The People of America's Oil and Natural Gas Indusry

Ethanol Policy, E15 and Real-World Impacts

Mark Green

Mark Green
Posted November 3, 2014

Sometimes the public policy debate occurs at an academic level, and it’s easy to overlook the impact on real Americans.  A good example is the campaign to push higher ethanol-blend fuels into the marketplace, which could negatively affect millions of consumers and hinder the broader economy. True enough, but we should also look at the real-world impacts of forcing increasing levels of ethanol into the fuel supply, impacts on individual Americans like Russell Garcia in Chicago.

Garcia owns five independent service stations in Chicago. He recently wrote a letter to the editor of the Chicago Tribune to point out the consequences of a city council proposal to require Chicago gas stations to carry E15 gasoline – fuel containing up to 15 percent ethanol, 50 percent more ethanol than the E10 gasoline that’s prevalent across the country.

Garcia wrote that E15 won’t deliver benefits promised by proponents, such as cost savings and environmental improvements. Instead, he wrote, it would impact consumers and small business owners like himself and ultimately be worse for the environment. Garcia:

The idea of mandating the sale of E15 gasoline in Chicago is poor public policy. … (M)y businesses would be negatively impacted by this mandate, and my customers would be harmed too. E15 provides no cost savings. While E15 has a sticker price that is about the same as traditional gasoline, its poorer gas mileage makes it more expensive. Plus, the cost of retrofitting new underground tanks at my stations and my competitors' would necessitate even higher gas prices.

Garcia’s letter continues:

Everyone would like to help the environment, but E15 doesn't do that. Several studies have concluded that the process of growing and manufacturing of corn-based ethanol produces additional greenhouse gases. The major automakers are telling customers to be careful when they use E15 because it will void most engine warranties if put into the tank; the vast majority of cars on the road are not compatible. For this reason, AAA has advocated the suspension of E15 sales nationwide since 2012.

Let’s look at Garcia’s points, starting with his last one.

Consumers – Individual Americans could bear significant individual costs with the introduction of higher ethanol blend fuel into the marketplace. Mr. Garcia is correct: Millions of vehicles on the roads today weren’t designed to use E15 – 90 percent, according to AAA – which is why automakers have said those vehicles wouldn’t be warranted for damage caused by E15, such as problems with engines and fuel systems. The chart below is a compilation of automobile makes and model years showing that in only a small percentage of them do manufacturers recommend E15 use:

manufacturers 

In addition, E15 used in small engines, such as lawnmowers and chainsaws, motorcycles and marine engines could cause damage – the costs of which could be borne by consumers, not the ethanol lobby.

Cost – Ethanol has 33 percent less energy that gasoline. Thus, fuels with higher ethanol content – E15 and E85 – get fewer miles per gallon than standard E10 gasoline. Consumers will have to fill up more often to go the same amount of miles. Play with the comparison tool on the Energy Department’s fuel economy website to see the performance and cost disadvantages of E85, which has been in the marketplace for a number of years now. 

Small Business ImpactNinety-four percent of service stations are independently owned and operated, like Mr. Garcia’s. If the Chicago E15 mandate went into effect, station owners there could be forced to install new storage tanks and other equipment that can handle E15, which is more corrosive than standard E10 fuel. This could cost owners more than $200,000.

Environment – Ethanol supporters often claim environmental benefits with higher ethanol blend fuels, but as Garcia notes in his letter, a number of authorities – including the National Academy of Sciences (using EPA data) – point to increased greenhouse gas emissions from the production of corn ethanol and its ultimate use in fuels.

The Environmental Working Group (EWG), in its 2014 report, “Ethanol’s Broken Promise,” found that federal corn ethanol mandates under the Renewable Fuel Standard (RFS) have driven up food prices, strained agricultural markets, increased competition for arable land and promoted conversion of uncultivated land to grow crops. EWG:

A few recent studies still claim that corn ethanol produces fewer emissions than gasoline, but a careful look reveals that their methods don’t properly account for land use change. Studies that do factor in land use change show that using food crops to produce biofuels – once considered a promising climate change mitigation strategy – is worse for the climate than gasoline.

And there’s this from the Clean Air Task Force:

If EPA had analyzed corn ethanol produced during 2010-2015 … the Agency would have found that corn ethanol’s net emissions over 30 years are approximately 28% higher than the emissions that would result from the use of gasoline over the same period.

Still more from the University of Wyoming’s Ingrid C. Burke, in 2011 congressional testimony:

“… the pollutant amounts emitted during the fuel-production phase (including feedstock production and transportation) are typically higher for corn-grain or cellulosic ethanol than for petroleum-based fuels.”

The RFS is an example of flawed central planning, holding that government can legislate/mandate the marketplace and consumer behavior. Unfortunately, flawed proposals like the one in Chicago could negatively affect regular Americans like Russell Garcia all across the country.

ABOUT THE AUTHOR

Mark Green joined API after a career in newspaper journalism, including 16 years as national editorial writer for The Oklahoman in the paper’s Washington bureau. Mark also was a reporter, copy editor and sports editor. He earned his journalism degree from the University of Oklahoma and master’s in journalism and public affairs from American University. He and his wife Pamela live in Occoquan, Va., where they enjoy their four grandchildren.