouting up across the United States. According to a recent study by the environmental group Earth Policy Institute, 79 ethanol plants are currently under construction in the U.S. When completed, by 2008, these new plants will more than double the annual U.S. ethanol production capacity, to 11 billion gallons. In addition, there are at least 200 more ethanol plants in the planning stages in the U.S.

The forecast annual U.S. production of 11 billion gallons of ethanol translates into about 262 million barrels. Sounds like a lot of fuel, until you adjust for the energy density of ethanol, which is far lower, only 59.5%, than an equivalent barrel of gasoline. The standard, accepted measurement of energy density for ethanol is 26.8 megajoules per kilogram. This clearly compares unfavorably with the energy density of gasoline at 45 megajoules per kilogram.

In other words, 262 million barrels of ethanol will yield 60% less energy when burned than an equivalent volume of gasoline. We won't go into a long discussion of that just now. Nor will we get into the energy return on energy investment (EROEI) of ethanol, which is about break-even at best. No, we won't go there. Let's take a look at some telling comparisons...

262 million barrels of ethanol per year translates into about 718,000 barrels per day. (Divide by 365 days in the year.) In terms of volume, this is the energy equivalent of replacing about two supertankers full of imported oil every day. OK, not bad, and this looks like a lot of fuel if you are standing next to one of the two supertankers, but it is a drop in the bucket of U.S. national aggregate demand for liquid fuel – less than 3.5% of U.S. daily oil consumption of about 21 million barrels.

Another way to look at it is that each ethanol plant, on average producing 3,680 barrels of product, will yield the ethanol equivalent of what is commonly considered to be a small onshore oil field. But consider the EROEI of ethanol for a moment. On an ongoing basis, the oil field is producing oil with only the "energy input" of the pumps that lift the oil out of the ground. Even today, with oil drilling occurring in remote locales, in deep waters, and with wells that penetrate to great depth, the EROEI for the world oil industry is estimated to be between 25- to-1 and 30-to-1.

By contrast, the ethanol plant requires far more energy to operate, on an ongoing basis, than does the oil field. The EROEI for corn-based ethanol, produced in the U.S., has been estimated at anywhere between .8-to-1, or below the break-even point, and the slightly energy-positive 2- or 3-to-1, depending on who is doing the calculating. Even if you grant the high number, it is clear that producing ethanol from corn provides about only one-tenth the EROEI of current oil drilling (3 for ethanol, versus 30 for oil drilling).

Here is another comparison. 718,000 barrels of ethanol per day is somewhat less than the amount of oil that the U.S. produces daily from its vast array of humble, old stripper oil wells, about 900,000 barrels per day. According to the U.S. Department of Energy, the U.S. has 393,000 oil stripper wells in service. And there are about 260,000 natural gas stripper wells in service. These wells are typically operated by small, independent companies and pull product out of older fields that are long past their peaks.

The definition of a stripper well applies to oil wells delivering no more than 10 barrels per day and gas wells delivering no more than 60,000 cubic feet per day. Clearly, therefore, the stripper well industry is not in any way capable of supplying the U.S. with anything approaching its cumulative daily energy demand for liquid fuel. And the corn-based ethanol industry is still quite a bit smaller than the stripper well industry.

Lastly, wrap your brain around this comparison: The amount of grain that is required to fill a 25-gallon tank with ethanol, one time, could otherwise feed one person for a year. So will the U.S. really wind up converting one of its largest food crops into a massive fuel crop? The answer is no.

According to the statistics, as published in The New York Times, no less, ethanol production from existing plants and plants under construction is on track to consume about half of the U.S. corn crop. In some localities of the U.S. Midwest, almost all corn is already under agreement to be sold for ethanol production, essentially leaving no corn for other local farming needs. This will certainly cause a ripple effect throughout many farming communities, all the way to the shelves of the grocery stores. And according to Cornell researcher David Pimental, if the entire U.S. grain crop were converted to ethanol, it would still only satisfy about 15% of U.S. automotive fuel needs.

The take-away point here is that the full-court press now ongoing in the U.S. to build plants and manufacture ethanol from agricultural corn will not provide any sort of long-term energy salvation for the nation. Rather, it will destabilize the nation's food supply and disrupt traditional export patterns, all for the sake of converting fossil-fuel based inputs into ethanol. From a national security standpoint, therefore, large-scale ethanol production from corn will not make the nation more secure in any measurable way. We would still need to important billions of barrels of crude oil to produce our billions of barrels of ethanol. In fact, based on current technologies, we would consume about 5 to 8 billion gallons of oil equivalent (boe) to produce the 11 billions gallons of ethanol we expect to produce by 2009. I would hardly call that "energy independence."

Maybe there is a better idea out there for making ethanol from cellulose waste products. And it is not as if a diversity of energy resources is ever a bad idea. So some production of ethanol from corn makes sense. But sometimes, just because something is a good idea, it does not necessarily follow that more of it is a better idea. It is the same thing with corn-based ethanol. Pro-ethanol agricultural, industrial, transportation, and tax policies will not provide the country with anything like the volumes of motor fuel that it needs to run the existing transportation grid. And manufacturing ethanol from corn will dramatically disrupt the U.S. food supply. Eventually, the nation will reap what it sows.

and on to part II....

A Corny Idea, Part II
By Byron W. King

Is ethanol a good investment?

For a corn farmer, yes. For an ethanol producer, maybe. For a national energy policy, probably not. For a long-term investor, unlikely.

Let's dig a little deeper...

Most investors have at least a basic understanding of the concept of Return on Investment (ROI). ROI is the ratio of how much money an investor gains or loses on an investment, relative to the amount of money invested. That is, you buy a stock for $100 per share, and sell it later for $110 per share, for a profit of $10 a share. In this example, the $100 you used to buy the stock is the "investment" and the $10 profit is the "return." So $10 is your "return on investment." ROI is an extremely valuable tool for calculating the degree of investment profitability. Ideally, you want to deploy your investment funds to the most profitable efforts, and certainly avoid the money-losing propositions.

A similar concept operates in the world of energy production. That is, the concept of Energy Return on Energy Investment (EROEI) is the ratio between the amounts of energy you expend to obtain a resource, compared with the amount of energy you receive from that resource.

Although the academic study of EROEI is, for the most part, of relatively recent vintage, EROEI is a fundamental sort of concept. EROEI has deep roots in the iron laws of thermodynamics, and the immutable realities of geology and biology. But despite its solid scientific basics, EROEI tends to be rather an alien concept to most policymakers, economists...and investors.

The best way to keep it straight in your mind is to focus on the point that anything that requires or consumes more energy to obtain than it yields is not a practical energy resource over the long haul. At the most fundamental stage, when the EROEI of something becomes equal to or less than 1, that energy source becomes what is called an "energy sink." It can no longer realistically be used as a primary source of energy because it consumes more energy than it yields.

For example, think about the energy that it takes to drill an oil well. It requires energy to manufacture the steel pipe and drill bits. It takes energy to construct and run a drilling rig. It takes energy to run the pumps that lift the oil from the well. And when you compare the energy value of the oil that comes out of the well, with the energy input to make the well, you can arrive at a general value for the EROEI for oil drilling.

Many decades ago when most oil was found and extracted from near-surface, onshore fields, the EROEI for oil production was about 100-to-1. That is, for every unit of energy that went into an oil well, you pulled 100 units of energy out. This very favorable ratio is one reason why oil was so downright cheap for so many decades. Even today, with oil drilling occurring in remote locales and in deep waters, the EROEI for the world oil industry is estimated to be between 25- to-1 and 30-to-1. As the world's depleting oil reserves become trickier to locate and develop, oil's EROEI will certainly continue to fall. Ominously, for frontier exploration over the past decade, EROEI has been estimated as low as 8-to-1. But guess what? 8-to-1 is still about three times higher than the most flattering estimates of ethanol's EROEI.

Chemically speaking, ethanol is a form of alcohol based on the ethane molecule, containing two carbon atoms. As opposed to methanol, commonly known as wood alcohol, ethanol is the kind of alcohol that you can drink (but not to excess, please.) Ethanol has a relatively high energy density, although it only has about 60% of the energy density of standard gasoline. Still, you can burn ethanol in a properly modified automobile engine, up to and including NASCAR racers. And ethanol can be handled, transported and distributed relatively safely, without the need for expensive and heavy cryogenic or high-pressure systems, which are required for gaseous fuels like methane gas, propane or butane.

And ethanol, say some promoters, is a "renewable fuel." This usually assumes that the ethanol is produced from fermented biomass such as corn in the U.S., or sugar cane in Brazil. But upon closer inspection, "renewable" seems like a gross misnomer. The EROEI for corn-based ethanol, produced in the U.S., has been estimated at anywhere between .8-to-1, or below the break-even point, and the slightly energy-positive 2- or 3-to-1, depending upon who is doing the calculating. Even if you concede the highest ratio, it is clear that producing ethanol from corn provides about only one-tenth the EROEI of current oil drilling (3-to-1 for ethanol, versus 30-to-1 for oil drilling). And the higher EROEI estimates for ethanol tend to discount the need to use oil- and natural gas-based inputs for corn farming, such as for tractor fuel, fertilizer, transportation and process heat for manufacturing the ethanol.

You need more than just fresh air and sunshine to grow corn. And if conventional, fossil fuel-intensive U.S. agriculture is the basis for growing corn, then what currently passes for "renewable energy" production is really more of an "energy trade." In particular, oil and natural gas are used in great quantity to grow and harvest corn, which is then converted to ethanol. So at the end of the process we are merely trading one form of non-renewable fossil fuel for the illusion of another, so-called renewable kind of fuel. The claimed environmental and long-term sustainability advantage of corn-based ethanol in the U.S. is simply not going to be realized because, viewed as a system, the net result is a negative fuel balance.

Brazilian ethanol, on the other hand, is estimated to have a rather respectable EROEI of 7- or 8-to-1, and even up to 15-to1. This is because Brazil produces ethanol from high-yielding sugar cane, in a tropical climate, using an agricultural system that is far less dependent on fossil fuel inputs than is the case in the U.S. Brazil has been developing its ethanol industry for over 30 years, and the EROI has improved over time, as Brazilian agronomists and technical personnel have gained knowledge in the field.

The bottom line is that corn-based ethanol does not "save" all that much oil or natural gas, and may well be a one-for-one trade in terms of net energy produced. The U.S. is not gaining anything by focusing on the manufacture of corn-based ethanol. By throwing resources into corn-based ethanol, the U.S. will not supplant its dependence on foreign oil, nor produce a truly viable, large-scale alternative to gasoline consumption.

Investor beware.

Thank you, John Mauldin and InvestorsInsight for publishing this:

The possibility to produce oil/ethanol out of agricultural products. On this very topic, the best summary we have read of the issues at hand was produced recently by our friend Mark Anderson, the editor of the SNS newsletter. We lift his work below shamelessly: "Ethanol is a liquid fuel, currently produced from corn... Now here's the rub: there is a debate about whether it actually takes more energy to create a gallon of ethanol than the energy contained in a gallon of ethanol. According to Report No. 814 from the Office of the Chief Economist of the U.S. Department of Agriculture, corn ethanol contains 1.34 times the energy required to manufacture it.

It is clear that the manufacture of ethanol from corn is not very energy-efficient, and through its production process, ethanol's cost is strongly linked to international energy costs.

The wholesale price of a gallon of ethanol was recently in excess of $5, but has now fallen to less than $4. Last year, the price of ethanol was $1.30 per gallon. The escalation in price reflects an increase in demand as gasoline refiners began adding ethanol into their fuel products.

GM proudly claims that it has at least 1.9 million vehicles on the road that can use E-85 (gasoline with 15% ethanol content). But are consumers actually going to buy significant quantities of E-85 in place of gasoline with a high ethanol price?

Fortunately, there are a number of ethanol refineries under construction and due to come on-line in the next 18 months. With an increase in supply, we can expect a reduction in price, bringing the pump price of ethanol more in line with the pump price of gasoline. With the price of ethanol more competitive with gasoline, we should have no problem eventually reducing our dependency on gasoline. Except for one little fact....

Even if the cost of a gallon of ethanol production were equal to that of a gallon of gasoline, the energy content of a gallon of ethanol is less than that of a gallon of gasoline. The effect is to reduce the "gas mileage" of a car operating on ethanol by about 66%, which means that about 33% more ethanol than gasoline is required to drive a fixed distance. Therefore, to be economically competitive with gasoline, the pump price of ethanol actually must be no more than two thirds the price of gasoline.

The US government, at the urging of corn producers, provides a subsidy for refining ethanol of $.51 per gallon ($21.42/bl). Conversely, a gallon of gasoline is not subsidized at all. [my note: Not exactly true, considering Depletion Allowances, etc., to the oil industry, right?] Guess why all the ethanol refineries are being built. With the incentives in place, the ethanol refiners are making tidy profits from each gallon sold. To make matters worse, we are physically limited by how much corn-based ethanol we can produce by the amount of land that can be converted to growing corn, which is aggravated by the fact that only the grain is used to create ethanol.

There are, however, alternative methodologies for creating ethanol. The simplest near term solution would be to use sugar cane in place of corn as the feed stock. This simplifies the refining process and requires less energy. Unfortunately, the U.S. government imposes a tariff on sugar cane to improve the competitive position of corn syrup (yup -- the same special-interest group that is behind the corn-ethanol subsidies). This tariff acts as a disincentive to make ethanol from sugar cane. This must have been an oversight in our comprehensive national energy policy.

There are longer-term solutions. In a period of about five years, we could be producing ethanol in quantity from cellulose. Cellulose is found in a variety of plant material, including the stalks of the corn plant. The process for production of ethanol from cellulose does not require large amounts of hydrocarbons and is, therefore, much less expensive. If the federal government continues to provide large subsidies for corn-derived ethanol, however, we are in effect providing a disincentive to make capital investment in cellulose technology. The corn lobby will fight tooth and nail, but in the end, democracy, just like the free market, has a way of doing what is right and sensible (usually, after trying out all other options). In this case, that would see cellulose derived ethanol become widely available in the marketplace.

Thank you, Alan Reynolds and Jaguar88 at www.priuschat.com.

Energy piracy

June 30, 2005

The Senate voted 85 to 12 in favor of a 768-page grab-bag full of subsidies, tax breaks, loan guarantees and mandates. They describe this, gratuitously, as an "energy bill." The Congressional Budget Office (CBO) estimates that "implementing the bill would cost $5.1 billion in 2006 and $35.9 billion over the 2006-2010 period."

Despite the bill's well-worn rationale of reducing energy imports, the senators obviously don't expect all that pork to make a dent in energy imports. They therefore pass the buck to the White House to somehow reduce U.S. oil imports by 1 million barrels per day from levels "projected" for 2015.

Imports are projected to rise from 10 million barrels a day to 13.3 million by 2015. The Senate's quixotic proclamation that someone else should trim that figure by 1 million amounts to a confession that it expects its bill to have even less effect than that, and that it expects imports to rise 22 percent in 10 years.

The actual objective of these new energy bills, like those that came before them, is to give away the maximum amount of taxpayer's money. President Bush is likewise eager to sign anything called an energy bill, so long as it has what it takes to placate those who contribute sufficient money to politicians to feel entitled to feed at this trough, such as ethanol producer Archer Daniels Midland. That is why the House bill required that 5 billion gallons of corn-derived ethanol be added to the gasoline supply annually by 2012, and why the Senate upped that to 8 billion.

The lobbying behind this ethanol crusade has been deceptive or delusional. A May 26 Associated Press story spoke of the ethanol industry "lobbying blitz arguing that 8 billion gallons of ethanol would replace 2 billion barrels of crude oil."

Well, there are 42 gallons in a barrel of crude oil, so we would need 84 billion gallons of ethanol -- not 8 billion -- to replace 2 billion barrels of crude. But we would actually need much more than 84 billion because there is much less energy in a gallon of ethanol than a gallon of gasoline. A math whiz at www.reformclub.blogspot.com calculated it would take 156 billion gallons of ethanol to replace 2 billion barrels of crude.

Eight billion gallons of ethanol is a drop in the bucket, and that drop won't replace a drop of petroleum. Ethanol cannot be produced from corn without wasting huge amounts of petroleum. Petroleum is needed to fuel farm machinery, to produce fertilizer and insecticide, and to transport the corn and ethanol by diesel truck or train.

Former CIA Director R. James Woolsey noted in congressional testimony this April that if ethanol is produced from corn, then "it takes about seven gallons of oil to produce eight of ethanol."

He went on to say, "(Alan) Reynolds clearly does not understand the comparatively small amount of fuel required to produce cellulosic ethanol" from farm waste.

What I understand is that hoping to get much fuel from farm waste is technically speculative and politically naive. The CBO says, "The technology that would be used to process ethanol from such sources (agricultural residue) is new and is not well-proven." Besides, the farm lobby would never allow much ethanol to be produced from anything except new crops of corn or sugar (or soybeans for biodiesel).

Ethanol already gets an indefensible tax break at the pump of 51 to 71 cents a gallon, but Congress now wants to compel everyone to add it to their tanks. But doing so would leave us with less fuel at higher prices. Why? Because there is much less energy in eight gallons of ethanol than in the seven gallons of gasoline it takes to produce it.

In his June 15 speech, President Bush said: "Ethanol comes from corn -- and we're pretty good about growing corn here in America; we've got a lot of good corn-growers. Therefore, it makes sense to promote ethanol as an alternative to foreign sources of oil. Ethanol can be mixed with gasoline to produce a clean, efficient fuel. In low concentrations, ethanol can be used in any vehicle. And with minor modifications, vehicles can run on a fuel blend that includes about 85 percent ethanol and 15 percent gasoline. Ethanol helps our farmers find new markets ..."

Efficient fuel? Check the official mileage estimates at www.fueleconomy.gov. A Dodge Stratus gets 20 miles to the gallon in city driving on gasoline, but that drops to 15 mpg on E85 (the 85 percent ethanol fuel) -- and highway mileage drops from 28 mpg to 20 mpg.

A Ford Explorer is rated at 16 mpg in the city and 21 on the highway, but those figures drop to 12 and 16 on E85. If gasoline were $2 a gallon, E85 would have to sell for about $1.40 to compete on a cents-per-mile basis. But E85 doesn't come close to being competitive even with huge subsidies. The Economist got that all wrong -- it didn't check the mileage.

Even the 10 percent ethanol blend Congress is so eager to force upon us would reduce fuel economy. People would notice. Do legislators imagine that pleasing a few corn farmers will bring them so many votes that it won't matter if they anger millions of drivers?

"We're trying to encourage people to make right choices in the marketplace," says the president. He believes those who can afford a 400 horsepower 2007 Lexus GS 450h (hybrid) should get a $4,000 tax credit because they made the "right choice." A hybrid Chevy Silverado truck is a right choice -- a Chevy Cobalt is not.

If the actual point of these energy-subsidy bills were to economize on motor fuel or reduce its cost, then the most obvious "right choice" for consumers is to never let anyone add even a drop of corn-based ethanol to your gasoline.

For Congress, the right choice would be to end all subsidies to producers of flexible fuel vehicles and end all tax subsidies for consumers of fuel containing corn-based ethanol. The people need to encourage politicians to make the right choices, not the other way around.