Oil and Water

June 4, 2008

A disinformation campaign, financed by international oil refiners and food processors, continues to distort basic facts about ethanol. Consumers and policy makers may wish to consider the following facts about two specific topics related to fuels.

More water is required to refine gasoline than ethanol. It takes 44 gallons of water to refine a single gallon of oil into gasoline, but only four gallons of water to produce a gallon of ethanol. Future ethanol production could use only 1.5 gallons of water for every gallon of ethanol as the process becomes more efficient.

Almost every manufacturing process requires the use of water. It takes 12 gallons of water to produce a slice of bread, 37 gallons for a cup of coffee, 150 gallons for a newspaper, and 4,400 gallons for a pair of leather shoes. More than 21,600 gallons of water are applied to the average residential lawn.

Many figures that purport to estimate water use in the ethanol production process include the amount of water it takes to grow corn, but 96% of the corn in the U.S. is grown with rain water rather than irrigation. One acre of corn gives off about 3,000 gallons of water per day through transpiration. Wet distillers feed produced as a co-product of ethanol production includes water which is consumed by livestock as the ration is used.

Critics of ethanol cite water use as a detriment, but it’s clear that it takes less water to make a gallon of ethanol than a gallon of gas. Technological innovation will continue to reduce water used in ethanol production, said Todd Sneller, administrator of the Nebraska Ethanol Board.

Record high gas prices prove the advantage of ethanol in the marketplace. Gas will soon be more than $4 in many Nebraska locations. Weekly data released yesterday by the Energy Information Administration pegged the national gasoline price average at $3.97 — up 82 cents a gallon from the same week last year.

This is the consequence of oil recently surging past $130 a barrel. And yet a coalition of vocal biofuel opponents is agitating to cap or roll back biofuel production. What would that do to the picture?

Economist John Urbanchuk calculates the initial impact of taking biofuels off the market would jack up the price of oil another 27.5 percent.

Urbanchuk also found that removing 4.5 billion gallons of ethanol from the U.S. market by waiving part of the Renewable Fuels Standard would cause gas prices to spike an additional $1.10 per gallon.

The presence of ethanol fuels in the market is projected to save Nebraska motorists more than $70 million during 2008. Ethanol burns cleaner, it reduces our dependence on foreign oil, it lowers gas prices, and it uses less water than gas, Sneller said. Ethanol is the best choice for Nebraska.

Ethanol Price Advisory

May 19, 2008

A growing supply of ethanol in Nebraska provides consumers with an opportunity to save money at the fuel pump as ethanol prices remain lower than gasoline. Many consumers can buy E10, the traditional ten percent blend of ethanol in gasoline, for a dime per gallon less than unleaded regular gasoline.

E10 blended fuel is typically sold as mid-grade because of its higher octane content. More than 73% of all gasoline sold in Nebraska today contains ethanol. Consumers also have an opportunity to purchase E85, an alternative fuel designed for Flexible Fuel Vehicles (FFVs), first introduced in 1992. E85 is specifically intended for use in FFVs. E85 often costs 20% less than unleaded regular.

Because ethanol prices are cheaper than gasoline, some fuel marketers now offer unconventional blends of ethanol such as E17 and E24. Fuel which contains more than 10% ethanol should only be used in Flexible Fuel Vehicles. All vehicles manufactured since 1979 can use the conventional E10 ethanol blend.

State law requires that fuels, including all ethanol blends, be properly labeled at the pump. Consumers should look closely at the pump to ensure it’s the correct fuel for the vehicle. Ethanol will continue to offer consumers an opportunity to save money at the pump. The Nebraska Ethanol Board estimates that Nebraska consumers will save more than $70 million during 2008 because of the lower cost for ethanol fuels.

Consumers who have questions about ethanol fuels can visit the Nebraska Ethanol Board website at www.ethanol.nebraska.gov for more information.

Ethanol Slashes Record High Gas and Food Prices

May 13, 2008

Ethanol is reducing food costs by lowering gas prices, some experts say.

According to one analyst from Merrill Lynch, ethanol lowers gas and oil prices by 15%. Another study by Iowa State University found that ethanol reduces gas prices by at least 29 to 40 cents per gallon. Rising energy costs play the dominant role in the price of food because raw ingredients like corn comprise only 20% of the price of food. The other 80% is shipping, packaging, processing and advertising costs.

In the past year, food prices have increased only 4.6% while energy prices have increased 26.4%, according to the Consumer Price Index Report. The president of OPEC, Chakib Khelil, has stated oil could easily reach $200 per barrel within two years.

A driver who buys E10 can save at least ten cents a gallon—and that can add up to hundreds of savings in one year. But eliminating ethanol from the U.S. fuel supply would instantly cause gasoline prices to soar an additional $1.10 per gallon over the current price, according to economist John Urbanchuck.

When the average animal travels more than 1,000 miles from producer to plate, it’s clear that oil and gas prices are pushing up the cost of everything. Oil companies are scrambling for a scapegoat while they rake in billions every month, said Todd Sneller, Nebraska Ethanol Board administrator.

“Consumers who choose ethanol fuels at the pump will save money compared to those who opt for conventional gasoline. We expect Nebraska motorists to save nearly $70 million by using ethanol,” said Sneller.

Even with increased demand for corn for food and fuel, the net output of feed corn and distillers grains has increased 26 percent in the last five years. There is enough corn grown in the U.S. to meet ethanol demand, increase exports and still stockpile a 10% surplus. Nebraska farmers and ethanol producers are providing food, feed and fuel for Nebraska and the nation, said Jim Jenkins, Nebraska Ethanol Board chairman.

Gas Prices Spark Consumer Inflation

April 3, 2008

The high price of oil and gas is driving up the cost of nearly all consumer products, but the ethanol industry helps keep the Nebraska economy strong amidst nationwide inflation.

A recent study by Creighton University economist Ernie Goss found that the ethanol industry and higher ag commodity prices have boosted the Midwest economy while much of the country faces an impending recession.

The production and use of ethanol strengthens Nebraska’s economy while lowering fuel costs. Ethanol blended fuels saved Nebraska consumers more than $70 million during 2007. Francisco Blanch, a commodities expert for Merrill Lynch, said that biofuels like ethanol lower gas prices by at least 15% on a nationwide basis. Those energy savings are retained in the domestic economy, noted Jim Jenkins, Nebraska Ethanol Board chairman.

In 2007, the top five oil companies alone raked in over $123 billion in pure profits. But oil companies are still fighting to keep over $18 billion in tax breaks and subsidies from the federal government. Much of the profit earned on imported oil and gasoline is enhanced by subsidies.

Oil companies make more in 13 seconds than the average American makes in one year. As an alternative to giving subsidies for imported fossil fuels, perhaps oil subsidies should be directed to cleaner, domestic alternatives, said Todd Sneller of the Nebraska Ethanol Board.

Dr. Richard Perrin of the University of Nebraska-Lincoln will speak about the impact of higher energy costs on food prices and other consumer products Friday morning at a meeting of the Nebraska Ethanol Board. Perrin is a Jim Roberts professor of Agricultural Economics at UN-L and studies agricultural production economics and agricultural productivity.

In a February report Perrin wrote that crop prices are determined by the supply and demand of the world market, and that the cost of corn used to produce food is only about 3 percent of the retail price of food. Perrin will also discuss the impact lower ethanol prices have on the economy.

Perrin will deliver his presentation at a meeting of the Nebraska Ethanol Board April 4 at 9:30 a.m. The meeting will be held at the Holiday Inn, 141 N. 9th St., Lincoln.

Special Presentation Speakers for April 4 Ethanol Board Meeting

March 31, 2008

Dr. Richard Perrin of the University of Nebraska-Lincoln and Clark Smith of the Nebraska Department of Environmental Quality will be the featured speakers at the April 4 meeting of the Nebraska Ethanol Board.

Dr. Richard K. Perrin will speak about the relationship of ethanol and food prices. Perrin is a Jim Roberts professor of Agricultural Economics at UN-L. Dr. Perrin studies agricultural production economics and agricultural productivity.

Clark Smith is an air quality specialist at NDEQ. Smith will provide an air emissions regulatory update for ethanol plants.

The Nebraska Ethanol Board will meet April 4 at 9 a.m. at Holiday Inn, 141 9th St, Lincoln. Special presentations will begin approximately at 9:30 a.m.

Established in 1971, the Ethanol Board assists ethanol producers with programs and strategies for marketing ethanol and related co-products. The Board supports organizations and policies that advocate the increased use of ethanol fuels and administers public information, education and ethanol research projects. The Board also assists companies and organizations in the development of ethanol production facilities in Nebraska. For more information, please visit www.ethanol.nebraska.gov.

The Advancement of Ethanol in Nebraska