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 So the greater challenge is
to find new markets or expand existing markets for the consumption
of corn.
In the 1970s the addition of ethanol to gasoline began because the
current stabilizing additive, MTBE, was found to be contaminating
groundwater. By 2005 MTBE was banned in 20 states and the norm
became the addition of 10% ethanol to gasoline to raise the octane
level, and provide the needed oxygenating stabilizer.
Corn prices at the time were around $2 a bushel, and with the
nationwide adoption of E10 as a standard for automobile gasoline, it
is estimated that ethanol production added somewhere between 75
cents to $1 a bushel to the price of corn.
The aim in 1970 was to achieve energy self-sufficiency, avoiding
politically charged purchases and commitments for fuels to unstable
regimes in middle-eastern countries.
Today the aims have changed. With the expansion of shale oil
production in the gasoline industry we are now energy
self-sufficient and are now a petroleum exporter. The aim of ethanol
use now is for environmental protection and agricultural support.
Most gas stations in the U.S. sell a blend of gasoline and the 10%
ethanol produced mainly from corn goes to motorists driving
automobiles and light trucks. In 2011 the EPA cleared all
automobiles produced after 2001 to use E10. With government
subsidies, the ethanol industry grew, corn consumption grew,
independent ethanol producers went out of business and sold out to
big grain consortiums (like ADM and Cargill), and the farmers who
grew corn were rewarded.
In an attempt to grow the ethanol industry, new ethanol blends such
as E85 were produced and marketed. E85 is a blend of 85% ethanol and
15% gasoline, and still exists today. Approximately 11 million E85
flex fuel vehicles have been produced since their advent in 2008 but
only about one-half million of the E85 capable vehicles get fueled
with E85 gasohol today for two reasons: First, the availability of
E85 has been hampering E85 sales. Few gas stations were able to sell
E85 because of the infrastructure changes needed to support E85; and
second, drivers found that they got poor mileage from low-energy E85
compared to E10, and few continued to use E85 despite the lower
price.
In March 2009, a lobbying group, Growth Energy, formally requested
that the EPA allow the ethanol content in gasoline to be increased
to 15% from 10% for general consumption in the United States. Their
aim was for E15 to replace E10 as the automobile standard for cars
and light trucks produced after 2001. Growth Energy's motivation was
to expand the ethanol industry, and the result would be to expand
the consumption of corn. The EPA gave tacit approval, with the
restriction that E15 only be sold from October thru May each year.
Since ethanol requires great quantities of electricity to produce,
the EPA wanted to limit the production of E15 to reduce the amount
of carbon put into the atmosphere by coal burning power plants
during the high electricity production summer season (an Obama
administration environmental regulation).
This seasonal restriction prevented the expansion of E15. Service
station owners stayed with the old standard E10 rather than spending
significant money to expand for a fuel that was only used for 8
months a year. E15 was shelved except in a few markets, and is only
sold in 1,300 gas stations in 29 states currently. The major
problems are insufficient infrastructure and seasonal restrictions
by the EPA.
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In July 2018, President Donald
Trump said in a speech to Iowa farmers that he would work to lift
the E15 EPA seasonal restrictions and promised E15 sales year round.
The expansion from E10 to E15 would raise the consumption of corn
from 40% of the current crop to approximately 55% if E15 replaced
E10 nationwide according to the USDA.
The oil industry is actively
fighting E15 because the expansion of ethanol would mean a reduction
in the consumption of gasoline in the midst of a boom in the
production of petroleum fuels in the United States. The oil industry
has issued press releases and established websites listing the
hazards, dangers, ecological and economic reasons not to use E15,
much of which is full of innuendo, hyperbole, and outright
misdirection.
In addition to the opposition from the oil industry, E15 also faces
another hurdle. State governments currently provide sales tax
exemptions for the ethanol portion of E10 (a savings of 20%) but
there is no sales tax exemption presently for E15. Any service
station replacing E10 with E15 would immediately price themselves
out of the market to other stations that continued to sell E10.
In this time of prices impacted by global markets and trade
disputes, changing the nationwide standard for gasohol from E10 to
E15 would expand the market for the consumption of locally grown
corn and would hopefully raise the price to establish a baseline for
$4 a bushel corn in the United States. While it is fraught with
uncertainties and political promises, the expansion to E15 would be
a very good thing for Logan County producers.
References:
Wikipedia: "Ethanol fuel in the United States"
Fox 28: "Trump promises Iowa farmers E15 all year" by Matt Hammill
July 26, 2018
Iowa State Agricultural Policy Review: "USDA's Projections for 2018"
Genesis Communications Network: "The many reasons not to buy E15
gasoline"
Chicago Tribune: "Mandating E15 gasoline is a bad idea"
Illinois News Network: "Illinois farmers cheer Trump's E15 fuel
expansion plan" by Greg Bishop Oct 11, 2018
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