Friday, October 15, 2010

Looking beyond the headline

On the surface, the Environmental Protection Agency's decision to allow higher concentrations (15%) of ethanol in gasoline sounds like a good move to halt the production of greenhouse gases. However, in reality, the costs of going forward will exceed the benefits.

The ethanol we mix with gasoline is a corn-based alcohol with a higher octane rating than conventional gasoline. The ethanol burns cleaner than the gasoline, reducing a car's exhaust emissions. However, the ethanol/gasoline blend you fill up with at the gas pump produces less energy than gasoline alone which means your fuel mileage will decrease. The 85/15 gasoline/ethanol blend will reduce fuel efficiency by approximately 25%.

The gasoline/ethanol blend costs the same as regular gasoline which means the cost of operating your car is higher due to the decreased fuel economy.

Then there's the cost, both economic and environmental, of producing ethanol. As ethanol is produced from corn, there is an increased demand for corn (and other feed grains), this, in turn, pushes feed prices higher which, in turn, pushes the price you pay for beef, pork or chicken higher. As more farmers try to squeeze higher yields from their cornfields, the demand for fertilizers increases. This pushes the cost of production higher. It also means that more petroleum products are used to produce fertilizer and that the amount of fertilizer run-off is increased. Since ethanol cannot be shipped through pipelines it has to be trucked to the refineries. Thus more diesel fuel is burned in transporting ethanol over the road - increasing the amount of diesel exhaust emissions.

Ethanol also costs far more to produce than an equivalent amount of gasoline. According to the US Department of Agriculture, the variable costs of producing a gallon of ethanol are $.96 while the capital costs are about $1.57 a gallon. So, while the average price for a gallon of gasoline in the US is $2.81, the average cost to produce a gallon of ethanol is $2.53! In order to make the product affordable, the federal government offers subsidies of between $1.05 and $1.38 a gallon.

Now I'm all for increasing fuel efficiency in cars and finding ways to reduce our use of natural resources, but increasing the amount of ethanol in gasoline is not the way to do it. This decision has less to do with conservation and more to do with income transfer and politics.

My point is not to accept at face value the story you're being told. Look behind the story. Look to the facts. Let the prosecutor tell his story -- then give the jury the opportunity to see behind the story. What didn't the prosecutor say? Why didn't he mention it? Let the jury come to its own conclusion.

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