The People of America's Oil and Natural Gas Indusry

About Ethanol – Just The Facts, Please

Bob Greco

Bob Greco
Posted March 22, 2013

The Renewable Fuels Association (RFA) has been circulating a video titled “40 Facts about Ethanol.”  The first items demonstrate the growth in ethanol production over the past few decades:

  • 1982 – A handful of small ethanol plants produce 350 million gallons of ethanol
  • 1992 – 39 ethanol plants produce 985 million gallons
  • 2002 – 66 ethanol plants in operation, producing 2.14 billion gallons
  • 2012 – 211 ethanol plants produce 13.3 billion gallons

That’s 3700 percent growth in 30 years, pretty impressive. As the ethanol industry’s biggest customer, we have provided the demand to fuel much of that growth.  Unfortunately, RFA follows these statistics with a list of “facts” that couldn’t be further from factual, presumably to support the unworkable Renewable Fuel Standard(RFS) that is becoming increasingly difficult to defend.  Let’s take a look at a couple of the most problematic claims in RFA’s video:

“Last year, ethanol displaced an amount of gasoline refined from 462 million barrels of imported crude oil. That’s more oil than we imported from Saudi Arabia.”

First of all, ethanol is primarily an additive TO gasoline, not a replacement FOR gasoline.  Ethanol can only act as a replacement to gasoline when it is sold as E85 (fuel that contains up to 85 percent ethanol). More than 99 percent of ethanol sold is used as an additive to gasoline, typically making up 10 percent of a gallon of E10 fuel.  In 2012, only 100.2 million gallons of E85 were sold.  This means that ethanol sold as a fuel, rather than an additive, has “displaced” 50.7 million gallons of gasoline, after accounting for ethanol’s lower energy content, which we explained in a post last week.  To put this in context, the U.S. consumes approximately 352 million gallons of gasoline every day.

Additionally, every barrel of oil yields a range of products, including gasoline, that we use every day – from the tires on our cars to the heating oil that warms our homes. So there isn’t any circumstance where ethanol could replace a single barrel of oil.  Further, the U.S. is currently producing more than 7 million barrels of domestic oil per day, so to claim that all ethanol consumed is displacing “imported oil” is disingenuous.  Finally, as an example of RFA’s lack of adherence to facts, even if their claim was true, the U.S. actually imported 496 million barrels of oil from Saudi Arabia - more, not less, than the 462 million barrels for which RFA tries to take credit. 

“And it means the U.S. reduced expenditures on imported oil by $44 billion last year.”

The U.S. Census Bureau tracks foreign trade and reported earlier this year that the U.S. spent $18.7 billion less on crude oil imports in 2012 than in 2011.  This number is far lower than the $44 billion RFA takes credit for, and these savings are the result of increased domestic oil production, reduced fuel consumption due to the recession, more fuel-efficient vehicles and some biofuel consumption, not ethanol alone.

We would like to see RFA come to the table and work with us toscrap the current unworkable RFS and formulate a real policy. But this will not be possible if RFA instead prefers to pursue a campaign of false facts and misinformation.