Based primarily on information obtained from the Illinois Corn Growers Assn. (ICGA), the genuine cost paid by motorists for corn-based, ethyl alcohol-blended gasoline should be close to $2.90 per gallon, if all subsidies, taxes, delivery, retail markup and energy content are calculated.
The ICGA says the wholesale price of ethanol delivered to the Chicago area currently is $1.30 per gallon. As the first step, this translates into $2.13 on a gasoline energy equivalent basis.
If one then adds current motor fuel taxes (federal and Illinois state) — also on an energy equivalent basis — plus delivery and retail markup, ethanol's real-market price comes to about $2.65 per gallon. But one also must add in the subsidy paid to farmers in order to offset the difference between the price to ethanol producers and the corn production cost; ICGA says the subsidy is about 60 cents per bushel of corn; 2.5 gallons of ethanol are recovered from one bushel.
The ICGA counters this type of calculation with the point that if E85 (85% ethanol & 15% gasoline) were widely available, dedicated engines with higher compression ratios could take advantage of ethanol's higher octane. Engine engineers, however, say that the cooling effect of ethanol — thought to permit higher compression ratios — is offset by the fuel's lower spontaneous ignition temperature, which prevents higher compression.
As another point, ethanol advocates justify lavish subsidies said to be no different than the way gasoline was subsidized by the expensive Gulf War to insure Middle East supplies of petroleum.
The Environmental Protection Agency terms ethanol a “renewable” energy source, but ethanol contains less energy than is required to produce it.