5 reasons why ethanol's future is bright despite today's cheap gas prices
“What’s going to happen with ethanol now that gas is so cheap?”
This is a question corn farmers and biofuels supporters have been asked more and more over the last couple of weeks. The short answer is this: Ethanol has a very bright future. It’s cleaner-burning, high-performing and is the most affordable option to meet the octane needs of today’s (and tomorrow’s) engines.
That’s the short answer. If you want a longer answer, here are five reasons why ethanol’s outlook remains bright despite today’s cheap gas prices:
1. Lower gas prices are a short-term phenomenon
Let’s not kid ourselves, today’s low gas prices are a short-term phenomenon. What you’re seeing right now is the bigger players in the oil industry holding prices down to try and force some of the start-ups who rely on new oil sources and extraction technology in the United States out of business. If the big boys are successful, gas prices will shoot right back up, possibly even higher than they were before if the end result is further consolidation in the oil industry.
2. Ethanol provides a necessary and inexpensive octane boost
Gasoline, regardless of how cheap or expensive it is, needs an additive to boost octane (a key factor in engine performance) and meet the 87-octane standard preferred by the market and automakers. Ethanol’s 113 octane rating makes it the best and most price-competitive option for adding that octane boost. Before we began blending 10 percent ethanol in our gasoline, petroleum companies used octane additives that were more expensive and terrible for air quality. Some even caused cancer.
3. Export demand for ethanol is up
Foreign demand for ethanol remains strong. U.S. exports of ethanol were up 15 percent from October to November, the highest they’ve been since December 2011. Most analysts agree that demand from growing countries like China and India for ethanol will only continue to grow.
4. Minnesota sales appear strong
Higher ethanol blends like E85 are still less expensive than gasoline. And they’re still selling here in Minnesota. Minnesotans filled up with 1.36 million gallons of E85 in November, more than November of 2013 despite the fact that the number of stations dispensing E85 decreased. More stations offering E15 and other blends through flex fuel pumps continue opening in the state, especially in the Twin Cities area.
5. Ethanol is clean, renewable and homegrown
Here’s the bottom line: Even with falling gas prices, people still want choices at the pump. They want those choices to be cleaner-burning, less expensive and homegrown. Ethanol fits the bill. Let’s not forget the days before we blended 10 percent ethanol in all of our fuel supply. The Twin Cities was in non-attainment status with the Environmental Protection Agency, meaning our air quality was terrible. Ethanol helped clean up the air we breathe. It’s going to take a lot more than a short-term drop in gas prices to make ethanol irrelevant.
