A View from Here

Bill's Sisson's weekly Trade Only blog

E15 and the ‘unintended consequences of the diversion of food to fuel’

Ethanol was back in the news recently when a Phillips 66 service station in Lawrence, Kan., in July became the first in the country to offer E15. The station, which has 14 gas pumps and four for diesel, allows motorists to choose E10, E15, E30 or E85, with the higher levels suitable only for so-called “flex-fuel” vehicles.

I’m not hearing much applause from builders, dealers or boaters.

An active and vocal opponent of E15, the NMMA has begun distributing about 100,000 warning labels to member builders to remind boat owners of the engine problems that misfueling with E15 would cause. The higher blend of ethanol gasoline should not be used in marine engines, regardless of when they were made, or in cars manufactured before 2001.

In addition, most car makers have cautioned that E15 could also damage later model vehicles and void their warranties. The effect of those warnings on consumers’ willingness to fuel with E15, combined with the cost of modifying stations so they can offer the higher blend, are expected to limit its availability … at least for now.

The NMMA estimates that as many as 95 percent of all recreational boats fuel at traditional gas stations, leading to the likelihood that some misfueling will occur despite warning stickers.

Last week, I sat on a panel with three others who spoke at the 12th annual Northeast Nordic Tug Owners’ Association rendezvous in Essex, Conn., hosted by Wilde Yacht Sales. We talked about several topics, from boating safety to provisioning, but the subject that generated the most questions during and after the talk was ethanol. Specifically, how to combat the various woes it can inflict on gasoline engines, including phase separation and problems with carburetors, fuel lines, gaskets, values and fiberglass fuel tanks.

The primary boat owned by this audience is diesel powered and, therefore, not directly impacted by E10 gasoline, but these folks also run dinghies and tenders with outboard kickers, not to mention second boats and lawn mowers, chain saws, weed whackers and the like.

Mobile marine mechanic Erik Klockars told the tug owners that well more than half of the problems he sees with outboards today can be traced to E10 gasoline. “It’s a real problem,” says Klockars. “And it’s not getting better.”

There also have been recent reports in the mainstream press that record high corn prices and a depleted harvest caused by the summer draught in the farm belt, along with reduced demand by motorists for gasoline, have caused several ethanol producers to idle plants. The situation has been exasperated by continued strong demand for corn, including from China.

According to a July 27 report in that newspaper, the ethanol sector consumes roughly 40 percent of the domestic corn output.

In a Wall Street Journal opinion piece last week, C. Larry Pope, the president and CEO of Smithfield Foods Inc. — the world’s largest producer of pork — wrote that ethanol now consumes more corn than animal agriculture does. Pope said the government, through its Renewable Fuel Standard, had diverted so much corn “as a questionable substitute for gasoline” that companies such as his have had to look to alternative markets to feed their livestock.

“For the first time in memory, corn is cheaper when it’s delivered to the U.S. from abroad than if it’s purchased from domestic suppliers,” wrote Pope, whose company is one of the largest corn consumers in the country. “Smithfield was forced to take the unfortunate but absolutely necessary step of buying corn from Brazil — spending money that under normal circumstances would have gone to U.S. farmers.”

Pope continued: “This is what happens when the corn market, which already has to count on the whims of Mother Nature and is governed by the laws of supply and demand, is victimized by the whims of Washington and the unintended consequences of the diversion of food to fuel.”

Irrespective of supplies or price, the RFS mandates that about 15.2 billion gallons of ethanol in 2012, most of it from corn, be blended into gasoline, according to the business leader. Pope argues that the EPA in the short term should grant a nationwide waiver to the RFS and that, going forward, the RFS percentage should be tied to “free-market supply and demand.”

Boatbuilders and dealers, meanwhile, need to continue to educate boaters about how to minimize the impact of E10 on their engines and fuel systems, and how to avoid making the potential costly mistake of pumping E15 into their tanks. The warning labels being distributed by NMMA will help.

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