E85 Hindered by Availability, Efficiency

Posted on December 20, 2007 by LCT Staff - Also by this author - About the author

LIMA, OH — Despite the demand for a new, more efficient and more affordable automobile fuel, E85 and other alt-fuels have struggled to take hold of the market. According to Bill Timmermeister, an E85 station owner, ethanol remains a mystery to the motoring public, even in states that have pushed it hardest. The number of stations in the country selling E85, a fuel consisting mostly of ethanol, has jumped fivefold in the last three years, but it is still unavailable to the vast majority of motorists.

Americans drive millions of cars able to burn E85, but many do not even know it. Those who do are not always aware they must do some math every time they pull into a station to figure out which is cheaper, E85 or gasoline.

“This is the absolute best place for ethanol fuel to take off,” said Mr. Timmermeister, noting that Lima is on the eastern edge of the nation’s Corn Belt. “But will it happen? I don’t know yet.”

The ethanol industry is experiencing a historic boom, with record investment in new plants, more ethanol-burning cars on the road and rising public awareness. With Congress on the verge of passing an energy bill that will drastically ratchet up ethanol production, automakers are promising to build millions more ethanol-capable vehicles, universities are developing better methods to produce the fuel and big retailers like Wal-Mart are studying ways to bring it to consumers.

But enormous hurdles remain.

Most ethanol produced in the country is blended with gasoline in a mixture called E10, containing up to 10% ethanol. It can be burned in any engine and is generally sold in areas with air-quality problems because the ethanol helps to reduce certain pollutants.

The mixture called E85, a gasoline blend consisting of 70 to 85% ethanol depending on the season, could contribute more to reducing the nation’s dependence on oil if it were widely used. But it is available almost exclusively in the Midwest, far from the coastal regions where most Americans live and most cars are sold.

The number of stations selling E85 has jumped to 1,413, from 285 three years ago. But that is still fewer than 1% of the gas stations in the country. And the number of cars that can burn E85, about six million and rising, is still only 2.4% of the nation’s automobile fleet.

“It’s a classic chicken-and-the-egg problem,” said Brian Turner, analyst at the National Commission on Energy Policy in Washington. “There’s no demand because for most people the fuel just isn’t available. And it’s not available because the demand isn’t there.”

Even when people can find E85, they are often fooled by the price. It is almost always cheaper per gallon than gasoline. But because E85 contains less energy than gasoline, fuel efficiency drops 10% to 30%, depending on the vehicle. Recently, Arnold Foss, a retired farmer, drove to a Kroger gas station in Perrysburg, Ohio, to fill the tank of his 2003 GMC Yukon, which can burn E85 or gasoline. E85 at the station cost $2.73 per gallon, while regular unleaded was $3.13.

“I’m saving 40 cents a gallon with E85, and I don’t notice any difference in gas mileage,” Mr. Foss said.

“He’s wrong,” said David Champion, director of automobile testing for Consumers Union, the nonprofit organization that publishes Consumer Reports magazine. In its October 2006 test of the Chevrolet Tahoe, the sister truck to the GMC Yukon, Consumer Reports found that the giant sport utility vehicle’s average mileage dropped 27%, to 10 miles a gallon, when switched from gasoline to E85. Mr. Foss was actually losing more than 40 cents for every gallon of E85 he pumped.

A few small fuel retailers are building a business model that helps consumers at least break even. The MFA Oil Company, a farmers cooperative that sells E85 at 45 locations in Missouri, has lowered prices so it will always cost 20% less than gasoline, largely compensating for the lost efficiency.

Sales are up, but even the company’s busiest ethanol pump does only half the volume a gasoline pump would, and MFA admits it could probably make more money by sticking to gasoline. “We’re willing to take the risk to develop this market because our farmer members believe we’re doing the right thing,” said Tom May, the marketing director.

Bigger retailers are also testing the ethanol market, one reason the number of ethanol pumps nationwide has jumped. The Kroger supermarket chain sells ethanol at 42 stations and plans to install more pumps at its gas stations in Ohio and Texas, said Meghan Glynn, a spokeswoman.

Perhaps the biggest unknown for ethanol fuel right now is Wal-Mart. The retail behemoth is studying whether to install ethanol pumps at its stores, said Dave Tovar, a spokesman.

“Wal-Mart can come in as the big gorilla and blow the doors off the ethanol fuel market,” said Curt Magleby, director of government affairs at the Ford Motor Company.

The six million cars and light trucks able to burn E85 are known as flex-fuel vehicles; they adjust automatically to run on any mix of ethanol and gasoline. But most people who drive them do not know it because, until recently, it was rare for automobile dealers to mention the feature in their sales pitches.

The six million cars exist because flex-fuel vehicles cost only $100 more to build, and they provide special credits for Detroit that allow automakers to sell more gas-guzzling sport utility vehicles than would otherwise be allowed under federal mileage standards, said Therese Langer of the American Council for an Energy-Efficient Economy.

Lately, automakers have begun to emphasize the feature, and some flex-fuel cars come with yellow gas caps as a clue. Even so, most new cars — and hence most new ethanol-burning cars — are sold on the coasts, where high transport costs for ethanol make it difficult to sell E85, Mr. Champion said.

“Unlike with oil, there’s no pipeline for ethanol,” said Nathanael Greene, policy analyst at the Natural Resources Defense Council. “We can’t get the fuel to market at a reasonable price. That is the bottleneck right now.”

The ethanol market is glutted at the moment, but a big national switch to E85 would require far more of the fuel. By most estimates, the country can produce only about 15 billion gallons from corn without severe disruption of the food-production system. That much ethanol would displace less then 7% of the nation’s gasoline.

That means new technology is needed to create ethanol from sources like wood chips and straw, known as biomass. Turning those into ethanol could eventually displace more than a third of the nation’s gasoline, the Oak Ridge National Laboratory said in a report. The energy bill under consideration in Congress would require expanded ethanol production from both corn and biomass. Construction is beginning on small factories that will use biomass, but the economics have yet to be proved.

“When you’re talking about ethanol fuel, uncertainty is the name of the game,” said George Naylor, a corn farmer in central Iowa and president of the National Family Farm Coalition. “The whole thing is up in the air right now.”

SOURCE: New York Times

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