Dealer Outlook

Trade Only Dealer Outlook Blog

As predicted, ethanol rears its ugly head again

How things can change! Less than a year ago, gasoline prices were soaring and so were the fortunes of the corn-based ethanol producers. In addition, the Bush administration had just mandated a steady increase in the annual production of ethanol to 36 billion gallons per year by 2022. If you were a corn farmer or ethanol refiner, you were as happy as a suntan lotion salesman in a nudist camp.

But today, the sun has gone down for the ethanol producers, and some refineries are even shutting down. “We are all struggling, there’s no hiding that,” admitted Scott Pearce, president of Biofuel Energy Corp., in an interview with David Adams of the St. Petersburg Times. “Our timing couldn’t have been worse.”

Pearce was referring to the fact that his firm has just built two new ethanol plants, each capable of producing 115 million gallons per year. Today there’s an ethanol glut!

To all this, I say: Bravo, let ’em all — all 180 plants — shut down. After all, this push for ethanol has been a scam even Bernie Madoff could envy. And finally there are mounting reports raising real questions about both the efficiency and environmental benefits of ethanol. Unfortunately, it’s not going to be that simple.

Enter Growth Energy, an ethanol industry trade association. Retired Army Gen. Wesley Clark recently joined this group and said, “What the industry faces is a political problem. The government needs to raise the limit [the blend cap] to get the next big surge in ethanol.” To that end, Growth Energy recently filed a petition with the EPA to allow blends to be increased from 10 to 15 percent.

We in the marine industry are acutely aware of the destruction and safety problems our marine engines and related fuel systems will face if the blend cap goes above the current E-10. I’ve written about it in this blog several times over the past couple of years, and I predicted we’d see a push for higher blend caps. The push is on.

Pushing back (as reported in Trade Only Today last Friday) is NMMA. It has teamed up with the National Petrochemical & Refiners Association and the Outdoor Power Equipment Institute to oppose any increase above the current 10 percent cap. The groups are calling for comprehensive scientific research, as required by the Clean Air Act, on the possible risks that “midlevel ethanol blends” pose to public health, consumer safety and the environment.

According to NMMA’s legislative director Matthew Dunn, more and more groups are coming out against the corn-based oxygenate, and he thinks the political mood in Washington is beginning to shift. I hope he’s right. But I, for one, see big problems ahead.

Problem: The new Agriculture Secretary is Tom Vilsack, a former Iowa governor and longtime advocate of ethanol. No surprise there, since Iowa has an abundance of ethanol refineries.

Problem: Energy Secretary Stephen Chu also joins the party, another acknowledged proponent of biofuels from cellulose.

Problem: President Obama included $6 billion in loan guarantees in the stimulus package for development of energy technologies including biofuels.

Whether the administration will come to the aid of the ailing ethanol producers is uncertain. But I wouldn’t bet against it. Right now, ethanol supporters are actually trying to circumvent the required process and get an administrative action declaring that E15 is the same as E10.

Finally, since Growth Energy has filed a petition, EPA is now required to publish a notice in the Federal Register, schedule a public comment period, and draw up a formal proposal to authorize the waiver. When that happens, it will be critically important for individual dealers, as well as organizations like MRAA, the state Marine Trades Associations and consumer boating groups, to become fully engaged.


15 comments on “As predicted, ethanol rears its ugly head again

  1. Paul J. Lash

    Had to have a complete rebuild of the fuel vent system on a flats skiff that I owned, plus all new fuel lines, filters, and an acid wash job on the 3 carbs to the tune of about $900. also had to have the tank pumped by a fuel recovery company at $10.00 per gallon. Total cost of around $1,200. all because of water and phase seperation in the tank caused by ethanol additive. In cars not a problem – in boats, it’s a disaster and the boat owner is left holding the bag with fingers pointing in every direction other than one that can help.

  2. denny

    Problem: Obama was elected . weather you voted for him or not AND a majority of Americans did we will have to accept his way of doing things until the next election

    My question is what has happened to the boating insustry in other countries wher the ethanol being sold already meets or exceed`s the proposals for the U.S?

    Seems to me we need to identify and or provide an additive to ethanol blended fuels that will prevent detrerioration or destruction of the effected components in these fuel systems.

    I am sure we can do it.

    The problem is the cost of that solution will offset any savings that were hoped for by increasing the ratio of ethanol to gasoline

    This isn`t just about the environment

    It`s dollars and sense

  3. tom Ireland

    E15 is not the same as E10, and many engines, (IT’S FIVE PERCENT MORE, DUMMIE3S), AND FUEL SYSTEMS will not live with higher dosss of ethanol. I understand this increase is being championed by the agriculure committee. BIG SURPRISE!!
    We make less hp on the crummy fuel, and get poorer mileage in both our cars, and boats.
    Let’s make something better than corn based ethanol, or work on alternative fuels that don’t hurt the average user like this stuff does. The additives we all have to run raise the cost of a gallon of ethanol laced fuel out of reason.
    It’s hydroscopic tendencies have ruined everything from tanks to fuel injectors. Boats are intended to be used in water, and the water pulled out of the salt laden air of our coastal waterways is costing the user, and the industry, heavily.

  4. Rob

    At what point do we shoulder the burden and wean ourselves off non-renewable energy? When we pump the last drop out of the ground?
    Maybe I am out here alone, although I think it is time that the so-called Marine Industry leadership get behind a sustainable home grown fuel.
    Our leadership should be putting as much pressure on engine manufacturers to modify their products to run on alternative fuels as they do pressing the government into relaxing clean water and air acts.
    Dealers, manufacturers and our leadership should be more proactive in dealing with ethanol fuels as opposed to being reactive. Or do we fight to leave this problem to the next generation too?

    Rob Brown

  5. AnonymousBob

    To Tom Ireland:
    Actually, E15 is 50% more than E10. With that little bit of nit-picking from me out of the way, I completely agree ethanol is THE enemy of the marine industry right now! There are way too many negatives with this stuff that we face a huge uphill battle at keeping boats running properly as long as this crap remains. The Agriculture lobby has lined the pockets of Congress and we’re all screwed as a result. I’m with Norm in that I feel E15 will be on us before we know it.

    To Rob:
    The manufacturers can only be so proactive. Most industries are reactive based on the nature of the business – legislators make laws and we react to conform. We could be more proactive if our industry were bigger and had the funds to buy Congress like the fuel and farming industries. Oh well, we can hope.

  6. CarlM

    Where is your proof that oil is finite? You have none because it isn’t. In old oil field around the world oil has returned to many of those old abandoned wells. Every day new oil deposits are discovered i.e for example in Nebraska. and extrication today is far less intrusive than you even know.
    It is a foolish man that turns his food source, or the land he grows his food on into his fuel sources, want proof: just look at the retail price of a box of corn flakes. As a boater & one who makes his living in the marine recreational business your inferences that the organizations associated with it along with the participants are for dirty water & unclean air are insulting. Everyone I’ve meet in this industry is an enviromentalist who has a vested interest that the air & water be clean & safe. We & our customers swim in it, fish in it, drink it, etc. We care about it even more than Joe average landlubber!
    When viable & competitive alternative energy sources have been refined to the point that they are ready for the mass market then they will happen.
    Rob your last line speaks volumes- it seems you want to cure all the percieved ills that man has wrought on Mommy earth. If we cure everything then what will the next generation have to do?
    We are not here to create heaven on earth that is beyond all of our pay grade… I doubt you are in a marine biz or even a boater.. If you are, you should put you money where your keyboard is and start to lead instead of following or asking others to lead you where you want to go but are unwilling to go alone.

  7. David

    I have been using fuel with some level of ethanol for years and have seen no negative effect whatsoever, except that ethanol additives reduce the price of fuel substantially.

    FYI: Ethanol costs $1.05 to $1.10 per gallon to make, including the cost of the farm, seed, water, taxes, refining, etc etc. The fact that ethanol is MUCH cheaper than petroleum based gasoline is the reason all of us with powerboats should EMBRACE ethanol, not complain about it. At half the cost of petroleum based gasoline, and at a cost that is ind

  8. Schwarzel

    We as a country have oil & coal. This country has huge deposits. Lets liquidize the coal. The Germans did in WWII. WHY CAN WE????? Carl your right we care more about the water.I get so pissed at these green goof retards who think they know best. The water is the cleanest in years, we have more fish than we have had in years, and these goofs want more. Well I for one have had ENOUGH. We as a industry better wake up. These goofballs want to put US out of business. Just look how embolden they have become after the election of Obama. Just look at GM. That is what lays in store for us if we don’t stop these people. Government Marine. My grand-daddy would roll in his grave if he saw today what this country has become.

  9. CarlM

    Hey David AKA Rob
    get a grip read the scientific data on ethanol. Ethanol eats fuel lines, fuel tanks, engine components, attracts water, & produces less power meaning you burn more so you spend more. If you were an active boater or in the marine industry you would know that. How much more are your corn flakes. You have been outed as the posser you are.

  10. Rob

    Guess you haven’t lived until you find out your kids have been drinking from a well that’s been contaminated with MTBE! Our alternative to ethanol.

    I’m really not sure who Dave is and I have no issue signing my name to my comments. Doesn’t sound like Dave does either. Are you really Carl?

    We have been dealing with ethanol laced fuel for a few years now in our state. Being that my dealership has been proactive (that would be another word for leading, Carl) in making needed adjustments, we have experienced zero problems. If you own an older boat that needs to be modified, modify it.

    People want to go boating. As a dealer people pay me to keep them on the water. Just like everyone else my customers have had a pile of questions and they have been looking to us for advice. Not excuses, or big alligator tears, They may not like the answers sometimes although we work with folks to deal with the potential issues on the front end instead of waiting for a problem. We don’t cry about it, or make excuses, or talk gibberish that just makes the problem more of an issue then it really is, We make through inspections, recommendations, and corrections as needed.

    Nothing anyone can do at this point about reduced mileage, Adapt.

    Is anyone foolish enough to think that a well can’t be pumped dry? We have millions of acres of unused land in this country where corn can be grown and converted into fuel and food. I don’t eat corn flakes there not all that good for you anyway. Wouldn’t it be nice to have better control over our energy costs? I for one would like to take that out of the Middle East’s hands, What’s that worth to you?

    One of the biggest problems we have in this industry is that we have too few adopters and far too many crybabies. No wonder as to why we can’t move forward.

    And Carl, This generation can undo some of the crap we have inflicted on this planet, I have faith in us. After all, we are the ones most responsible.

    Rob Brown

  11. CarlM

    Hey Rob those same folks that put MTBE in your gasoline(& well) are the ones demanding blending ethanol. Were you proactive when they proposed that additive?? I was. That land you mention is private land if the government wants to grow corn they have plenty of land to do it on. As you know the Gov’t pays farmers not to grow. By the way Corn strips nutriants out of the soil like no other crop, it takes large amounts of phosphates(90% stripped mined in Fl.) which has been directly linked to be the cause of the major algee bloom dead zone at the mouth of the Mississipi River (in the Gulf of Mexico) that is ever growing, and add on to that the herbacides & pesticides that are also sprayed and injected into the ground & runs off, you have A REAL ecological stew going on.
    Maybe the next generation can come up with a cure for that distruction (Oh yea the folks along that water shed have to drink that nice concoction) Dealing is a word for putting up with something. Yes I really am Carl & I’m sorry you feel so guilty about what You have done to the earth but I bet you never looked at the broad consiquences of corn based fuel. The real answer is make drilling for accesable petrol , say in the north pole region on fed lands that have reseves larger than Saudi Arabia available today. Fuel cells are the future but until then we should drill in our own back yard, build nuke plants (they are good enough for the navy to power our ships) while experimenting & test long range consequences to these panacia feel good solutions. Do you know that there is now research on the negative consequences of wind turbines?? They kill massive amounts of bats & birds (not by hitting them) – bats eat small flying bugs which, eat, etc , etc, etc. So we need to think it all the way through which I believe most posters here are saying concerning ethanol. We are all dealing with 10% we are not interested in putting up with a 50% increase in a know distructive additive that has high hidden production costs & costly enviromental consequences.

  12. Rob

    Glad to hear you were so behind MTBE, now we at least have one person to blame.

    So tell all us knowing one, Wrapped in gibberish, if ethanol is not the answer, what is?
    If pure grain alchohol is so bad, why not stop drinking any form of it too? The way you ramble, it sounds like you have already had more then your share.

    Fact it ethanol is here and we need to adjust to it like it or not. And guess what, with this administration the percentage is likely to increase. As a dealer I figure I have a couple of choices, Throw my hands in the air and cry like a little girl spouting gibberish, (Carl’s and our industry leadership’s approach) or, deal with the circumstances in a productive way. (Rob’s approach) If you were a customer, whom would you rather trade with? Excuses or working solutions?

    If you don’t stop complaining and start actively working to solve your existing customers problems a dealer with my mindset is going to make your regulars my regulars.

    Hay Carl, top off your week, and go beat a seal or harpoon a whale!

    I’ve enjoyed the conversation.


  13. CarlM

    Rob I was proactive Agianst ADDING MTBE or any other whitchs brews as any one who read my post would understand. Agian Rob if you read my post I gave you the answer that you do not want to hear. Drill the oil that resides within our borders. Rob you have not added 1 solution, productive or not, in your posts to the down side of ethonol additives that your customers have except to plant more corn which the run off is killing the Misissipi water shed and the water out 100 plus miles into the gulf of mexico, but your dealership & your customers must not be located there so they don’t care- I’m think you are more a west coastie- can you tell us “industry types” where we should send the customers for there supliment of corn juice cure?
    I like Manatee’s brother they taste like bald eagles.- Carl said sarcasticlly for the one who might miss that point.
    My week will be top off if the Ray’s beat the Yankees tonight in St. Pete. (Rob that is in Florida)


Leave a Reply

Your email address will not be published. Required fields are marked *

Comments are moderated and generally will be posted if they are on-topic and not abusive. For more information, please see our Comments Policy.