It takes kernels from about 32½ ears of corn
to make 1 gallon of ethanol.

Based on 2005 gasoline use, Missouri will need
327 million gallons of ethanol to comply with a bill
mandating E10 fuel at pumps statewide.

Politicians and consumers are looking toward ethanol
to lessen dependence on foreign oil. But much
remains unknown, including the big question:
Will ethanol help?

JEFFERSON CITY — For a nation struggling with addiction, alcohol might seem like an unusual cure.

When it comes to the cost of gasoline, though, that’s what Missouri politicians from both sides of the aisle are prescribing. Republicans and Democrats alike are touting the potential of ethanol — a form of grain alcohol that can be made from corn and other products — to wean the United States from what President George W. Bush has called an addiction to oil.

Some critics, though, see ethanol as not a magic elixir but a placebo, with benefits that are more perception than reality.

Road to the pump Gasoline and ethanol begin on parallel journeys, but their paths cross before they reach the final destination. Here’s one example of how fuel blends get from their sources to pumps in Mid-Missouri.
GASOLINE		ETHANOL
A rig drills for crude oil in the Gulf of Mexico. The oil is transferred by tanker truck to a Texas refinery.			A Missouri farmer grows corn, which is shipped to an ethanol plant by truck.
From the refinery, gas is transferred by pipeline to a Missouri terminal.			After the corn is converted to ethanol, the ethanol is taken to a Missouri terminal by truck or rail.
At the terminal, ethanol is blended with gasoline. The blended fuel is put onto tanker trucks and shipped to gas stations.
Consumers pump the fuel into their vehicles. Virtually any automobile can use a blend made with 10 percent ethanol.
Lora England graphic

Whichever the case, Missourians are about to get a lot more familiar with the alternative fuel. At the federal level, last year’s energy bill included a requirement that the nation’s fuel be blended with at least 7.5 billion gallons of renewable sources, such as ethanol and biodiesel, by 2012.

In Jefferson City, meanwhile, Gov. Matt Blunt is expected to sign a bill requiring that by 2008 gasoline sold in Missouri must be blended with 10 percent ethanol as long as ethanol is cheaper than gasoline.

It all adds up to major changes at the pump. The ultimate impact of those changes is less clear.

Despite all the recent attention, ethanol isn’t a new innovation. According to the U.S. Department of Energy, Henry Ford built his first automobile — a quadricycle — to run on pure ethanol, and the federal government has offered a subsidy for use of the fuel since at least 1978.

In Missouri, ethanol enjoys support that spans the political spectrum. Governors of both parties have supported tax subsidies for plants that produce it, and Republican and Democratic lawmakers at the state and federal levels have aggressively sought government backing for it.

In Washington, for example, Sen. Jim Talent, R-Mo., pushed hard for the 7.5-billion-gallon renewable fuel standard that passed as part of the 2005 energy bill. His Democratic opponent, Missouri Auditor Claire McCaskill, says the federal government should do more to support alternative fuels.

The rush to support ethanol reflects a political reality. Because in the United States it is usually made from corn, it enjoys strong support from farmers across Missouri who are looking to boost demand for their product.

The same dynamic plays out at the national level, particularly among candidates who have presidential ambitions. The nation’s first presidential caucus is traditionally held in Iowa, and presidential aspirants are closely attuned to the fact that ethanol has wide support in the Hawkeye State.

Besides the economic benefits for rural Missouri, proponents say ethanol is good for consumers. Rep. Bob Behnen, R-Kirksville, sponsored the 10 percent ethanol mandate that passed the Missouri legislature earlier this month.

During floor debate, Behnen said adding ethanol will probably cause the price of gasoline to drop and offered a broader argument. The legislator said the corn-based fuel would point America toward energy independence. “We want to depend upon our farmers and people here in the Midwest and not people abroad,” he said. “And we can do that.”

But in a state such as Missouri, bipartisan support can overshadow the fact that ethanol isn’t universally beloved. Just ask Tad Patzek.

A professor of geo-engineering at the University of California-Berkeley, Patzek isn’t impressed by the notion that ethanol will help reduce American dependence on foreign oil. The researcher pointed out that in 2004 American motorists used some 140 billion gallons of gasoline. Meanwhile, the ethanol industry produced about 3.4 billion gallons that year, according to the Renewable Fuels Association.

Patzek said ethanol backers are “playing on human inability to see the scale.” “Five years from now with all the ethanol anybody will be able to produce, the impact” on gasoline consumption “of all of that is less than inflating car tires properly, just in passenger cars,” he said.

Kevin Hassett, director of economic policy studies at the American Enterprise Institute, is another critic. In an article written in February, Hassett noted the huge income earned by Exxon Mobil and said the potential rewards would be enormous for an alternative fuel that could compete for that business. “But even with decades of federal subsidies, private companies still haven’t developed an economical ethanol, and public sector progress is minimal,” he said.

Brazil is often cited as the model for energy independence. According to The Associated Press, 48 percent of the Latin American country’s passenger vehicles ran on pure ethanol in 2005, and every filling station offers ethanol pumps.

The AP said some experts predict that within a few years 90 percent of new cars sold in Brazil will be “flex-fuel” vehicles that can run on ethanol or gasoline.

Matt Hartwig, a spokesman for the Washington, D.C.-based Renewable Fuel Association, said the United States will actually produce more ethanol this year than Brazil — but far less as a percentage of fuel used.

Brazil’s ethanol industry could become a formidable competitor to its American counterpart, which might be why Talent, Sen. Kit Bond and seven other senators recently wrote to Bush urging him not to lift a 54-cent tariff on imported ethanol.

In the letter, the senators said that countries such as Brazil subsidize ethanol production and that U.S. refiners that blend imported ethanol into gasoline would still qualify for an additional 51-cent blenders credit from the U.S. government.

“Foreign countries, like Brazil, do not need U.S. tax dollars to compete effectively,” the letter said.

Ron Lamberty, director of market development at the American Coalition for Ethanol, said a major reason for that country’s dependence on the fuel is because the government mandated its use years ago.

In addition, Brazilian ethanol is made from sugar, a process that is easier than producing ethanol from corn. Even an ethanol booster like Hartwig acknowledges that the United States could not duplicate Brazil’s success immediately, although he says it’s possible eventually. “We didn’t get into the position we’re at in terms of our dependence on oil — particularly foreign oil — overnight,” he said, “and we certainly won’t get out of this situation overnight.”

According to a 2004 report sponsored by the pro-ethanol Clean Fuels Foundation, one bushel of corn can produce 2.7 to 2.8 gallons of ethanol. That translates to about 450 gallons of ethanol per acre of corn harvested.

Put another way, if every acre of corn planted last year were used to make ethanol, it would still produce less than 40 billion gallons — not nearly enough to replace the gasoline used in the United States.

But Terry Hilgedick, a Hartsburg farmer and president of the Missouri Corn Growers Association, framed the question differently, saying ethanol is “a part of the answer to our dependence on foreign oil.”

Hilgedick said that by 2012 U.S. farmers should produce enough corn to meet the current demand for food and other uses and have enough left to blend all gasoline sold in the United States with 10 percent ethanol.

“It’s the first renewable fuel to come along that gets traction, that has enough gallonage and enough acceptance to really make a dent in our problem,” Hilgedick said. “It’s not the entire solution, but it’s a really, really good start at the solution.”

An equally important question for many consumers might be the impact of ethanol on their wallets. In Missouri, sponsors of the 10 percent mandate say they have taken steps to ensure it doesn’t exacerbate the pain at the pump.

Under the bill approved this month, the Missouri mandate wouldn’t apply when distributors — who deliver fuel from terminals to the gas station — are unable to buy blended gas for the same price or less than regular unleaded.

Critics are skeptical that consumers will see lower prices, though. “I don’t understand how the prices would go down when you’re mandating certain use of a product,” said Douglas Beech, legal counsel at Casey’s General Stores Inc.

Casey’s has more than 270 stores in Missouri and sells ethanol at all of them. Beech said Casey’s supports the ethanol industry, but the company will struggle to comply with the mandate because it only applies when ethanol prices are lower.

Because of the volatility in the prices of ethanol and gasoline, the attorney said, the mandate might apply in some parts of the state and not apply in others, causing headaches for his company as it gets gas from terminals to deliver to its stores.

“We may be pulling from Cape Girardeau, we may pull from Springfield, we may pull from Poplar Bluff, and they all may have different ethanol prices depending on the day of the week,” Beech said.

Ethanol prices have displayed a measure of volatility in recent months. In Nebraska — where the state has tracked monthly ethanol and gasoline rack prices since 1982 — ethanol was 18 to 44 cents a gallon cheaper than gasoline from March through June 2005. In July, though, the price of ethanol jumped past gasoline, and it has been more expensive since.

Those figures don’t include taxes and also don’t account for one of ethanol’s major advantages — a 51 cent federal tax break for every gallon of ethanol that’s blended with gasoline. Under the law passed in Missouri, taxes and credits must be accounted for when determining whether ethanol is cheaper than regular gas.

And for some stations that already sell the 10 percent blend — known as E10 — the price of the fuel largely tracks gasoline anyway.

In Columbia, for example, Break Time stores often set the price of E10 with an 89 octane rating to match the price of regular 87 octane gasoline. Jerry Taylor, president of MFA Oil Co., said rather than moving the price of E10 “all over the ballpark,” his company has heard from consumers that they want consistent pricing.

“They don’t want us to raise the price 2 cents or 4 cents above 87 octane every time the price of ethanol goes up,” he said.

Taylor said his company hopes that, if the price of gasoline stays high, MFA could consistently sell E10 below the price of unleaded regular within a year and a half.

Besides the arguments about cost and energy independence, some Missouri lawmakers raised a philosophical objection to mandating ethanol use, saying that idea conflicts with the free market.

Sen. Chuck Purgason represents a rural district in southern Missouri and said mandating the use of ethanol in Missouri is simply shifting support from big oil companies to big farming conglomerates.

“What’s the difference between a farm subsidy and a subsidy to a company to locate in downtown St. Louis and a subsidy to take care of someone that doesn’t want to work?” he said.

Rep. Steve Hobbs, R-Mexico, an investor in an ethanol cooperative, supports the mandate. Hobbs said there’s some validity to concerns about interfering with the free market but cited the exemption when ethanol is more expensive than gasoline.

“The price safeguards in there, we’re essentially saying with that bill we want Missouri consumers to have the cheapest product,” he said. “Whether it’s ethanol or whatever, we want them to have a cheap product.”