Ag groups step up push for biofuels

5/15/01

By MARK POWELL

With rising gasoline prices gaining increasing attention across the country, farm organizations are stepping up the pressure on political leaders to give biofuels increased support.
Sen. Richard Lugar (R-Ind.) recently introduced a bill supported by President Bush that would increase research funding for the creation of biofuels using agricultural and animal waste. Lugar said that by replacing as little as 10 percent of imported oil with domestically produced biofuels, the United States “will diversify its energy portfolio and reap enormous economic, strategic and environmental benefits.”
On May 17, the Bush Administration is expected to release a report for its strategy for dealing with high fuel prices and energy shortages. Lugar said the panel will recommend more research and development of biofuels. Other sources said the report will emphasize new drilling for oil and natural gas and offer a variety of secondary suggestions such as the promotion of new gas pipelines, electric-gas hybrid cars, electricity transmission lines and nuclear plant licensing.
The price of gasoline nationwide has risen more than 20 cents over the past month, and Memorial Day, the start of the summer driving season, is still a few weeks away. Many are predicting that gas prices will surpass the $2 per gallon reached last summer, and may be as high as $3 per gallon.
The Maryland Grain Producers Association issued a press release last week entitled, “Maryland residents deserve to know why gas prices are so high.”
According to MGPA, experts agree the lack of refining capacity and the fragmentation of gasoline markets caused by multiple environmental regulations are primarily to blame for the price volatility being seen today.
Refineries are operating at 95 percent capacity compared to many other industries, which run at 82 percent.
Although the demand for gasoline has steady risen, there have been no new refineries built in the past 20 years. Currently, the United States doesn’t have enough refining capacity to convert crude oil into gasoline. In fact, as gas prices were rising last summer, the United States had to export crude oil so that it could be refined and then imported back us.
According to MGPA, the United States has 14 different types of gasoline, and each of these fuels has three different grades, for a total of 42 different gasolines. Each of these 42 grades of gasoline requires separate and distinct production, shipping, and storage and handling infrastructure. This reduces the ability to use alternative supplies in the event of refinery fires, pipeline breaks or other regional disruptions in production or distribution.
The federal government only requires two types of gasoline: reformulated gasoline (RFG), sold in the worst ozone non-attainment areas, and conventional gasoline. Almost every other special gasoline requirement has been implemented by the states with the support of the refining industry to avoid the expanded use of RFG. Tight supplies mean higher prices, which means larger profits for refiners.
MGPA leaders spoke out on the issue of high fuel prices.
“Once again we are faced with outrageous fuel prices,” said St. Mary’s County farmer Donnie Tennyson, president of the MGPA. “Citizens have to speak out. There is absolutely no reason this country has to be dependent on foreign oil sources. We have the renewable resources here in the United States to produce our own fuel, and that fuel is ethanol, made from renewable resources such as corn, wheat, or any starched based product.”
Although refining capacity has stagnated, the U.S. ethanol industry has been expanding at a record pace. In 2000, the industry expanded production capacity by 15 percent, and is on course to increase by an additional 400 million gallons in 2001. Each day more than 5 million gallons of ethanol are blended into about 65 million gallons of gasoline, adding critical volume to a tight gasoline market and reducing the pressure on price.
Ethanol is far less expensive than its competitor in the oxygenate market, MTBE. On an oxygen content basis, refiners could replace $1.50 of MTBE with 50 cents of ethanol. Given today’s prices, ethanol is also less expensive than gasoline in many markets.
It takes 70-85 days to get oil from the Middle East to the consumer gasoline tank. In contrast, it takes as little as 25 days to get ethanol from the Midwest to consumer gasoline tanks, meaning ethanol can quickly respond to regional supply shortages.
“The time is now for consumers to let their voices be heard. They need to let their legislators know that they want an alternative fuel, one that supports the economy of the United States, not just the pocketbooks of the refineries. Ethanol is that fuel,” Tennyson said.
MGPA was also promoting ethanol during Maryland’s Clean Commute Week, May 21 to 25. During that week, citizens are encouraged to try new ways of commuting to work: car pooling, bicycling or even walking. Currently, ethanol is available in blended fuel at the Navy Exchange Citgo in Arlington, Va.
Six of these “E-85” fueling sites are planned in Maryland, made possible with a federal Energy Department grant. The sites will be in Fort Meade, Annapolis, Baltimore and Gaithersburg. Using E-85 (85 percent ethanol, 15 percent gasoline) produces 32 percent fewer emissions of greenhouse gases for the same distance traveled.
Current cars ready to run on E-85 include the 3.0 liter Ford Taurus; 3.0 liter 2WD Ford Ranger, 2000 Chevrolet 2.2 liter S-10; 4.0 liter Ford Explorer Sport, 4.0 liter Ford Sport Tracs, 3.3 liter family of Chrysler, Dodge and Plymouth minivans and the Mazda 3.0 liter B3000 and GMC 2.2 liter Sonoma and 2002 4.0 liter Explorer SUV.