Cloudy skies ahead for ethanol

Kent Misegades | GAfuels | February 13, 2012

On Dec. 31, 2011, the 45 cent per gallon federal “blender credit” for ethanol finally ended with little fanfare, as described in this article from U.S. News.

Since fuel producers are still required to meet the RFS ethanol mandates in EISA 2007, the end to the credits will have no effect on the continued adulteration of our nation’s gasoline supply that also renders much of gasoline useless as an aviation fuel.

If an end to taxpayer subsidies was not hard enough on ethanol producers and distributors, the latest trends in the overall sale of gasoline must be especially foreboding. As seen in this chart from the DOE’s EIA, monthly deliveries of gasoline have dropped by a whopping 50% in the past decade, and are the lowest they’ve been since the early 1980s. This means that demand for ethanol, despite federal mandates requiring its sale, have also dropped dramatically, as reported by the Des Moines Register, which reports than many ethanol producers are now operating at a loss or are closing facilities.

The next shoe to drop will likely be corn producers, who appear to be hoping for a return to high prices from last summer despite the drop in demand both domestically and overseas.

We have likely already hit the so-called “blending wall,” a situation where federal ethanol mandates cannot be achieved even when every drop of gasoline in the country contains 10% ethanol. Either the EPA and Congress must now ignore its own laws, or the RFS mandates must be modified. Hopefully, logic will prevail and our elected officials will rethink the entire law, either scrapping it outright and allowing free markets to determine what fuels are best, or at least to require premium ethanol-free fuel to be sold wherever an ethanol blend is sold, as Mississippi State Senator Michael Watson recently proposed.

The GAfuels Blog is written by two private pilots concerned about the future availability of fuels for piston-engine aircraft: Dean Billing, Sisters, Ore., a pilot, homebuilder and expert on autogas and ethanol, and Kent Misegades, Cary, N.C., an aerospace engineer, aviation sales rep for U-Fuel, and president of EAA1114.

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