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US consumers aren’t sure the ethanol math is adding up here as they
prepare for this year’s new federal mandate—they’re also not sure
whether it’s good for their car engines.
To wit: This year, the use of renewable fuels must rise to 16.55 billion gallons, and this means more ethanol and more ethanol-blended gasoline for cars. More specifically, US refiners will be required to use 13.8 billion gallons of corn ethanol—up from 13.2 billion gallons now--but this is too much to blend with gasoline.
Right now, the gas Americans are putting in their cars is about 10% ethanol, but even this hasn’t been approved by regulators for ALL cars. The Environmental Protection Agency (EPA) has approved the E15 blend—for newer cars--thanks to a lot of lobbying by the ethanol producers.
There’s also more because demand for gasoline and diesel has grown less than forecast back in 2007, two years after the Renewable Fuel Standard was enacted. Demand for gasoline and diesel is also expected to decline more over the next decade. What this means is that ethanol will be a larger percentage of fuels on the market at a time when it hasn’t even been approved for all vehicles.
Related article: Cooking Oil Gets KLM Across the Atlantic
The government (and the EPA) may have jumped the gun here. Consumer groups are balking at a mandate they think could harm vehicles and leave car-owners stranded without insurance in the case of ethanol-related damage. All the pieces weren’t put into place ahead of this mandate, and insurance companies are balking at the idea that they may have to fork out cash for any damage ethanol might cause to engines.
Testing has already indicated that old vehicles manufactured before 2001 could incur damage from fueling up with E15. It’s too early to tell what, if any, damage ethanol blends could do to a car’s engine, but according to Popular Mechanics, “the main issue is whether or not your vehicle will be covered under warranty for any damage caused by E15 usage, and in many cases the answer is no.”
On a broader level, AAA notes that “millions of Americans are unfamiliar with E15, which means there is a strong possibility that many motorists may improperly fill up using this gasoline and damage their vehicle. Bringing E15 to the market without adequate safeguards does not responsibly meet the needs of consumers.”
Related article: Exxon’s Algae Gamble 25 Years into the Future
Consumer groups are also concerned that the ethanol mandate will end up costing drivers more. For now corn ethanol is the only commercially viable domestically produced biofuel—and it’s also apparently 27% less fuel-efficient than gasoline. Consumers will have to buy more to go as far, according to geologist David L. Tyler.
The general consensus seems to be that we just aren’t ready for this great leap of faith in ethanol. According to Consumers Report, while the near-term advantages of ethanol look promising because it can be produced in large quantities and requires less complicated infrastructure and technology, there are still three main concerns about its viability as a fuel source: the diversion of food crops for biofuels, the lower energy potential and hence less fuel efficiency and the fact that we don’t yet know whether ethanol production increases or decreases CO2 emissions.
If we don’t know what to do with the 13.8 billion gallons we have to produce this year, what will we do in 2022, when the requirement is 36 billion? If consumer groups have their way, the ethanol mandate will be scrapped until the time is right.
They may get their way, in part: Two bills introduced into Congress seek to delay or ban altogether the sale of E15 gasoline.
Incidentally, the bizarre has already begun. With refiners required to use a certain amount of biofuels each year or buy credits in the marketplace, prices for ethanol credits have spiked to $0.75 from $0.02 just a few months ago. Traders are having a field day with RINs (Renewable Identification Numbers) awarded to each gallon of ethanol produced. These RINs are basically credits for ethanol to meet blending targets or sell off extra credits for over-blending.
Source : oilprice
To wit: This year, the use of renewable fuels must rise to 16.55 billion gallons, and this means more ethanol and more ethanol-blended gasoline for cars. More specifically, US refiners will be required to use 13.8 billion gallons of corn ethanol—up from 13.2 billion gallons now--but this is too much to blend with gasoline.
Right now, the gas Americans are putting in their cars is about 10% ethanol, but even this hasn’t been approved by regulators for ALL cars. The Environmental Protection Agency (EPA) has approved the E15 blend—for newer cars--thanks to a lot of lobbying by the ethanol producers.
There’s also more because demand for gasoline and diesel has grown less than forecast back in 2007, two years after the Renewable Fuel Standard was enacted. Demand for gasoline and diesel is also expected to decline more over the next decade. What this means is that ethanol will be a larger percentage of fuels on the market at a time when it hasn’t even been approved for all vehicles.
Related article: Cooking Oil Gets KLM Across the Atlantic
The government (and the EPA) may have jumped the gun here. Consumer groups are balking at a mandate they think could harm vehicles and leave car-owners stranded without insurance in the case of ethanol-related damage. All the pieces weren’t put into place ahead of this mandate, and insurance companies are balking at the idea that they may have to fork out cash for any damage ethanol might cause to engines.
Testing has already indicated that old vehicles manufactured before 2001 could incur damage from fueling up with E15. It’s too early to tell what, if any, damage ethanol blends could do to a car’s engine, but according to Popular Mechanics, “the main issue is whether or not your vehicle will be covered under warranty for any damage caused by E15 usage, and in many cases the answer is no.”
On a broader level, AAA notes that “millions of Americans are unfamiliar with E15, which means there is a strong possibility that many motorists may improperly fill up using this gasoline and damage their vehicle. Bringing E15 to the market without adequate safeguards does not responsibly meet the needs of consumers.”
Related article: Exxon’s Algae Gamble 25 Years into the Future
Consumer groups are also concerned that the ethanol mandate will end up costing drivers more. For now corn ethanol is the only commercially viable domestically produced biofuel—and it’s also apparently 27% less fuel-efficient than gasoline. Consumers will have to buy more to go as far, according to geologist David L. Tyler.
The general consensus seems to be that we just aren’t ready for this great leap of faith in ethanol. According to Consumers Report, while the near-term advantages of ethanol look promising because it can be produced in large quantities and requires less complicated infrastructure and technology, there are still three main concerns about its viability as a fuel source: the diversion of food crops for biofuels, the lower energy potential and hence less fuel efficiency and the fact that we don’t yet know whether ethanol production increases or decreases CO2 emissions.
If we don’t know what to do with the 13.8 billion gallons we have to produce this year, what will we do in 2022, when the requirement is 36 billion? If consumer groups have their way, the ethanol mandate will be scrapped until the time is right.
They may get their way, in part: Two bills introduced into Congress seek to delay or ban altogether the sale of E15 gasoline.
Incidentally, the bizarre has already begun. With refiners required to use a certain amount of biofuels each year or buy credits in the marketplace, prices for ethanol credits have spiked to $0.75 from $0.02 just a few months ago. Traders are having a field day with RINs (Renewable Identification Numbers) awarded to each gallon of ethanol produced. These RINs are basically credits for ethanol to meet blending targets or sell off extra credits for over-blending.
Source : oilprice
Sign up before Midnight to watch our video,
“Biggest Ponzi Scheme in U.S. History to Crash,”
and get our daily e-letter Investment Contrarians.
We respect your privacy!
We will never rent/sell your e-mail address.
That’s a promise! And you can opt out at any time.
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