Is ethanol the solution to our energy problem? Of course not. But it’s the best we have right now.
One of the key reasons oil prices keep climbing is that oil has no serious competition. OPEC and other oil producers can raise prices because the rest of us will gladly pay for it. Well, maybe not gladly, but we do it because we have no choice.
Imagine if we had other sources of fuel from which to choose. Just the threat would force oil prices lower. But it has to be a serious threat. Today, we can make gasoline from coal, tar sands or shale. But in the U.S., there is no infrastructure to do so. Hydrogen may be the ultimate answer, but it’s even further off. Way further.
Bio-fuels are here today. The basic infrastructure is in place and growing fast. In the next few years, ethanol alone will meet 5% of our transportation energy needs. The Dept. of Energy figures that bio-fuels could meet 30% by 2025. Thirty percent is a lot!
Some say it takes more energy to make ethanol from corn than what you get out of it. What a bunch of hooey. It ignores new efficiencies in ethanol production made in the last few years. And bigger improvements are on the way thanks to bio-engineers supercharging the process.
Yet, we have to make sure the ethanol producers don’t get too greedy. Today, E85, a mixture of 85% ethanol and 15% gasoline, is priced too high. It needs to be roughly 20% cheaper than gasoline to make economic sense for consumers.
How do we keep ethanol prices low? Easy. We start by reducing the import tariff on Brazilian ethanol, which is about 50 cents a gallon. We don’t want to eliminate the tariff because we need to keep our home-grown ethanol producers healthy.
Next, we reduce the import tariff on sugar, which keeps U.S. sugar prices well above world prices. This is why American sugarcane growers don’t make ethanol like the Brazilians do. The sugar import tariff makes producing sugar much more profitable.
The real beauty of using E85 is that it greatly reduces petroleum consumption. And yet, in volume production, it only costs about $100 to convert a car to run on ethanol.
With an 85% ethanol mix, a big Chevy Tahoe uses far less gasoline than even the most-efficient hybrid burning ordinary fuel.
E85 and bio-fuels are sort of an insurance policy. They help protect us from oil supply interruptions and keep a lid on prices. That means we get the fuel we need at a cost we find attractive.
Just watch. The faster we displace crude oil with bio-fuel, the faster oil prices will drop – or at least not rise as much. Competition is the best way to keep a lid on the price of anything. Always has been.
John McElroy is editorial director of Blue Sky Productions and producer of “Autoline Detroit” for WTVS-Channel 56, Detroit and Speed Channel.