That cheaper E85 ethanol is a myth in Maryland

May 04, 2005|By Jay Hancock

IT'S CALLED E85. It's nearly pure ethanol fuel, made from fermented corn. It works in millions of cars (check your manual, Ford Explorer and Dodge Caravan owners), costs less than $1.50 a gallon in some places and "can reduce our dependence on foreign oil," say its backers.

So I drove over to the Fort Meade Service Center Chevron, which sells E85, to fill the tank with corn "likker" and interview the long lines of motorists waiting to save money and improve homeland security.

But there weren't any. The station's 85 percent ethanol blend - the same stuff that cost $1.47 a gallon yesterday at the Stagecoach BP station in Warren, Ill., according to attendant Donna Troxell - was going for $2.46.

That's 67 percent more for the Maryland E85 than the Heartland version. And it's more than high-test conventional gas costs in Maryland.

"It's so high the public's not going to use it," says Kevin Falls, owner of the Fort Meade Service Center.

What's going on here?

You might not want to know, but it's what passes for a national energy policy.

"I like the idea of people growing corn that gets converted into fuel for cars and trucks," President Bush said last week at a Small Business Administration conference. "Our farmers can help us become less dependent on foreign oil."

Sounds great when he says it like that. And it sounded great 25 years ago when President Jimmy Carter said ethanol - they called it "gasohol" then when it was in a blend - was part of an energy plan that was "the most exciting single undertaking in the last part of the 20th century."

Ethanol's flame has waxed and waned, but it's still burning a lot brighter in the political bloviosphere than in America's engines.

Soaking up close to $2 billion in annual federal subsidies, ethanol from Midwestern farms fills less than 3 percent of the country's gasoline demand. And that's despite a doubling of production since 2000 and record output for 2004 of 3.4 billion gallons.

One reason for the increase is ethanol's ability to substitute for the increasingly disfavored MTBE as an environmental fuel ingredient in states with bad pollution.

Ethanol's greatest use is as an additive - 10 percent or less - in close to a third of all U.S. gasoline. In an unsubsidized world, it might have a legitimate niche as a gas "oxygenate" or even as a primary fuel if oil prices go higher.

But we'll never know because the cumulative federal ethanol subsidy was $11 billion through 2000, according to government auditors, and about $1.8 billion last year, according to Monte Shaw, spokesman for the Renewable Fuels Association, the ethanol lobby.

Gasoline marketers get a tax credit of 51 cents for every gallon of ethanol they add to their blends. The subsidy and a similar predecessor are credited with keeping U.S. ethanol industry alive and, according to critics, wasting billions of taxpayer dollars.

"Just remove the subsidy," says David Pimentel, a Cornell University professor who has become Enemy No. 1 of the ethanol lobby. "That'll fix everything."

Instead of adding to the U.S. energy supply, ethanol burns up more energy to make than it supplies to consumers, Pimentel calculates. "We're importing oil to produce ethanol," he says, adding that ethanol-crop production promotes soil erosion and other pollution.

The Renewable Fuels people disagree on every point, especially the first. Every unit of ethanol energy takes only 0.6 of a unit of fossil fuel energy to produce, says Shaw, adding that petroleum enjoys its own government subsidies, and that most fuel used by ethanol plants is U.S.-derived natural gas or coal, not imported oil.

But even if we accept the association's claim that ethanol subsidies allowed the United States to cut oil imports by 143 million barrels last year - big deal. That's less than two weeks' supply.

The subsidies certainly aren't doing Maryland any good. Fort Meade Chevron owner Falls says Midwest distributors crank up his E85 cost because they know the Fort Meade government fleet is required to buy a certain amount of alternative fuel - no matter what the price.

He makes only 5 or 7 cents a gallon, he says.

So get this straight: As a taxpayer you're subsidizing the ethanol business to the tune of close to $2 billion so they can sell it to you, the taxpayer - via the National Security Agency at Fort Meade - at inflated prices. U.S. ethanol policy is still more about getting votes for Midwestern congressmen than doing anything about the energy problem.

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