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Brooks Wilson's Economics Blog: Waco's Reaction to Ethanol

Friday, December 18, 2009

Waco's Reaction to Ethanol

J.B. Smith, of the Waco Tribune-Herald, describes consumer dissatisfaction with E10 ethanol blended gasoline in,"Ethanol blend makes way to Waco gas stations."  It seems that others are having the same experience and reaction that I had. 
Ethanol blends have quietly made their way to Waco-area gasoline pumps this fall, and that has Bob Potter fuming.

Potter, a retired defense worker who lives in Hewitt, calls the 10 percent ethanol blend a “snake oil concoction” that hurts his gas mileage and maybe his engine.

“I’m not getting my money’s worth,” he said. “I don’t see any difference in price with the ethanol blend. I’m worried about damaging my vehicle, and I’m incensed that I’m paying the same price for less miles per gallon.”
It might be that Potter and I are the only two people that don't like E10 and that gasoline retailers are filling that demand, but Smith provides a more likely explanation.
Refiners have begun selling stations the 10 percent blend, called E10, because of federal laws that require them to ratchet up their ethanol sales nationwide over time. And E15, a 15 percent ethanol blend, may be on the way.

Responding to requests from the ethanol industry, the Environmental Protection Agency this month said it was considering increasing the amount of ethanol that retailers could blend into gasoline to 15 percent. The final decision would come no sooner than May, when the U.S. Department of Energy is to complete tests of whether E15 damages cars. The blend would be recommended only for cars from the 2001 model year and later.

The ethanol industry has sought the new standard, saying the ethanol market needs to expand to avoid overproduction. The industry argues that expanding the market would create an incentive for developing a new generation of ethanol plants that could use grass, corncobs and wood chips.
We are buying it because the federal government under the Bush administration says that we must.  Notice the contorted logic of the ethanol industry: "the market needs to expand to avoid overproduction."  Generally, when a producers find the market glutted, they cut production and price, but not ethanol producers.  They run to Washington and lobby for mandated use. 

Let me be blunt, if my experiences is the mean (my experience is described here), and if environmental benefits are as exaggerated as fuel efficiency, it would be cheaper to close ethanol plants and pay workers to stay home than continue making ethanol.  The only savings in gasoline would come from a decline in demand due to a fall in purchasing power (real income).  Ethanol makes our nation poorer.

Smith then interviews local mechanics and reports some problems but nothing major.  E10 has only been in local markets since October.  My guess is that major problems will occur in the future.  


  1. I have become an unsolicited member of this E10 experiment. Lately, I've been filling my car up at a local station that mixes ethanol in with its gasoline. I noticed that I was getting fewer miles to the gallon recently, so upon reading this blog post I decided to try out another gasoline station down the road. My fuel tank gauge has barely dropped this week. I've been driving the same route daily and yet I have come away with more mpgs. The only difference between the two stations was the concentration of ethanol in their gas. I wholeheartedly agree with your point of view. The government may be stretching the truth in order to pass off this new fuel source as "environmentally beneficial" and "fuel efficient". Most cars on the road today do not experience any better gas mileage with this new biofuel mixture. Cars with FlexFuel technology built in are better able to utilize the ethanol mix, and even then, they admit that higher concentrations of ethanol yield fewer miles to the gallon. These cars are specifically built to use the fuel, so the reasoning behind making ethanol mixes the norm for all cars is beyond me. Many of us don't have the luxury of buying new cars just to fit in with government policies.
    -Santiago Vallejo-Gutierrez, University High School

  2. 80% of Brazil cars run with ethanol. Alcohol fuels are colder than gasoline and when the engine runs at less than 100 degrees Fahrenheit, the fuel does not work as well and the mixture has to change. To retrofit older vehicles, Brazilian company invented a system that includes a small gasoline reserve. When sensors measure low engine temperatures, a small amount of gasoline can be injected into the engine to heat it up.