Boston Globe:
With the recreational boating season getting into full swing, some boat and marina owners across northern New England are less worried about the cost of gas than the type of fuel that’s going into their fuel tanks this holiday weekend.

Across the country, many boat owners already have gone through the transition to gasoline with a 10 percent ethanol mix, known as E10. Now, marinas in the nation’s northeast corner are beginning to see ethanol-blended fuel, and there are fears of potential problems.

Some marinas say they’re busy rebuilding carburetors and replacing filters and hoses. The Web is full of horror stories and warnings, and it’s a common topic in boat shops.

“People are talking about it constantly,” said Judy Marsh, owner of Paul’s Marina in Brunswick, who blames E10 for fuel hoses disintegrating prematurely on some boats. “Not a day goes by that someone doesn’t come in and talk about it or ask, ‘What do we do?’”

In addition to damaging older hoses, water in the gas tank can mix with ethanol, causing fuel separation and creating problems.

Tom Fulweiler, manager of Adams Marina in Tilton, N.H., said he’s already installed 15 filters designed to separate water from gas this season.

“We have more problems with water in the gas this spring than we’ve had in the past, because more people are using ethanol-blended fuel,” said Fulweiler. “It’s a big problem. The best thing you can do is install a water-separating fuel filter.”

Another potential problem is that ethanol is a solvent… read on.

Before $4 a gallon gasoline, Gary Stankowski bought a hybrid vehicle for the ecological reasons.

“I just thought it was the right thing to do,” he said.

Now, with so many people looking to buy hybrids, they are very difficult to find. However, for the 2008 model year there will be 24 different types of hybrid vehicles on the market.

They will come in all shapes and sizes, from the compact Toyota Prius to the 4-wheel drive GMC Yukon.

An 11 News search of the Web site Cars.com shows that very few hybrids can be found now. We did find one Ford Escape hybrid and just four Toyota Prius’ within 50 miles of downtown Houston.

“Basically everybody is ordering them, waiting a couple of months (and) signing up before they even get here,” said David Womack of Sterling McCall Toyota.

But the different hybrids vary widely on overall savings.

All hybrids cost more up front. On average, a hybrid is $3,000 more than the non-hybrid version of the same car. Read more.

Enter “dried distillers grains with solubles”, or DDGS. DDGS, a byproduct of converting corn to fuel ethanol, is typically used as livestock feed. Rick A. Boydston, Harold P. Collins, and Steve Vaughn, of the U.S. Department of Agriculture, undertook a research study on the use of DDGS as a weed deterrent on potted ornamentals. The study results, published in the February 2008 issue of HortScience, evaluated the use of DDGS as a soil amendment to suppress weeds in container-grown ornamentals.

Researchers applied DDGS two ways: to the soil surface, and mixed into the potting media of transplanted ornamentals. Applied to the soil surface after transplanting, DDGS caused no injury to plants. According to Dr. Boydston, an agronomist with the Agricultural Research Service (ARS), “grains applied to the surface at rates that gave good coverage of the soil (800 and 1600 g/m2) reduced the number of common chickweed and annual bluegrass. Weed control was not perfect, but could reduce the amount of hand-weeding typically required.” Read full piece.

“When you put that ethanol in here, it eats up the insides or rusts them out. All the rubber gaskets and parts - it eats those up,” explains Benjamin Mallisham Sr.

Mallisham says the ethanol component of most regular gas reacts with small engine parts, rusting them over time and clogging valves. Damaged engines look like they’ve been stripped and they sound like they’re skipping.

“They’re starving for gas because the little needle holes in them are stopped up with the gel that happens when that stuff breaks down. It stops them up so it can’t run,” says Mallisham.

Mallisham says there’s only one easy solution he’s found: buy a gas stabilizer and add it to your gas tank. He warns draining the gas tank between uses won’t help.

“People will tell you you can take the gas out of them and it won’t happen, but it’s the residue that does the damage,” says Mallisham.

Lawn mower owners can also look for a gas that’s ethanol free, but lately that’s hard - and expensive - to find.

The competition for corn is increasing due to higher ethanol production requirements mandated by Congress in the 2007 Energy Independence and Security Act, the groups argue. The result is an “unforeseen and severe feed grains inflation,” they said in a letter to Bush.

The energy act calls for the production of 9 billion gallons of ethanol this year. Corn is used as a sweetener and as feed grain for livestock, in addition to its growing role in the nation’s transportation fuel mix.

Thirty-six associations and companies and anti-tax groups signed the letter, including the Grocery Manufacturers Association and Coca-Cola. Full article.

Newsweek:
Powering cars with coal might seem like a recipe for ecological disaster. But if fuel experts are right, a liquefied form of the notoriously dirty mineral will be providing much of the world with its transport fuel within the next two decades. The coal miner’s equivalent of turning straw into gold, liquid coal enables cars, trains and even jets designed to burn oil to run on coal instead. And, says its cheering squad, it does so in a way that’s green, economical and widely available.

Liquefied coal is nothing new. First developed by German scientists in the 1920s, it helped power the Nazi war machine. But until recently, turning coal to liquid (a method known as CTL) was prohibitively expensive. For two decades, until 2003, oil prices averaged $25 a barrel, making $45-a-barrel liquid coal out of the question economically. But now, with oil prices staying consistently above the $60-a-barrel mark and the environment high on everyone’s agenda, liquid coal is rebranding itself as the right choice to ensure national energy security, combat high oil prices and help stop global warming. “CTL has the potential to serve both the economic and environmental imperatives of 2007 and beyond,” says Global Insight’s head energy analyst, Steven Knell.

When we look at the multibillion-dollar spate of recent liquid-coal deals across the world, it’s clear that many agree. In total, worldwide liquid-coal production is expected to rise from 150,000 barrels a day today to 600,000 in 2020, and 1.8 million barrels a day in 2030. In China, there is about $25 billion worth of investments currently in the liquid-coal pipeline. Sasol, the South African company renowned as the global authority on liquid-coal technology, is currently building two CTL plants, each with a price tag of about $6 billion, in Ningxia and Shaanxi. The state-owned Shenhua Group is preparing to bring China’s first CTL plant into production in 2007 and has already spent an estimated $7.5 billion.

In America… carry on reading.

The companies together face 120 million reals (US$75 million) in fines for operating without licenses and planting sugarcane in illegally deforested parts of one of Brazil’s most threatened ecosystems, Minc said. They will also be required to restore 143,300 acres (58,000 hectares) of degraded rain forest.

“We will not let companies that destroy the Atlantic rain forest have any peace,” Minc told reporters. “If these environmental crimes continue, they will provide ammunition for those who want to slap trade barriers on the export of Brazilian ethanol.”

International criticism of Brazil’s massive sugarcane-based ethanol industry is mounting, with opponents saying it encourages environmental destruction and inflates world food prices. Brazilian officials deny those claims and note that ethanol producers are required to preserve much of their land.

The companies fined this week - mostly small Brazilian producers - violated rules requiring them to leave 20 percent of their forest lands untouched, Minc said.

Any rapidly growing, paradigm-shifting industry is bound to engender both enthusiasm and resistance in roughly equal amounts. And the prospect of using grains, which have generally been cheap in this country, as a replacement for fossil fuels, was bound to excite hope and ruffle feathers. After all, while farmers and ethanol-plant investors will profit, companies and industries that rely on cheap grains, or that produce and distribute fossil fuels, face serious disruption. And so, before it has even emerged as anything more than a marginal contributor to supply—ethanol accounted for about 1.25 percent of gasoline use last year—a full-fledged ethanol backlash is underway. The squawks of protest arise not just from oil companies. They’re coming from economists, environmentalists, poverty fighters, and science nerds. Meet the ethanol-skeptics.

Inflation hawks… read on.

It has worked so well that Dubbelde, who manages a local grain elevator, mixes fuels for all three of his family cars, though only one was designed to handle ethanol-heavy blends.

The practice has caught the attention of the Environmental Protection Agency as a handful of filling stations install pumps that allow drivers to select different ethanol blends with the push of a button.

Auto manufacturers warn that ethanol can corrode fuel lines and damage hoses, seals and the fuel pump in cars not made to carry ethanol. That can lead to bad gas mileage, poor performance and may even affect the vehicle computers that warn of problems.

The EPA says it can damage emission control devices.

Yet with the price for a gallon of gas hitting a string of record highs this year, motorists are paying little heed, even at the risk of voiding their warranties.

“It works good, real good,” Dubbelde said of the blends he uses in a Toyota and a Buick, which he improved through a couple years of experimentation. “No ‘check engine’ light comes on. I don’t even think there’s a difference in mileage.”

The local Cenex gas station installed special blender pumps after managers saw customers mixing their own fuel just like Dubbelde.

Motorists at the station in this western Minnesota town can press a button and fill up with E85, a fuel mixture with up to 85 percent ethanol, or blends varying from 20 percent to 50 percent ethanol. There is little physical difference, except that blending pumps have buttons offering increasing levels of ethanol rather than 87- or 89-octane gas.

Dubbelde pumped E30 into his Buick Rendezvous SUV. He uses E20 in the family’s Toyota Avalon and pumps up to 85 percent ethanol into his flexible-fuel pickup truck.

The savings at the pump are real. While regular gas was $3.93 a gallon at Cenex recently, E85 was going for $3.23. E20 was $3.81, E30 was $3.71 and E50 was $3.52 — and that was before the 20-cent-per-gallon discount Cenex offered for ethanol blends 20 percent and up as part of a special promotion that day.

Continue reading.

According to reports the interest for the (not yet available) conversion kits is high. Only certain kits are approved, and after the actual tinkering, the modification needs to be approved by the Swedish Motor Vehicle Inspection Company (Bilprovningen). The price for conversion is about 10-15 000 SEK and after approval the car is reclassified as ‘environmentally friendly’.

Two thoughts on this.

One of the major sellers of the conversion kits (BSR (swe)) market the kits on their web page with the headline: “Drive on E85 in your gasoline car and get increased power as well”. This phenomena of using power as the argument is well known from the marketing of the Saab Biopower for example. In my view it is a tragic step in the wrong direction. Not only a new fuel is necessary, but also cars that consume a lot less of it. Converting to ethanol for power reasons and thereby using more fuel overall is not a positive development. And since small cars already consume less gasoline, these cars will not likely be converted to the same extent. Thus Sweden will get an even thirstier car fleet with this ‘conversion law’. Read full article.

A list of Oregon dealers who are pumping regular gas, with no ethanol added, is growing daily on the Web site of the Oregon State Marine Board.

“I’m hoping it’s a resource that will help boaters know where they can go, and I’m hoping that aviators and other folks will take advantage of these locations as well,” said Ashley Massey, public affairs specialist for the marine board.

When boaters headed for the water en masse during Memorial Day weekend and discovered that their inboards, outboards and jet engines weren’t operating normally on ethanol-blended gasoline, they flooded the marine board with telephone calls.

“What we did is send out a questionnaire to all our known marine filling stations,” Massey said. “It’s great how they’ve replied back.

I’m usually getting new information daily. It’s a work in progress, and hopefully we’re getting everyone talking together.”

And there’s plenty for everyone, from boaters to woodcutters, to talk about.

The Oregon Legislature mandated in its last session that all gasoline for on-highway automobiles contain at least 10 percent ethanol by the end of the year, hence the supply of gasoline coming to Oregon from refineries has become almost entirely blended gas.

Even though boats, airplanes, race cars, all-terrain vehicles, antique cars and small engines such as chainsaws and weedeaters are legally exempt from ethanol gas, operators have had a difficult time finding a supply of regular, and in some cases have been slow to figure out why their engines have quit running. Read on.

Sources like paper pulp and barley are gaining attention as the merits of corn-based ethanol as an alternative fuel source is being questioned by environmentalists and politicians because of the fuel’s link to rising food prices.

In May, oil-and-gas giant Marathon Oil Corp. led an $81 million debt-and-equity funding round for Mascoma Corp., a Boston-based company making ethanol from cellulosic plant material. General Motors Corp. is among the investors in that round and it also has partnered with Mascoma to test biofuels. It was the second investment this year by the auto maker in a cellulosic-ethanol company.

Mascoma uses various feedstocks such as woody biomass, corn stover, and paper pulp to make ethanol. Read more.

The damage to crops from heavy rains and failing levies is the result of a natural disaster. But it’s nothing compared to the unnatural disaster we’re creating for ourselves by subsidizing food-based ethanol, blended with gasoline, at a minimum of 51 cents per gallon, reducing the cost you pay at the pump by mere pennies a gallon.

Two new studies underscore the growing impact of federal ethanol mandates on food prices as more agricultural resources are diverted to biofuels. Dr. Thomas E. Elam found, for example, that increased fuel production spurred by the Renewable Fuels Standard of 2007 has had a barely measurable effect on the global energy market, the impact on food prices and food security are “huge.”

If the federal mandates remain the same, he said, the smaller corn crop due to heavy moisture “will be devastating to meat, dairy, and poultry producers. Consumers will suffer as food and fuel costs rise and supplies of corn-based food diminish. The overall economy will be damaged from higher inflation and lost jobs in the food production sector.”

Elam and Keith Collins, a former chief economist for the U.S. Department of Agriculture who authored the other study, both dispute the U.S. Department of Agriculture’s claim that federal biofuels policy has raised food prices by as little as 2-3 percent.

Full piece.

Last year it did just that. And this year, it’s on pace to break the $8-per-bushel mark.

With farmers expecting lower yields in their corn crops because of delayed planting, wet conditions and flooding, the high prices could help keep their profits normal or even up from previous years.

But for the corn-based ethanol industry, the high prices mean the product isn’t that attractive anymore.

“There’s actually an impetus for us to push harder toward alternatives to corn-based ethanol,” said Sonny Ramaswamy, director of agricultural research programs and associate dean for research in the College of Agriculture at Purdue. “Really now, the ethanol companies are having a hard time sustaining at the price that (corn is) at.”

VeraSun Energy, which owns a corn-to-ethanol plant in Linden, has put three plants it expected to build, including one in Reynolds, on hold. Continued.

Since California-based firm E-Fuel Corp officially unveiled the 100 MicroFueler last month, there had been overwhelming interest in the product due to crude oil holding above $130 a barrel, Chief Executive Thomas Quinn said.

“We’ve got hundreds of orders from individual customers and on the dealers side, we’ve thousands of interested dealers, which would add up to thousands more orders,” Quinn said late Wednesday.

The machine processes sugar and water into alcohol - the chief energy-producing component in ethanol - and delivers it to fuel tanks of vehicles through a hose and nozzle just like those used at gas pumps.

It runs on electricity, stands as tall as a stacked up washer/drier, is weather-resistant and can be placed in a garage or anywhere outside the home.

Quinn says the MicroFueler can turn out a gallon of ethanol for just under $1, compared with the average pump price of U.S. gasoline hovering above $4 a gallon. With crude oil hitting a new record above $140 on Thursday, analysts say gasoline is unlikely to get any cheaper.

The MicroFueler can generate 35 gallons of ethanol a week, using 10 to 14 pounds of sugar per gallon.

Since most automotive experts do not endorse 100 percent usage of ethanol in motor vehicles, Quinn said customers could fill three quarters of their tank with the MicroFueler and top up the balance with regular gasoline. Continued…

The idea is that a gallon is a gallon is a gallon, but when you’re talking about gas, what’s inside that gallon is subject to change.

The infinitesimally small molecules that make up a gallon of gas are tightly condensed when they’re cool. They expand when heated. That means a gallon of warm gas will contain fewer molecules than a gallon of cool gas.

The warmer the fuel, the fewer molecules the consumer will receive in a gallon.

The science of that is true, and experts say that warm gas may have actually cost individual drivers more at the gas pump generations ago, when gas stations stored fuel in all sorts of unregulated ways.

But these days, gas stations uniformly use 10,000 to 30,000-gallon fiberglass tanks. Because the tanks are insulated and underground, the temperature of their contents does not change dramatically with the hot and cool cycles of the day.

Thus, say oil industry experts, the idea that hot gas is costing you more money is a myth.

Why, then, consumer advocates ask, are oil companies giving drivers outside the United States a price break in hot weather?

The ratings agency said in a report that political-event risk also could become a risk factor for the industry “if the food versus fuel debate sways currently positive public opinion.”

The report comes a day after VeraSun Energy Corp. (VSE) said it will delay the startup of an ethanol production facility in North Dakota, the third plant this month the company decided to not open due to volatile market conditions. The postponements reflect the immense pressure ethanol producers are under as their margins are squeezed by high corn and natural-gas prices.

VeraSun shares recently fell 2.8% to $4.

Wednesday, VeraSun Chief Executive Don Endres said, “With oil prices hovering around record levels, there is a tremendous urgency for domestically produced fuel options in our country.” He called ethanol a solution that “will continue to have a strategic impact on diversifying our energy needs.”

S&P said biofuels, especially ethanol, have become a “preferred way to diversify for global agricommodity companies,” and that widespread government support to extend biofuel production has been triggered by “rising and volatile fossil fuel prices and the call for renewable energy sources as a remedy to carbon emissions.”

But S&P Credit Analyst Michael Seewald said, “The credit outlook for ethanol producers varies across regions and business models, according to the local production environment.” For example, Brazil - which has competitive advantages in the sugar cane-based ethanol market - could see its edge widen as sugar prices rise on increasing world demand. Read full article.

This is an update to a post I originally made back in February 2008: Corn Ethanol Economics. While this is approximate, I think I captured most of the major economic considerations. In fact, one of the comments I received following the first essay was: “I work in an ethanol plant. Those numbers are pretty accurate, but the price we get for ethanol has been going up lately. Our margins have been poor lately, but are improving. But you did capture the important economic factors that have hurt us lately.”

Since then, natural gas, corn, and ethanol prices have all risen. So what do the economics look like today? The following is my previous analysis, with updated numbers.

I found multiple references for all of the numbers I am going to use, but I will only reference a single source. According to Ethanol Reshapes the Corn Market, one 56-pound bushel of corn will yield up to 2.7 gallons of ethanol and 17.4 pounds of distiller’s dried grains with solubles (DDGS).

The price of corn for July delivery as of this writing is $7.24/bushel, so each gallon of ethanol contains $7.24/2.7, or $2.68 of corn per gallon of ethanol. However, the DDGS can be sold, so a credit is applied for that. The current price of DDGS as of this writing is $175/ton, which is $0.0875/lb. Given that a bushel of corn yields 17.4 pounds of DDGS, there is then a $1.52 credit, which spread over 2.7 gallons is equal to $0.56 gallon. This reduces our cost per gallon to $2.68 minus $0.56, or $2.12 for just the corn input. (Note that there is sometimes a credit for carbon dioxide sales, but it is very small relative to the other costs and credits). Read more.

It has worked so well that Dubbelde, who manages a local grain elevator, mixes fuels for all three of his family cars, though only one was designed to handle ethanol-heavy blends.

The practice has caught the attention of the Environmental Protection Agency as a handful of filling stations install pumps that allow drivers to select different ethanol blends with the push of a button.

Auto manufacturers warn that ethanol can corrode fuel lines and damage hoses, seals and the fuel pump in cars not made to carry ethanol. That can lead to bad gas mileage, poor performance and may even affect the vehicle computers that warn of problems.

The EPA says it can damage emission control devices.

Yet with the price for a gallon of gas hitting a string of record highs this year, motorists are paying little heed, even at the risk of voiding their warranties.

“It works good, real good,” Dubbelde said of the blends he uses in a Toyota and a Buick, which he improved through a couple years of experimentation. “No ‘check engine’ light comes on. I don’t even think there’s a difference in mileage.” More.

Brazilian groups Cosan, Guarani, NovAmerica and Alcoeste agreed sell to Sweden’s Sekab 115 million liters of anhydrous ethanol that will adhere to certain social and environmental standards.

“This initiative addresses European consumers’ concerns related to the sustainability of ethanol,” Martinho Seiiti Ono, director at trading company SCA that will manage the exports, said.

“It is the first practical application of verified sustainable ethanol and is a major step toward realizing an international standard,” Ono told reporters.

Mills will receive 5 to 10 percent more for the certified product than for a similar ethanol without traceability, he said, declining to give other details.

The deal will be valid for at least nine months and the first cargo was shipped earlier in June.

Among the standards is zero tolerance for child or slave labor. Mills must use at least 30 percent mechanized harvesting today and increase this to 100 percent by 2014. An independent international company will audit all the groups production units twice a year.

Sustainable ethanol will result in a reduction of carbon dioxide emissions from farming, production and transport to Sweden by at least 85 per cent compared with petrol, Anders Fredikson, vice-president at Sekab, said.