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Bryce (NY Times) and ethanol: The whole truth and nothing but the truth

E85 pumpWhat’s up with the Manhattan Institute for Policy Research? While I often don’t agree with the scholars who write for it, I find its articles and books thoughtful and provocative.

My question concerning the Institute derives from a desire to build a now absent civil dialogue concerning policy issues affecting the U.S. The Institute, when a reasonably informed national dialogue on policy existed, was an important participant. Now, that it has been lost, the Institute’s agenda and body of work offers hope that it can be resurrected someday soon. In this context Robert Bryce’s article in today’s New York Times, “End the Ethanol Rip-Off” concerns me. His article is filled with factual and interpretative errors that skew his conclusions concerning the Renewable Fuel Standard (RFS).

Bryce asserts that corn ethanol is responsible for significant environmental problems particularly related to land use, harvesting and processing fuel. He also states that it generates higher food costs, and that it damages small engines. Finally, according to the author, ethanol’s price has been and is generally higher, much higher, than gasoline. The only thing he left out is that ethanol is the cause of global warming, the Israeli-Palestinian conflict, unemployment, the trial and tribulations of Miss America contests and bouffant hairstyles in Texas.

No fuel used now in America is perfect. Certainly, the DNA of gasoline, which Bryce seems to champion, is much more harmful to the environment, and the nation’s need to reduce GHG emissions. Gasoline use also reflects significantly more public health problems and continues the nation’s dependence on imported fuels.

Let me try to summarize some of the facts that Bryce overlooks or does not seem to know:

  1. Although a cleaner burning fuel, E10 (10 percent ethanol) blended with gasoline does result in a small energy content gap that requires a purchase of additional E10 gasoline to secure mileage equivalency. But, up until recently, the lower price of E10, compared to gasoline, has more than made up for mileage differentials and slowed down the upward trend of the price of gasoline and put downward pressure on prices.
  2. E85, which the author does not mention, has been approved by the EPA for certain vehicle classes. Like E10, its use does result in lower mileage per gallon when compared to gasoline and also results in more mileage per BTU. The mileage gap is lower than the gap that Bryce indicates in his article. Again, before the decline of gas prices , the gap was more than made up by the lower costs of ethanol and its’ increased efficiency.
  3. There is no real consensus on the food vs. fuel debate. The World Bank has changed its position on this globally over the years and the Congressional Budget Office (CBO) has suggested that if there is a negative effect on food, it is very minor. Indeed, while the food vs. fuel argument has not yet been settled, most experts agree that increased oil prices contribute to increased food prices. The food vs. fuel argument has reflected an “on the one hand, on the other hand” dialogue. Perhaps more relevant, particularly with respect to corn, there are land use and processing techniques now being introduced that would mitigate possible problems. Certainly, corn is not in short supply and the price of corn to the consumer has not spiraled up significantly.
  4. The author also neglects the fact that natural gas- and cellulosic-based ethanol (as well as other feedstocks) maybe on the horizon. Investors have delayed involvement, primarily because of uncertainty concerning the market and gasoline prices. Its advent will likely lessen food vs. fuel issues and help lesson environmental concerns.
  5. Bryce suggests that ethanol, (again, he refers to E10 in his article), has a negative effect on engines. Most of the independent analysis of the impact of ethanol on engines, E10 as well as E15 and E85, suggest differently. The EPA has approved the sale of each blend with certain vehicular limitations with respect to E 15 and E 85.

Bryce spends much time talking about the cost to the consumer of ethanol and the so-called ethanol tax. Curiously, given his location in the Manhattan Institute, he neglects to mention the significant cost to the consumer of the failure of oil companies to open up the gasoline market to alternative fuels like ethanol. Try going to a “gas” station to buy E85 or to charge your electric vehicle. Good luck finding one near your home or easily on a long trip. Through tough franchise agreements, oil companies eliminate competition around the nation. I suspect the imputed tax caused by the oil companies’ monopoly or almost-monopoly position is quite higher, much higher, than the tax that Bryce suggests results from ethanol use. The Institute should pay for a copy of Adam Smith and give it to the author.

Bryce’s article does not really contribute to a needed transparent debate over Renewable Fuel Standards or the wisdom of alternative fuels. It mixes up concepts and facts concerning energy content, car performance and efficiency. It sweeps over serious issues with respect to food vs. fuel and the environment with a broken brush or broom. Its conclusion concerning ethanol and implicitly other alternative fuels is inconsistent with his assumed anti-regulatory position and belief in the market place. We need such a debate, one that reflects a comparison between alternative fuels such as ethanol and gasoline as well as one that accommodates a needed transitional strategy between alternate and renewable fuels.

 

Photo Credit: East TN Clean Fuels Coalition

NYT columnist: Gas really isn’t all that cheap

It’s about time somebody pointed out that gas, while cheaper than it’s been in the past few years, isn’t all that cheap, really. If you look at history.

New York Times business columnist David Leonhardt did just that, pointing out that the national average for regular unleaded — $2.03 per gallon — is “still more expensive than nearly anytime in the 1990s, after adjusting for general inflation. Over a 17-year stretch from the start of 1986 to the end of 2002, the real price of gas averaged just $1.87.”

Leonhardt notes that the era of cheap gas coincides with the “great wage slowdown.”

One of the surest ways to end the great wage slowdown would be for the United States to make sure it’s entering a new era of cheap energy. “It’s the proverbial tax cut,” says Daniel Yergin, vice chairman of the research firm IHS and author of a Pulitzer Prize-winning history of oil. If energy costs remain at current levels, it would put $180 billion into Americans’ pockets this year, according to Moody’s Analytics, equal to 1.2 percent of income and a higher share for lower-income households.

That’s why taking virtually every step to push oil costs even lower — “drill, baby, drill,” as the phrase goes — would make a lot of sense, so long as oil use did not have harmful side effects.

Ah, but it does have side effects. Leonhardt adds:

It leads to carbon emissions, which are altering the world’s climate. Last year was probably the planet’s hottest since modern records began in 1880, and the 15 hottest have all occurred since 1998. Oceans are rising, species are at risk and some types of severe storms, including blizzards, seem to be more common.

More oil production, then, involves enormous trade-offs: a healthier economy, at least in the short term, but a less healthy planet, with all of the political, ecological, health and economic downsides that come with it.

Leonhardt writes that it’s possible, in part, to retain the benefits of increased oil output without the drawbacks. Hydraulic fracturing is less carbon intensive than conventional oil drilling, although fracking comes with other issues. “Clean energy” offers a good solution, he says, “if it could become even cheaper.”

Read before you download: What the critics said about PUMP

PUMP hit theaters around the country in September, and now it’s about to hit the digital landscape.

You can download it on iTunes now. You can watch the trailer, and learn more about the film and the experts who made it such a success, at PumpTheMovie.com

PUMP was a hit with the public and the critics: On Rotten Tomatoes, 85 percent of viewers said they liked the film, while 73 percent of critics gave favorable reviews.

You should do yourself a favor and read some of these reviews yourself, though: The critics who saw PUMP had very nuanced, well-thought-out views, giving the important issues raised in the film the proper weight.

Below are excerpts from some of the bigger media outlets that reviewed the film. Read all about it, then watch the film and tell us what you think!

The Washington Post:

” … the movie makes compelling points. More important, the film suggests both long-term and short-term solutions.

“… if consumers hate oil so much, why aren’t there more readily available alternatives?

“That’s the question the documentary keeps circling back to, which is a smart approach because it’s aimed at appealing to both eco-conscious liberals and fiscal conservatives.”

The New York Times:
“… the arguments have an appealing logic for those concerned about the environment.

“… the movie goes beyond alarmism with solutions that on the surface would seem to find common ground between environmental advocacy and unfettered capitalism.”

The Hollywood Reporter:
“The historical overview they provide is insightful and lucid … The headline is that most cars on today’s roads could easily run on non-petroleum fuels that are cheaper, cleaner and more plentiful than gasoline. At the heart of the doc is ultra-practical information with the potential to galvanize a broad audience.

“Their thesis transcends red-state/blue-state polarities.

“The shift from quiet how-we-got-here outrage to hope, in the form of hands-on specifics, torques Pump and gives it momentum.

“… the eye-opener is that millions of American vehicles are already equipped to switch between gas and ethanol.

“Pump offers a map to true competition à la Brazil’s, and argues convincingly that there would be profound and wide-ranging benefits if American car owners were in the driver’s seat.”

The Los Angeles Times:
“Viewers of ’60 Minutes’ will experience déjà vu during vignettes on Elon Musk’s Tesla Motors and Brazil’s exemplary national conversion to ethanol, but ‘Pump’ ventures a step further to explore the practicality of flex-fuel vehicles in this country and methanol as another fuel alternative.

“As far as documentaries go, the film is exhaustively researched, interviewed and documented. Its disclosure that General Motors declined multiple interview requests earns the film some credibility where other advocacy docs fall short. It arms advocates with plenty of well-reasoned and compelling talking points …”

Variety:
“This zippily edited docu aims less to chastise than to emphasize that solutions to our oil addiction and much-vaunted desire for energy independence are tantalizingly close at hand.

“For unabashed agitprop, ‘Pump’ is quite entertaining, drawing together colorful archival footage, interviewed experts and ordinary folk, as well as sojourns to China (in the wake of its economic boom now the world’s largest market for cars) and Brazil (whose shift to ethanol production brought prosperous energy dependence), in a lively, professional package.”

The Oregonian:

“The most convincing testimony comes from John Hofmeister, a former president of Shell Oil who has switched sides. But the real stars of ‘Pump’ are the hackers and engineers who’ve devised cheap and easy ways to convert vehicles to flex-fuel capability.

“The inability of our capitalist economy to exploit this untapped market is puzzling until the filmmakers get to the part about the massive political donations made by Big Oil. Switching from gasoline to a cheaper, more environmentally friendly, domestically available fuel won’t address the other negative consequences of car culture — urban sprawl, traffic congestion, increased obesity — and neither does the film. But by pointing out simple things that could make huge differences, it’s a solid first step.”

Bloomberg BusinessWeek:
“This is the second feature about ending America’s dependence on oil from the wife-husband team of Rebecca Harrell Tickell and Josh Tickell. They’re tub-thumpers, but not shrill. Their thrust is roughly that cars = freedom. Americans love their freedom, and they sure do love their cars. Yet strangely, car- and freedom-loving Americans lack freedom of choice when it comes to what their cars run on. What gives? Oil is far from the best fuel for an automobile—not even close, if you factor in extraction costs, energy security, and pollution.

“Determined not to dwell on the negative, Pump introduces us to hobbyists, entrepreneurs, and even indie service station owners already making the break from petroleum.”

Village Voice:
“A car’s high beams trace slow-motion lightning across the highway. An auto worker in suspenders strides the factory floor. These seductive images of the American automotive industry act as dreamy parentheses to Josh and Rebecca Tickell’s compelling and cogent documentary Pump, which examines why Americans are so lacking in options at the gas station, what that means about the future of transportation and environmental health, and why the oil-driven American Dream must die — why it is dying.

“By carefully tracing the history of the oil companies’ legislative and consumer power and influence, the directors explore America’s issue of substance dependence, and indict the companies that act as enablers. If you’re not convinced we’re addicted, ask yourself if you could quit at any time.”

Reuters’ Breakingviews:
“A narrow focus helps “Pump” make its point clearly. The filmmakers don’t take on global warming or automobiles. Their solution is simple and straightforward: introduce competition at the gas station and let the invisible hand do the rest.

“Demand for alternatives, including electric vehicles from Elon Musk’s Tesla, is … growing alongside a crude backlash. On Monday, for example, the Rockefeller Brothers Fund, an $860 million philanthropic organization that owes its existence to the Standard Oil fortune, said it would divest from fossil fuels. The collective effect of all these efforts, including the message from ‘Pump,’ may just help fuel a trend.”

The Source magazine:
” ‘Pump’ makes clear one thing: oil is used in everything, from clothing to furniture, plastics to medicine and, yes, even engines to power cars. And increased demand leads to, you guessed, higher prices. ‘Pump’ explores this in a holistic, appreciative and thoughtful way.

‘Pump’ explores a range of alternative fuels including ethanol, methanol, natural gas among others, but never suggests humanity stop driving cars altogether. It would be a major technological step backward, damaging decades of effort. Instead, ‘Pump’ offers reasonable, grassroots-style progress that enables anyone to make a sustainable change.”

Cinemacy:
http://cinemacy.com/pump/

“One thing was made clear to me, we have a right to choose how we fuel our cars and that right is not being acknowledged by the government or big oil companies, which means the responsibility for change lays solely on us.

“The unpredictable cost of fuel, coupled with the damaging effects to our environment and our dependency to over-seas oil rigs is a scary future that we find ourselves looking at today. We are forced into limited choices at the pump, which only creates a stronger foreign dependency and a wealthier fuel monopoly. The message Pump presents, once you get past the numbers game, is simple: American made replacement fuels will equal more jobs, a healthier environment, and a stimulated, growing economy.”

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NYT: Keystone vote solved nothing, provided no new insights

The U.S. Senate failed, by one vote (as some observers predicted), to advance legislation demanding that President Obama approve the Keystone XL pipeline.

New York Times opinion-page writer David Firestone says the debate surrounding the vote — 59 senators approved, including 14 Democrats, leaving the measure shy of the 60 “yeas” needed to avoid a filibuster threat — was a “pointless” one that played into Republican hands:

The bill to approve the pipeline failed by one vote, and even if had passed, it would almost certainly have been vetoed by President Obama. The debate provided no new insights into the value of the pipeline, or its liabilities, and it changed no one’s mind.

As for why Democrats sought to push their own pro-Keystone bill during a lame-duck session before Republicans take over as the majority in the Senate in January, The Times opines that it amounted to a last-ditch and probably futile effort to save Sen. Mary Landrieu’s job. The Louisiana Democrat is competing against Congressman Bill Cassidy, who got his own pro-Keystone bill approved in the House, for Landrieu’s seat in a runoff election next month.

The Times’ coverage of Tuesday’s approval of the Senate measure includes a section on the lengths Landrieu went to convince colleagues to pass the measure:

At the lunch, Ms. Landrieu made an “impassioned plea” that at moments verged on tears, according to a Democrat. Ms. Landrieu, according to the Democrat, focused part of her pitch on how the legislation would help her back home, though at one point she argued that Democrats should send the bill to Mr. Obama’s desk because it would help him politically by giving him something to veto.

So what happens next? The president has the final say on whether the 1,179-mile pipeline extension gets built, regardless of what happens in Congress. But the next Congress could force him to either approve the bill (possibly after trading for something from Republican leadership) or veto it.

A Q&A in Wednesday’s NYT hints that the new, more heavily Republican Senate that convenes in January “may be able to muster a nearly veto-proof majority,” considering their ranks will swell from 45 to 54 (assuming Landrieu loses). But they need 67 votes to override a presidential veto.

New rules would require treating Bakken crude before transport

North Dakota’s top energy industry regulator unveiled new rules on Thursday that would require oil companies to reduce the volatility of crude  before it is shipped by rail.

The regulator, the mineral resources director Lynn D. Helms, proposed to the North Dakota Industrial Commission that all crude from the state would have to be treated to remove certain liquids and gases to “ensure it’s in a stable state” before being loaded onto rail cars. “The focus is safety first,” Mr. Helms said.

Oil trains in the United States and Canada were involved in at least 10 major accidents in the last 18 months, including an explosion in Lac-Mégantic, Quebec, that killed 47 people.

Read more at: The New York Times

NYT editorial: Keep up search for energy alternatives

The New York Times editorial board has a reasonable take on the falling price of oil, enumerating several winners and losers.

Low prices, obviously, are good for consumers. But they’re bad for countries that don’t have diverse economies, and for people promoting alternative forms of transportation fuel.

“It’s bad for the environment because cheaper oil means fewer incentives to develop alternative and less carbon-intensive sources of energy,” the editorial states.

“… it is imperative that the United States and all other beneficiaries resist the temptation to use what could be a fleeting drop in prices to slow the search for alternative sources of energy. The planet, alas, does not have the resilience of oil prices.”

Garage filling stations — are we getting close?

One of the greatest appeals of switching to an alternative-fuel vehicle — electric, compressed natural gas or hydrogen — is saving money and freeing yourself from the clutches of foreign oil. But another is being able to supply your own fuel from a garage filling station where you may even be able to generate some of it yourself.

All this takes on a certain air of necessity when you realize that most of the infrastructure for recharging or refilling is not yet in place. In many cases, the garage may be the best option right now. So let’s run down some of the different options available and see how they stack up as being economical and practical.

Let’s start with the easiest one — electric cars. There are three types of chargers available to owners of a Prius, Leaf or Chevy Volt. The first is a Level 1 “trickle” charger, which is just a basic 120-volt line that plugs into any three-pronged outlet. This is the standard plug-in for all EVs. The problem is the amount of time it takes for a complete charge. For the Leaf, it takes close to 21 hours, which means that you can’t even do it overnight. For hybrids there’s some leeway since you can always revert to the gas motor and do some brake recharging as well. But if you’re planning to rely completely on a home outlet, you’d better have a second car.

More favorable is a Level 2 240-volt circuit. If you have an electric clothes dryer in your house, you’re already equipped. If you don’t have a 240-volt system at home, installation is easy enough. It will require a 40-amp circuit breaker, which may need a permit from the local building department, but the job is simple enough. Recharging time will be cut to less than eight hours, enough for an overnight. Plugincars.com puts the price at $600 -$700, although vendors such as ClipperCreek lists some for less.

If you really want to go really high-tech, you can move up to a Level 3 480-volt power supply that can give you an 80 percent charge in half an hour. The whole package costs $30,000, but with federal tax breaks and some help from the car companies, you can get it down to $10,000. Nissan offers a unit for $9,900. You could probably recoup some of the costs by recharging EVs for your neighbors, but you might need a zoning variance.

So how about compressed natural gas? What are the options there?

The Honda Civic is the only CNG passenger vehicle being sold in the United States. (Most of the progress has been with delivery trucks and long-haul trailers.) There are currently 1,000 CNG filling stations across the country, but half of them belong to companies that are using them for their fleets. Only about 500 are available to the public. So, unless you’re traveling along an Interstate and can make it to one of Clean Energy Fuels’ new truck stops, you’re going to have a hard time.

Refilling at home, however, isn’t all that impractical. More than half the residences in the country are equipped with natural gas for home heating, cooking or hot water. The trick is to get a device that can compress this household gas to be used in your car.

Honda originally offered a home refueling kit, the Phill, which costs $4,500 and could do a refill overnight. Honda stopped making the offer after 2012; however, due to concerns about the widely varying quality of non-commercial gas and the possibility of home devices allowing moisture to collect in the fuel system. For those willing to take the chance, the Phill is still available from its manufacturer, BRC FuelMaker. The question is, “Why is it so expensive when the same pump would cost 10% if it filled air bottles?” There is a regulatory review needed to reduce the cost.

Seeking to promote the technology, the Department of Energy (DoE) handed out grants a few years ago to encourage companies to develop affordable home systems. Now one of them may have come through. The Eaton Corporation of Cleveland, already prominent in the field of electrical charging stations, announced in 2012 that it plans to market a CNG home refueling device by 2015. “The system will use liquid to act as a piston in compressing the gas,” says Chris Roche, vice president at Eaton’s Innovation Center. “We have also developed an innovative heat exchange technology that will improve efficiency and cut costs dramatically.” Eaton is aiming at production costs of $500, which means the device could sell for less than $1,000. GoNatural, a Salt Lake City company, has also promised to have a product available by 2015. “It could be a game changer,” said New York Times reporter Paul Stenquist, in profiling CNG home compressors last October.

So, what about hydrogen? Is there anything available there? Hydrogen is very difficult to deal with. It is the smallest atom and will leak through just about anything. It’s hard to store and transport and must be kept under high pressure.

The upside, however, is the possibility of generating your own hydrogen, particularly from renewable resources. This can be done with simple electrolysis of water, which only requires an electric current. If you can generate that current with wind or solar energy, then you are essentially powering your car for free.

Making it happen is probably a long way off, although people are working on it. HyperSolar, Inc., a Santa Barbara company, has announced “proof of concept” of a method for generating solar hydrogen. “Using our self-contained particle in a low cost plastic bag, we have successfully demonstrated our ability to mimic photosynthesis to produce renewable hydrogen from virtually any source of water using the power of the Sun,” said CEO Tim Young while making the announcement. Horizon Fuel Cells, a Singapore company, released a “desktop” hydrogen generator in 2010 that generates hydrogen through electrolysis from any power source. It sells for $250 on Amazon. Although the company is targeting much smaller fuel-cell devices, it could eventually scale up to handle quantities needed to run a hydrogen fuel cell car

Altogether for cutting loose from the local gas station, electric vehicles are the best bet for now. But natural gas in its many forms — including methanol — are moving up and renewable hydrogen may be on the horizon. With home-generating devices proliferating, it is not hard to see all this eventually making a dent in our consumption of fossil fuels.

Rin Tin Tin, RINs and the price of ethanol

Is the son or daughter of Rin Tin Tin alive and well? For a while I thought he or she was, while catching up on my reading over the weekend. I kept reading articles about RINs (Renewable Identification Numbers), their possible impact on the ethanol market and relatively high ethanol prices, despite the apparent weakening of the ethanol market. There seemed to be RINs and more RINs on every page I turned! Because I hadn’t slept for two nights, I couldn’t really focus on the contents of the articles, but only on the dog Rin Tin Tin and his offspring. How many of you have done that? Come on, be honest. Don’t make me feel bad!

I felt guilty after it became obvious that my focus on Rin Tin Tin resulted from a tired brain and eyes. I am back to the complex world of RINs today. (I had a bit of sleep).

Okay, you ask, “What the hell are RINs?” They are sort of a pass at reflecting company fulfillment of government mandates concerning biofuels. For this article, think ethanol! They are issued at the point of ethanol production or the purchase of the fuel by companies. They are approved by the EPA. They reflect a credit that verifies that the required amount of ethanol has actually been blended into gasoline. Succinctly, the Renewable Fuel Legislation, now the law of the land, mandates that a Renewable Identification Number (RIN) must be attached to every produced or imported gallon of renewable fuel in the U.S. One more thing, RINs are separated from the batch of renewable fuel when it is blended with gasoline. This fact indicates compliance with the law and Renewable Volume Obligations (RVOs). Credits, at this juncture, can be used for trading purposes.

In 2012, before the EPA’s Nov. 2013 proposal to change RIN quotas and lower requirements for ethanol, the price of RINs was very volatile. Initially, they ranged around 1 to 10 cents a gallon. By spring of 2013, however, they were around $1.

Why the price increase and what does it bode for the price of ethanol in the future? Initially, the RINs were thought of as a way to encourage refiners to produce renewable fuels, like ethanol, and to “pay” for credits if they don’t “play” by  meeting fuel targets.

Part of the volatility and increase in costs of RINs, probably, has to do with speculation by banks and other financial institutions. Thomas D. O’Malley, chairman of PBF Energy, indicated in a recent New York Times article that financial institutions “helped transform an environmental program into a profit machine…These things were designed to monitor the inclusion of ethanol in the gasoline pool…They weren’t designed to become a speculative item. For the life of me, I can’t see the justification for it.” Interviews with members of the financial community, conducted by the New York Times, seem to suggest agreement with O’Malley.

According to the Times, speculation in RINs “could have consequences for consumers. In the end, energy analysts say, the outcome will be felt at the gas pumps — as the higher cost of the ethanol credits get tacked onto the price of a gallon of gasoline.” The Times reports that the “credits, which cost 7 cents each in January [2013], peaked at $1.43 in July, and [were] trading for 60 cents” in September. Jordan Godwin in the Barrel Blog indicated that like RINs in 2013, ethanol prices in 2014 are downright wacky. “In a matter of less than two months, ethanol prices went from six-month lows to eight-year highs.” Godwin and others blame delayed returning train cars during the winter and constraints on supply and production. I would add speculation by Wall Street and uncertainty as to the impact and longevity of EPA’s new regulations concerning the reduced mandates for ethanol and other biofuels. It’s a dilemma for proponents of alternative fuels. Less speculation regarding trading, sustained predictable production and refinement of the distribution system, (along with avoidance by some retailers and blenders to price ethanol well over costs) would facilitate more competition with gasoline at the pump. More predictable competition and larger sales at the pump of E15 and E85 would generate more private-sector fixes to the ethanol supply chain as well as likely stabilize prices and, over time, lower them. In light of ethanol’s benefits to the nation, wise folks might be asked to find policies and stimulate market behavior that permit the American people to have it both ways.