So what is ethanol? According to the American Coalition for Ethanol, “ethanol is a clean-burning, high-octane fuel that is produced from renewable sources. At its most basic, ethanol is grain alcohol, produced from crops such as corn.” Ethanol is produced “similar to beer and hard alcohol,” when “the corn is ground and mixed with enzymes to break it down… Yeast is added, creating alcohol, carbon dioxide and the scent of a brewery.” One farm in Arizona, Pinal Energy, decided to build an ethanol refinery nearby and hopes to sell its product within Arizona. (Randazzo). The ethanol is then blended with gasoline to create either E10, a ten percent ethanol ninety percent gasoline mix, or E85 an eighty-five percent ethanol fifteen percent gasoline blend.
Some groups are trying to create a “super ethanol” from waste sources such as “sewage sludge, switchgrass, plant stalks, trees, even coal -- virtually anything that contains carbon.” (Heargraves). Native prairie grasses grown on degraded farmlands can improve soils, and require less energy to grow and harvest. The technology is not as far advanced for these sources as it is for corn, but creating fuel from our waste has obvious benefits.
The processes used to make corn ethanol have been criticized for creating more demand for energy than they satisfy. Consuming energy in the production process, farmers must plant, fertilize, irrigate and harvest the corn using machinery that requires fuel. The corn must then be transported to refineries, refined, and transported to fuel stations using more energy. Ethanol cannot be transported through pipelines without degrading and therefore must be transported by truck.
Many U.S. citizens believe that because it is domestically produced, from renewable resources, ethanol helps reduce America's dependence upon foreign sources of energy. This has been called into question by some experts. By some estimates, the process of growing and making ethanol will realize only a 20 % energy savings for the gasoline replaced. But others point to innovations in farming to claim that this is an inaccurate figure. Farming practices are always evolving more efficient practices like any other industry and some estimates of the energy derived from corn based ethanol do not take this into account. The claims very widely with some saying it will save energy while others claim ethanol use will cost us more energy. The technology for making ethanol and growing corn seems to be constantly evolving and many producers are trying new methods.
In addition, the fuel efficiency of ethanol blends have been called into question by the Detroit News Weekly. "Cars modified to run on E85, consume on average between 20 and 30 percent more fuel than those operating on gasoline.” (Winton). Comparing these cars to those that run on diesel gasoline, we find that burning E85 “will use almost 50 percent more fuel.”
Arco currently blends its fuel with ethanol creating a ten percent ethanol mixture. They report on their website that this increases the savings to their customers. Another benefit they stress is that this is a renewable domestic source. However they acknowledge that the product results in a one to three percent loss in fuel economy. Thus the ten percent savings in oil consumption that would seem to be the result of selling E10 should be reduced to take into account the more frequent fill ups that customers will require. This ten percent blend seems good on the surface by reducing our consumption of foreign oil, but it needs to be tempered by the reduced utility of the blend.
The jury is still out on whether ethanol use will benefit America. Until ethanol’s production processes are settled and fuel efficiency is studied there is not really an accurate way to anticipate whether President Bush’s goal of twenty percent reduction in foreign sources of oil will be realized.
In the meantime, the side effects of producing energy from corn, a significant food crop, are beginning to surface in our economy. In anticipation of high demand for corn, and therefore high corn prices, corn farmers are planting corn everywhere. The USDA expects farmers “to plant 90.5 million acres of corn, the largest area since 1944 and 12.1 million acres more than in 2006.” That is a fifteen percent increase in corn acres over 2006. Ag Weekly in June reported that “corn prices [hit] above $4 a bushel several times this year, compared with a 10-year average price of about $2.50 a bushel.” (Villagran). When supply is short of demand, as is currently the case with corn, the shortage will drive up the price levels, and therefore profits, for corn farmers. A dramatic increase in the amount of corn supplied will be necessary to meet the anticipated demand for ethanol. So far, increased production has not been enough to avoid price level increases. According to the Washington Post, “If every one of the 70 million acres on which corn was grown in 2006 was used for ethanol, the amount produced would displace only 12 percent of the U.S. gasoline market.” (Tillman, Hill).This is short the twenty percent goal of the Bush Administration and would not provide corn for any of its many current uses. Corn is used in many food products from corn syrup based products like soda and candy, to feeding animals for meat and dairy products. In the future, more arable land needs to be developed to meet the increased demand, but for now the affect has been to substitute corn for other crops in existing fields to try to fill the shortage.
In anticipation of higher profits, corn is displacing rice, cotton and soybeans in fields. The USDA reports a fifteen percent reduction in soybean planting this year, seven percent reduction in rice, and eleven percent less soybeans. This practice has upset equilibrium prices across the economy by upsetting supplies of these resources resulting in higher prices for products such as clothing, and soy products. Even Starbucks has seen costs go up as milk prices rise. (Sullivan). Until the supply of corn becomes stable, prices will to be affected in many areas not anticipated by average Americans. This kind of ripple will continue until a new equilibrium is found.
So will ethanol use reduce our dependence on foreign oil for energy? It appears that with the current fad of corn based ethanol it could, but at a high cost to other necessary products we buy. It is becoming apparent that its use will not save us money. However, innovations are abundant and may provide the answer to the problem. In balancing our need for food and fuel, the market will eventually settle on a favorite product that will satisfy the demands currently placed on it by our government and Americans who want affordable food production and to reduce our dependence on foreign sources of oil.
American Coalition for Ethanol. “Ethanol 101”. Ethanol Today Magazine. Accessed 7 July 2007.
Arco Gasoline FAQ. Accessed 20 July 2007.
Bohrer, Becky. “Louisiana cotton acres about half as corn draws attention.”Ag Weekly. 3 July 2007. Accessed 7 July 2007.
Hargreaves,Steve. “Super Ethanol on its Way.” CNN Money.com. 26 June 2006. Accessed 7 July 2007.
Tillman, David. Hill, Jason. “Corn Can’t Solve Our Problem”. Washington Post. 25 March 2007. Accessed 7 July 2007.
Oxford Analytica. “Ethanol Boom Requires Careful Management.” Forbes.com. 9 March 2007. Accessed 7 July 2007.
Randazzo, Ryan. “Corn to fuel, Arizona facility brews new ethanol.” The Arizona Republic. 23 July 23 2007. Accessed 24 July 2007.
U.S. Govt.WhiteHouse.gov. “President Bush delivers State of the Union.” January 2007. Accessed 10 July 2007.
Sullivan,Todd. “How Ethanol Hurts Starbucks”. Forbes.com. 18 May 2007. Accessed 10 July 2007.
U.S. Government. USDA. “Corn Acres Expected To Soar In 2007, USDA says Ethanol, Export Demand Lead to Largest Planted Area in 63 Years.” 30 March 2007. Accessed 24 July 2007.
Villagran, Lauren. “Soybean prices hit daily trading limit.” Ag Weekly. 29 June 2007. Accessed 7 July 2007.
Winton. Neil. “Diesel efficiency likely to trump even subsidized ethanol.” Detroit News Weekly. 3 July 2007. Accessed 7-7-7.