Is E85 Dead Now?

twdorris writes "With a stoichiometric ratio far lower than that of gasoline (much lower than the price difference), buying the E85 ethanol fuel blend instead of gasoline was already hard to justify. Unless you raced your car on a track where E85 provided a great alternative to race fuel, it really didn't make financial sense. And there are other reasons not to buy E85, too. Like the impact corn-based ethanol is having on food prices or the questionable emissions results (PDF). So, now that the ethanol subsidies provided by the U.S. federal government are scheduled to end this summer, it's going to be even harder to justify E85 (at least in the U.S.). This change will basically make a gallon of E85 cost the same or slightly more than gasoline. With so many things working against it, are the days numbered for readily available E85 at your local gas station? And should it have ever even been made available to begin with? How much did all that government-backed R&D and tax credits cost us for something that was pretty clearly questionable to begin with?"

Comments

10% Ethanol

[XanC]

Does that mean that we'll go back to having gasoline actually be real, 100% honest-to-God gasoline too?

Re:10% Ethanol

[Anonymous Coward]

This. I have a friend at the local state university who studies various alternatives to gasoline that come from plant sources. According to him, corn ethanol is practically the worst choice they could have made. The other choices, including using various native grasses, end up with net positives, without using cooked numbers, and are much much higher than ethanol's figures when using realistic numbers. The problem, there is no "grass" industry in the same way there is a "corn" industry.

Deader Than a Doornail

[eldavojohn]

I come from a family of farmers, some of which have taken advantage of the high price of corn. Well, around Christmas they were talking about two things. One is the serious disregard for pollution standards from most (they said more than just those caught and fined) ethanol refineries. And also the negative effect it has had on farmland in their area. The second was that many refineries were shutting down as these subsidies came to a close (my dad pointed out two abandoned as we drove along) and as a result some farmers had bought up land at high prices expecting the recent price of corn to continue. They had figured they would be getting $6 or $7 a bushel and there was a lot of talk that since the refineries were going down and production was already juiced that this was going to lead to a lot of farmers losing money in these purchases. From what I gathered from folks who have been doing this for many decades: this will be a very painful learning experience for everyone involved and this seems to be the sentiment whether the wind blows right or left.

Re:Deader Than a Doornail

[ducomputergeek]

We still have our family farms (my dad has a little more than half I have the rest), but we rent them out to other farmers these days. It totals about 600 acres, 450 roughly farmable the rest is woods, in southeast missouri. About 12 years ago we basically spent the cash we inherited when my grandmother died on leveling the land, putting in irrigation, etc. as well as grain bins on the farm. We expected about an 18 year return on the cash investment (on paper the value of the land we made an instant profit of about $300 an acre. Dry land it was worth about $1200 an acre, cost about $850 an acre to level and could be sold as irrigated/leveled land at about $2300 at the time. These days you can easily get $3500 an acre and maybe $4k if you are willing to wait for the right buyer). What we didn't foresee was $10 a bushel soybeans starting to be the "average". The increase in production we've seen from being able to water and switch to rise basically went from $20k a year to $60k a year. Now that's been closer to $80 and even close to $100k a couple years and we recouped the cash investment about 2009.

About 2007, the farmers decided basically go to a three crop rotation of 50% rice, 25% soybean, and 25% corn. That lasted about one season because we put a stop to it. There are a couple 20 acre fields that are still "dry land" and those do get corn placed on them every other year and that's fine, but we saw the bubble that was corn. We decided a few years ago to come up with a rotation and stick to it. Don't try and play roulette with the market. That rotation is rice, then the following year double crop spring wheat and come back with late beans. If for some reason that combination stops yielding the returns we desire, then we'll reevaluate. But there is no sense in getting suckered in with hype (like our farmers were). "Oh Corn is high this year, we better plant more next year". Problem is too many other farmers think that way and guess what: next year there is more supply and the price goes down. As my grand father said: The time to get into the hog market is when the price is low. The time to get out is when it's high."

My father remembered the whole Ethanol debacle from the 70's and 80's. One of our close family friends is a retired sales/marketing head for GM trucks. We were talking with him about it and back in 2002 or 2003 he said, "Yeah, these guys are going to get suckered in again. Once they've spent all these billions on these ethanol plants the Saudis will drop the price of oil and quickly put them out of business just like they did in the 1980's". Well I'm not sure if it was the Saudis pumping more oil, but the same thing happened. The price of oil dropped like a rock and just long enough to put most of these producers out of business.

We talk about the farms quite a bit and something we did about 2006 was sit down and look at the statistics on prices. Figured out where our high and lows should be. If the price got basically 1 standard deviation above the "average" price over the past 10 years we sold half the stock. If it went up more we sold the rest. If it went back down we'd sell again once it closed just below the price mark (which was $7.03 a bushel). Well now the price seems to averaging about $9 - $10 and we've locked in prices the past couple years around $12 on the futures market.

The only thing is we can see there is a bubble, especially in the land prices, maybe in the commodity markets as well. Now it's no where near what it is in say Iowa or Nebraska where some are getting $6k an acre, but there's a bubble there. That's why 6 years ago when all my friends were out buying houses and I didn't. I know my Dad is holding onto well over a $1M in cash with nothing he's willing to invest it in at the moment. He's basically divested from the stock market at this point. He holds a few bond funds and is buying into some energy funds and natural resource funds (mining, etc..) as well pipe lines (master limited partnerships). He doesn't feel particu

Lets keep E85, but..

[bhcompy]

lets switch to switchgrass please. You don't need to waste food or farmland for switchgrass, it grows in many difficult conditions and is cheaper to manage by far. It also has better energy energy content by far.

Re:Kinda sucks

[LWATCDR]

But it has a higher octane rating.
If you didn't have to have the "flex fuel" option then you could get better milage out of E85. Cars could run higher compression ratios and more spark advance. You could get very close or higher mileage out of E85 than Gasoline then... Oh and no breaking or bending of the laws of thermodynamics required. With the current compromise flex fuel set up you are correct.

Re:Scheduled to end....

[dak664]

As I understand it, along with the subsidy expiration is the elimination of the tariff for Brazilian sugarcane ethanol, which was being imported anyway to the US because of the higher tax credit for sustainable EtOH when used for making E90 (US production being exported to Brazil to pay for it). So ethanol will actually become cheaper! A few gas stations near boating facilities have been selling unblended gas http://pure-gas.org/ but most wanted the 5 cent per gallon credit for E90. Many small airports will let you buy leaded aviation gas for two cycle engines.

My chainsaw seized after overheating last month, after which I measured the ethanol content of my fuel mix to be 17.7% (add 100 ml of gas to 50 ml of water in a baby bottle, cap and shake well, read the water + ethanol level after it separates again). I am using $5/gallon aviation fuel in my new chainsaw. Using E85 voids the Husqvarna warranty!