The Auto Writer

The current state of ethanol production in the US simply isn’t that good and for two reasons mainly.

First of all, ethanol is being heavily subsidized by the federal government thanks to a 51-cent exemption from the federal excise tax on gasoline that goes to fuel mixed with ethanol. In addition, to protect U.S. farmers, the government slaps a 54-cent tax on imported ethanol including cheap ethanol derived from Brazilian sugar cane.

Second of all, in order for ethanol to be a better value than using gasoline, its price has to be at least 30% lower simply because ethanol is 30% less efficient than gas. In other words, a tank of ethanol burns at a rate .3 times faster than gas. Thus, a price chart showing ethanol costs on E85Prices.com though helpful, is not very accurate. Instead of using 15% as the price spread delineation, the percentage should be 30%. As the Reported E85 Prices-Last 30 days list shows, very few stations sell ethanol that meet that criteria.

One of the reasons why ethanol burns less efficiently than gasoline is that these engines were developed for gasoline, but converted for dual use. In Brazil, which is in the process of switching completely to ethanol consumption, engineers there are working on developing engines that close the efficiency gap. These same engines would be able to use any type of biofuel as well as consume gasoline.

Because ethanol is highly corrosive, fuel injectors, fuel tanks, intake systems, and exhaust systems must be modified for ethanol use. Brazilian engineers working for Robert Bosch Corp., for example, have been credited with developing an alcohol protected fuel injector that has been adopted globally.

There is a big concern that demand for corn-based ethanol is elevating corn prices and contributing to shortages as more than 20% of U.S. corn production is now set aside for ethanol. Feed prices are up which is pushing up meat prices as cattle farmers pass on their costs to consumers.

Finally, large scale cellulosic ethanol production, using products other than agricultural, is still a few years away, but when it becomes available it has the potential to shake up the ethanol industry and break our corn-based ethanol habit. Now if we can only break our addiction to foreign sources of oil!