Gasoline Blending 101: The Ethanol Blending Requirement
Posted by Robert Rapier on July 28, 2008 - 9:00am
Topic: Alternative energy
Tags: doe, eia, ethanol, gasoline blending, peter gross [list all tags]
I have seen the question frequently arise as to whether the ethanol blending mandate is based on rigid numbers (e.g., 9 billion gallons in 2008) or whether it is actually a percentage requirement, and the number is an estimate based on projected gasoline sales. In other words, let's say that hypothetically gasoline sales this year are only half the level of last year. Is the mandate still for 9 billion gallons, or does it drop to 4.5 billion gallons?
Also, a claim was recently made here that refiners are underblending ethanol this year, and are likely to end the year in violation of the mandate. So, I also sought some clarification around this issue. I contacted Peter Gross at the EIA, who seemed to be their expert in this area. He was kind enough to reply, and clarified both issues:
9 billion gallons (and future levels) are mandated and not based on projected total gasoline sales. The scenario you mention of gasoline sales falling way off (10% at most maybe from last year), would still put the total motor gasoline consumption at more than 130 billion gallons (which includes the 9 billion gallons of ethanol) for the year. Thus, there is plenty of gasoline around even in this extreme case to absorb the ethanol and still not saturate the E10 market. In fact, 9 billion gallons of ethanol means 90 billion gallons of E10 which leaves over 40 billion gallons of conventional gasoline without ethanol.
The immediate problem is not that there will be enough gasoline to absorb the ethanol in 2008, 2009, and probably 2010; in these years the questions are "Is there enough infrastructure to send the ethanol to (and blend with gasoline in) as-of-yet untapped regions, esp. the southeast?" or "Will mounting political pressure over food/grain costs force the EPA to lower the mandate?" (witness Texas's recent waiver application).
After 2011 EIA projects there will not be enough gasoline sold to absorb the ethanol as E10; then the big question becomes how does the U.S. absorb the excess; as E85? (currently the only legal option) or as E15/E20? (as of yet not fully tested). Can the EPA lower the mandate if the E85 infrastructure is inadequate or too costly and the E15/E20 option is not available? Yes, but again this probably would not happen until after the "blend wall" (i.e., saturated E10 market) has occurred.
All obligated parties (refiners and importers of refined fuel products) must satisfy their "renewable volume obligation" (RVO) which is essentially their share (based on how much fuel they produce or import) of the total renewable fuel that must be used (this year 9.0 billion gallons). Volumes of blended renewable fuel are assigned RINs (renewable identification numbers). If a particular party cannot blend their share, they may buy these RINs from parties that have over complied on their RVO (though some alternatives exist such as carrying a RIN deficit for one year or using one's own excess RINs from the previous year). In any case, every year every obligated party is required to document its RINs and show that they have the same or more than their RVO to the EPA. If they don't, they can carry a deficit as mentioned earlier or they will be penalized by the EPA.
Peter Gross
EIA, DOE
202-586-8822
To summarize, the ethanol mandate is based on a fixed number. This means that even as gasoline demand softens, demand for ethanol will not - unless the mandate is rolled back. Even if gasoline demand continues to fall, the ethanol mandate escalates from 9 billion gallons this year to 10.5 billion gallons next year to 12 billion gallons in 2011. This is interesting because right now you can buy a contract for January 2011 delivery for less than you can buy an August 2008 contract. Traders must believe that enough new ethanol capacity will come online to meet the additional mandated demand. (Note: I have learned that ethanol contracts are hard to buy and sell, so there is an added element of risk if you buy a contract.)
Further, refiners can technically underblend, but they must make up for it by either buying credits from parties who overblend, or by carrying a deficit that they have to make up - or suffer penalties. Thus, they can underblend and not be in violation of the mandate, because there are provisions for that. If they don't meet those provisions, they are in violation and are penalized.
This mandate got passed when corn prices were very low, and petroleum prices were also low.
It is time to abandon this mandate, and let ethanol be sold just like any other fuel --- consumers can choose to buy it, or not.
At the same time, the subsidies for ethanol have to be eliminated.
Let' see if unsubsidized ethanol can compete at $3 a gallon.
You can put that in your tank if you want, but I will stick with 100% gasoline.
The problem, of course, would be that in a couple of years gasoline would be very, very high; and there would be no ethanol infrastructure in place to take the pressure off.
Oil is peaking, D111; but demand isn't. Unless you're one of those unlucky few whose car just hates e10 you're coming out well ahead the way things are going. If your car does "hate" e10 you might want to ask your dealer if there's a "reflash" available for your car. There might be.
The operative word is "peaking". Gasoline is still available and the premium between buying 100% gasoline vs. the blends is maybe 20 cents a gallon.
For the extra dimes, you get fuel that is not adulterated --- ethanol has less energy per unit --- and you get to send a message to the ethanol lobby that you do not appreciate the scam they pulled on US taxpayers.
FYI, the US bans duty free imports of ethanol so that their ethanol lobbyists can live high off the hog.
Leave me out of it.
Some people are looking a year, or two, into the future.
And, FYI, we imported about 400,000,000 Gallons of "tariff-free" ethanol this year; and, we'll import about 600,000,000 gallons of "tariff-free" ethanol in 09'.
BTW, that "duty-free" ethanol gets the $0.51/gal Blenders Credit just like Domestic ethanol does.
Great!
You go buy the stuff --- and subsidize the lazy native ethanol farmers and brewers.
Now, let the free market decide whether we want gasoline (pure) and is willing to pay for it, or that blended stuff.
Can the tax credit so I don't pay it each time I buy a steak, have corn flakes, pork chops, chicken, or everything else that corn and grains go into.
I don't need to be reminded of the power of this corrupt ethanol lobby every time I buy groceries.
Quite frankly, I would pay a nice premium for gasoline just to put these ethanol tax thieves out of business.
Yeah, you liked it better when I was subsidizing you every time you ate a steak, or a bowl of corn flakes; Didn't you?
Lazy, "Native" ethanol farmers? Okey, dokey. I think we've got YOU figured out, now.
You are free to go to Washington to demand an end to agricultural supports and any subsidies on cattle, beef, pig and pork production.
Let's put the Department of Agriculture out of business.
While we are at it... Department of Energy has got to be pretty high on the list too....
Is it a viable proposition to increase the supply of ethanol by increasing imports from Brazil and other tropical countries? I understand that there would be some resistance from the farm lobby. But if we could do this incrementally, maybe it is implementable. Thus we can reduce the price of ethanol and reduce the amount of corn going into biofuels and reduce impacts on food costs.
The subsidies are not going away, they are going UP. The new Farm Bill is a giant compromise that is not going to be undone easily over the next 5 years until the next Farm Bill.
http://www.theoildrum.com/node/4227#comment-370087
Not unless every senator and congressman that comes up for election this fall loses their seat because they backed the farm bill's provisions for ethanol subsidies.
The coalition against subsidizing ethanol is building pretty quickly --- cattlemen, pork, chicken farmers, food processors, anti poverty groups, you name it.
Interesting thought. However, it seems that American Voters support Increased Ethanol Blending by 59 - 30.
On the other hand, McCain's opposition to ethanol seems increasingly likely to cost him Iowa, Mn, Wi, and possibly Mo, thus sinking his Presidential ambitions.
Doesn't people on this site get it?
Corn ethanol derived from corn grown in the USA are an incredibly inefficient source of energy --- by the time you subtract the energy inputs required to make and distribute it (diesel fuel, fertilizer, pesticides, etc.) the net energy return on investment is marginally positive.
Brazilian ethanol from sugar cane, on the other hand, have a pretty good positive energy return on investment.
The only reason we bother with ethanol was, once upon a time, it was a good way to stitch up a political constituency with farmers faced with depressed prices for corn, and wacky arguments that it is "renewable".
A more recent argument in favor of it is that it is useful as a diluent in place of MMT, which got phased out because it contaminated water supplies. Diluents are used to lower the combustion temperature of, mostly summer gasoline, in order to reduce pollution.
Otherwise, the use of ethanol --- a low grade, corrosive fuel that attracts water --- is decidely bad for most gasoline engines.
Now, if we are in Brazil, it is a pretty good deal. But, in the USA, corn based ethanol is not even a very good renewable --- not when you use fossil fuels and inputs to make it.
Let's get rid of this pig.
"Let's" = Let us
Who, exactly, is "Us," D111?
The Brazil ethanol story IMO is all about the E100 which is not pure refined (90 or 95% I think) and requires a fraction of the energy to refine thus making it "economical".
Of coarse the auto fleet had to be retooled for this.$$$$$
Ethanol proponents love to cite Brazil but fail to compare apples to apples.
What about 90% refined corn ethanol and re-tool our auto fleet?
We do need to do a little research on hydrous ethanol, though.
You are making that up entirely. The vast majority of etanol consumed as fuel in Brazil is distilled just like in the US and blended with gasoline.
No E100 cars are manufactered in Brazil any more. It took me five seconds to look that up. Would have helped you to have tried to find facts to support your argument as you would have found out you were wrong and saved the post.
http://en.wikipedia.org/wiki/Ethanol_fuel_in_Brazil
The above quoted study is a slick propaganda piece that is put out to scam politicians by the lobbyists who will reap billions of dollars from the subsidies they receive from Washington.
Back on topic: It was a Good Post, Robert. Good Research is Always appreciated.
I bought a (used) '93 BMW, stick shift, six or seven years ago. It got almost 35 mpg at that time. Now it gets almost 27. What's changed? I started using regular instead of hi test on someone's advice. And now there's the ethanol. I'm going back to hi test, but I can't (easily) get rid of the ethanol. I'm curious to know what part of the reduction in mileage is due to ethanol. Not that my individual experiment will give me more than a hint, because too many variables are nixed together.
But if ethanol causes any significant part of the reduction, then it's horse manure even in replacing gasoline.
Ethanol has less energy per unit volume than gasoline.
Then there is the problem that no one wants to talk about -- which is how much water is absorbed by the ethanol before it is pumped into your tank (where it absorbs more water).
If there is a 10% blend of ethanol, you should be seeing a low single % digit reduction in gas mileage, all things being equal.
The number can be greater if the ethanol managed to absorb a lot of water before it is pumped into your car.
If you have a choice, not every station sell blended gas, always choose a station that sells pure gasoline.
My bet: the reduction in mileage has something else to do with your car beside just switching out premium to regular gas with ethanol.
I would start with a tune up, check tire pressure, check muffler / catalytic converter clogging, etc.
One very likely problem is if you start using gasoline with ethanol in a car that has been run a long time on regular no ethanol gas, the ethanol blended gas is so corrosive that it will "lift" a lot of crud, including deposits from your fuel tank, and normal fuel line deposits, and clog up your fuel filter, fuel injectors, etc. In older cars that are not equipped to handle ethanol, it could have damaged the fuel system's rubber tubing, seals, gaskets, etc. on top of this. Or, if you had a fiberglass fuel tank, ethanol can literally cause the tank's resins to dissolve, with the crap ending up in your engine --- and dire consequences.
I had that happen (ethanol corrosion induced clogging of fuel system) with a 1 year old late model Ford truck that got its first dose of E90 with me --- and it ended up costing a brand new fuel injector, spark plug, oxygen sensor, and possibly damaged the catalytic converter as well.
Go back to premium with no ethanol if I were you.
Assuming you have replaced fuel, air filters, spark plugs, cables, distributor cap and everything else that normally replaced on a car that is over 10 years old:
Try the following tests:
1. Pressure test the fuel system before the fuel injectors.
See if both volume and pressure are within spec.
If it is not, start working backwards, from bad fuel pump, clogged filter, obstructed lines, etc.
Be aware that often, it is the return line to the fuel tank that clogs, and you might miss it if you don't test the return line for obstruction.
2. Pressure test the fuel system up to the injectors
Again, see if pressure and volume are within spec.
Sometimes, a visual inspection will tell you if the pattern is good, but nothing beats a proper flow pressure / volume test on a bench.
3. Compression test the engine and see if it is within spec.
4. Check spark plug for function
5. Computer diagnostics of vehicle.
The good computers will do things like turn off cylinders one at a time and see if there is a particularly weak or strong group of cylinders --- which is normally a clear sign of trouble.
My bet: you have very badly clogged injectors, that are clogged with fine debris at the built in filter in front of the fuel injectors. More than likely, the injector itself is clogged.
Answer: Replace the entire set of injectors $$$$$$ and purge the entire fuel system (fuel line, tank, new fuel filter) at the same time with clean fuel.
While you are at it, check for rust in the gas tank and lines, and replace the entire system if there is significant rust or corrosion.
The reason I suspect this is that 10% ethanol blend means that the injectors have to, on average, deliver a larger volume of fuel to make up for the less energy in ethanol.
If the injectors are really old before you went gasohol, it probably had "worn in" from your normal driving to a particular stroke length.
Add some crud that got through the filters for when you first use ethanol blend -- consisting of a mixture of rust, water, fine metallic particles that act like sanding grit, and all the deposits that were on the inside of the fuel lines (from having the gas heat up when you stop the car), and you probably got a plugged system. Add on top of this degraded gaskets and other parts.
That is about the only thing that can account for a whopping 20% drop in mileage.
You sure you don't just want to get rid of this thing rather than to pay close to several thousand dollars of repairs on it?
Add the following:
Test oxygen sensors for function --- while you are at it, test or replace every sensor that is replacable on a car that old: MAP sensor, temperature sensors, spark knock sensor, etc.
Don't forget to check for a clogged catalytic converter / exhaust pipe / muffler.
I bought a (used) '93 BMW, stick shift, six or seven years ago. It got almost 35 mpg at that time. Now it gets almost 27. What's changed? I started using regular instead of hi test on someone's advice. And now there's the ethanol. I'm going back to hi test, but I can't (easily) get rid of the ethanol. I'm curious to know what part of the reduction in mileage is due to ethanol. Not that my individual experiment will give me more than a hint, because too many variables are nixed together.
But if ethanol causes any significant part of the reduction, then it's horse manure even in replacing gasoline.
Dave, there are an awfully lot of variables in your situation. Six Years is one. Switching from Hi-Test to 87 Octane is another. Weather. Did you move? Most Hi-Test contains about 10% Ethanol.
As I stated earlier: If you get a large mileage drop going from 87 NL to E10 check with your dealer for any possible "reflashes" available for your car.
You might try adding a couple of gallons of e85 for every ten gallons of e10. Some cars really do get better mileage with a midlevel blend of ethanol than with e10.
Dave
Most likely the drop in octane ruined your mileage, most high performance engine have "knock" or detonation detection and retard the ignition timing to prevent it, retarding the timing reduces the efficiency of the engine. Ethanol is used as an octane booster, so in small amounts it improves the energy availability of the fuel (including the gasoline). Ethanol has a high octane but lower energy, it is disingenuous to focus solely on the energy content.
HTH
Neven
Dave, a decrease in MPG from 35 mpg to 27 mpg is due to a mechanical problem. Your owner's manual will tell you if a higher octane fuel is required. If it is not, you will notice no measurable difference between regular and premium.
There are three common problems that can severely affect the mpg of older vehicles. Rather than list them here, go to http://xpship.com/fuelsaveroad.htm
Good luck:)
Most likely your vehicle (which is quite old) has non-ethanol compliant rubber, seals, gaskets, etc.and it has been damaged by the introduction of ethanol blend fuel.
Even if it is compliant, if you never used ethanol blend for some years, and then suddenly begin to use it, ethanol blend have a habit of loosening or causing to be induced into the fuel system gunk, crud, and other deposits that have been formed (and remain perfectly harmless as it is immobile all these years) that ethanol and the water it contains loosen and allowed it to be induced into the vehicle fuel system.
If you ran the car from day 1 on ethanol blend on a car designed to run on 10% ethanol, this is unlikely to happen --- the deposits are never allowed to build up to begin with. But when you switch like you did, that is usually bad news.
If returning it to straight hi octane gas do not cure the problems, you probably have an expensive repair ahead of you.
Look on the bright side. There are people with boats / ATVs etc. that have fiberglass tanks that found the ethanol blend caused the resin to go goey, allowing a mass of crud to enter the fuel system, clogging carburetors, fuel injectors, etc. until the whole thing became a whopping expensive mess to repair --- including replacing the fuel tank / lines and virtuallly everything down to the exhaust pipe.
With some luck, some clever product liability lawyer will figure this out, and start suing gas stations, ethanol manufacturers, refineries, etc. that stuck this pig on people without warning them of the consequences.
Let the fat cat ethanol brewers who collect these tax payer subsidies pay for the repairs to vehicles they have damaged.
DAve my guess is it's 16 years old and the compression ratio has dropped . check that vs, new spec, and I bet its 20% down. nothing else you add, or change, will help that !
There are different issues with the Ethanol debate:
- the subsidies to corn production and ethanol, and the effect on food prices in North America.
- the 'closing' of the USA market to greener ethanol, for example the Brazilian sugarcane derived production. There seems to be a tariff barrier to direct imports of the Brazilian product - although some of it gets in if distilled in the Caribbean (Brazilian produced molasses, exported and refined in a Caribbean country).
I owned a E100 vehicle in Brazil many years ago (a VW Passat, 1981 model). It worked, and helped the country thru the bad oil situation in the late 70's.
The Brazilian government set ethanol prices at a fraction of the gasoline price, to account for the lower energy content in the fuel. Ethanol sold for about 60 to 65% of regular gasoline.
Today a lot of the automotive fuel in Brazil is pure ethanol, and it's also mixed with ALL gasoline (I believe at a 20% rate). There are some good info pages in Wikipedia about the Brazilian ethanol program (ProAlcool) - http://en.wikipedia.org/wiki/Ethanol_fuel_in_Brazil
For North America, mixing the ethanol would reduce the demand for oil, and that can be positive.
Making Ethanol from corn is not a winning proposition, though. Would be best sourced from a tropical location, and can be produced from sugarcane with much less impact on food supplies.
You make several very good points, Delta. Sugar Cane ethanol is cheaper/more efficient to make. However, a lot of people think that we should try to develop our own Domestic Industry, also. Corn has helped us do that. Keep an eye on "Municipal (Solid) Waste to Ethanol." It's gonna be a biggie.
Another problem is Brazil's extremely High "Import" Tariffs. Just about the highest in the world. I read the other day how a EU Trade Official was "Shocked" at Brazil's seeming indifference to the idea of allowing more imports in return for exporting more ethanol.
At some point we've got to start keeping some of this money "at home." I've sold a lot of stuff to American Farmers; but I've never been able to sell anything to Saudi Princes, or Brazilian Cane Producers.
Anyway, maybe we'll be able to work a little more trade out in the future. BTW, did you see where Dedini has come up with a Cane-Processing system that's Water "Positive?"
Let's make gasoline in the United States.
It can be made by simply taking coal, hydrogenating it, and turning it into synthetic gasoline.
Mind you.... the stuff will cost about $12 a gallon or more....
So a subsidy of $9 a gallon paid to synthetic fuel makers will make this stuff so plentiful... and it will be made right in USA.
You should take a look at WTC someday, they publish the importing tariffs of all their members. Compare EU, US and nordic countries tariffs with BRIC ones. Except for China, you'll be surprised.
Also, this ignores the fact that lots of comercial protection in the first world is done by non-tarifary means.
kdolliso -
No, I definitely do NOT think that municipal solid waste to ethanol is going to be a 'biggie'.
Recent history has shown that municipal solid waste to ANYTHING will always be (at best) a 'little-ie'.
Why? The short answer is simply material handling difficulties and hence cost. Basically, the stuff has an inherently very low value per ton but a high cost in doing anything halfway profitable with that same ton. It's an exercise in pushing a turd uphill.
I would think that the fact that so many waste-to-energy schemes have gone bust would have at least halfway dampened your apparently unbridled enthusiasm. But no, both the True Believer (to give you the benefit of the doubt) and the shameless self-interested huckster/ booster (to not give you as much benefit of the doubt) are structurally incapable of seeing or hearing anything negative about what they perceive as 'The Next Great Thing'.
So lots of luck. My only advice to you would be not to invest any of your own money into any muni solid waste to ethanol scheme. It's a sure loser.
Here's one company that's betting against you.
http://www.greencarcongress.com/2008/07/fulcrum-bioener.html
Here's another.
http://domesticfuel.com/2008/07/25/california-plant-to-make-ethanol-from...
Then, there's Coskata. Remember them? GM's betting on that one. Syntec?
The "Past" is the "Past," Joule. Time, and Technology marches on. And, gasoline costs $4.00/gal, now.
I'm betting on the Gassifiers.
Meanwhile, back on target. It looks like the wholesale price of ethanol is coming back a bit.
http://charts.aghost.net/popup/agonlineCharts.cfm?key=7CFAC45E-2B65-4AA0...
$2.38 minus the $0.51 blender's credit would make the cost to blender about $1.87/gal. Admittedly, there's on average an extra fifteen, or twenty cents, on average, cost of transportation which would bring the cost to blender up to around $2.00/gal.
Given that we're reducing demand for gasoline by at least 450,000 - 500,000 Barrels/Day we've almost got to be coming out somewhat ahead on the ethanol mandates.
IMO the futures price for ethanol does not correlate well with the actual rack price. I think it is because ethanol futures are illiquid.
http://www.ethanolmarket.com/index.html
The rack price is a much better guide as to what is going on as far as ethanol plant profitability and ethanol's competive position with gasoline. Recently when I went to fill up my flex fuel ranger gasoline had dropped to $3.56 but E85 was still at $2.96 so I passed it up.
Looking at the futures price can be deceptive since actual ethanol prices don't follow it very well for some reason.
X, there are Some Better E85 Prices out there, in Iowa. Hopefully, some more stations in your area will start selling it, and the increased competition will force prices down.
Notice, the "rack" spreads are Averages for the state. Some Blenders will be more competitive than others. Maybe, when the U.S. manufacturers increase the number of flexfuel vehicles (and, pray-God, the efficiency of said vehicles) in the next few years more pumps will be installed, and competition will take hold.
On the above link it helps to click on the "date" twice. That will put the most recent prices at the top.
August ethanol prices of $2.48 a gallon may be compared to RBOB gasoline at $3.07 a gallon. Ethanol has about 2/3 the BTU's of gasoline. Thus we do not get any real improvement in terms of the cost of energy delivered and had to be taxed for it while noticing painful cost increases at the supermarket.
To get 15 billion gallons of corn ethanol would require about 5.5 billion bushels of corn at roughly 2.7 gallons of ethanol from a bushel of corn. The distillation process also consumes energy from natural gas or coal.
The U.S. corn crop was 40 percent of the global corn harvest and supplied about 70 percent of the world’s corn exports. The United States 2007 corn harvest was estimated to be about 13 billion bushels. The United States corn exports in 2007 were about 2.25 billion bushels. The 5.5 billion bushels of corn that might be required for the 15 billion gallons of ethanol allowed from grain are more than the entire world export market for corn.
The 2008 harvest was forecast to be under 12 billion bushels before the flooding in Iowa and the midwest. Since the 2008 U.S. corn harvest was forecast to be less than the 2007 harvest results before the flooding in Iowa; predictions that corn harvests would rise with rising ethanol production may be proven false in this case. Farmers reckoned soybeans to have a better ROI than corn during the 2008 planting season and switched from planting more corn to planting more soybeans due to free market demand factors.
There were reports of 50 year low grain stockpiles last December. While Australian wheat harvests are expected to recover this year due to increased rain, there are yet pressures on grain supply from attempts to increase ethanol production, some of which was made from not only corn, but wheat. If there will be a shortage of grain it might be noticed in the late winter or spring before next year's northern hemisphere harvests, and not during the height of the world's grain harvests. Already there are predictions of higher meat prices coming next winter due to feedlot owners selling their herds to meat packing houses due to high grain costs and low meat prices. Tyson's foods reported a 90% drop in profits due to higher corn costs adversely affecting their chicken raising operations. Ethanol production has the potential to put many out of work.
This problem is being subsidized by an act of Congress, signed by the President of the United States. Because the ethanol production quotas were set by law instead of by free market capitalism, there is evidence the consumer might be subject to abuse