It’s January 2012, Do You Know Where Your Industry Is?

By Ron Lamberty | December 12, 2011

Most people see the beginning of a new year as a time to look into the future and  forecast  what might happen. In the process, they read articles like this one because they are curious to see if others share their opinions.  With so many changes that will, should and could take place for ethanol this year, the only honest prediction is that 2012 is difficult to predict. In other words, you and I are on the same page if your opinion is “I don’t know.” 

A year ago, an extension to the Volumetric Ethanol Excise Tax Credit had been passed, and ethanol supporters were hopeful that we could transition to policies that improve fuel choice and reduce the cost of policies most ethanol opponents objected to.  Last year’s January columns probably predicted an end to VEETC over a period of time, and changes to infrastructure policies. No one expected the period of time to be a few months, and the changes to be aggressive attacks on every thin dime that might benefit ethanol in any way. And did anyone predict the new love affair with Big Oil, the kid gloves treatment of oil’s subsidies, and the revival of “drill, baby, drill?”

Whatever you thought last January, sometime in 2011, years of public relations efforts—paid for by people with financial motives and no regard for science or truth—took hold and created an “alternative reality” of inaccurate (but widely held) beliefs about ethanol. Even the staunchest ethanol supporters were powerless to beat back the tide of misinformation, and ethanol opponents avenged years of pent-up frustration by riding the wave of anti-ethanol sentiment to sweeping policy change.

Those opponents will continue to push for further change and, ironically, the good news may be that there is almost nothing left to take. Sure, they’ll come after the renewable fuel standard (RFS), but the RFS was created to reduce air pollution, decrease oil imports and cash exports, increase domestic energy production and create good jobs, and it has done all of that. Eventually, someone will recall that the anti-ethanol crowd claimed VEETC was the real problem, and that’s gone. Pushing harder should make it clear that this is not really about the noble sounding fictional reasons used, because “cheap corn” and “less competition for oil” don’t inspire a lot of support.

It isn’t all bad news. Ethanol’s octane will continue to be valuable to refiners. They can make more gasoline from a barrel of oil if they can make 84 octane gas and use ethanol to blend it up to 87 octane “regular.”  Oil companies make money selling ethanol, and they like to make money.

E15 was approved by EPA based on science, and although the scare tactics used to attack it have gotten attention, there are petroleum marketers who want to be able to offer E15. They want to install blender pumps and give multiple options to their customers. Once a fuel like E15 is an option, consumers will try it, and will see that nothing will happen to their cars. Then, just as it has with every other ethanol blend that has ever been introduced, E15 will become the fuel of choice for more motorists every year.

There are even more positive possibilities beyond this year, as people concerned about health problems associated with fossil fuels, and car companies that need to meet new CAFE standards might be able to find common ground with a higher blend of ethanol. More ethanol means higher octane for lighter, higher compression engines that can provide better mileage while decreasing the type of gasoline emissions that are most harmful to people.

Ten years ago, after the worst pummeling of his boxing career, a reporter asked Mike Tyson what the future held for him. Tyson said, “I don’t know man, I guess I’m gonna fade into Bolivian.”  After a tough 2011, ethanol’s opponents want us to be just as punch-drunk and defeated as Tyson was after that fight. They will be disappointed that we’re not.

 . . . and now that I think about it, Bolivians have an ethanol requirement, don’t they?

Author: Ron Lamberty
Senior Vice President,
American Coalition for Ethanol
(605) 334-3381