The Great Ethanol blending rip off!
Let's change our Ethanol blending policy, to a Freight Equalization Credit! This would expand ethanol usage, for half the cost of the Blenders Credit!
I recently visited a typical fuel terminal in Alexandria Minnesota, which sends semi-loads of 10% ethanol blended gasoline or gasohol bound for western Minnesota gasoline stations. For I'm a strong supporter of corn based ethanol and wanted to observe the Ethanol Blending Process for myself.
For I know congress has sent a tax credit of 51 Cents/ethanol gallon blended with gasoline for many years to petroleum interests. Starting as part of our energy policy to compensate the petroleum industry for replacing a ground water pollutant MTBE with ethanol. Making ethanol the home grown higher priced clean air additive at the time, while also developing a futuristic fuel option. Which helped increase the usage of this new alternative fuel or additive and made it a true gasoline supply extender option in a rapidly changing market place.
Yet by early 2007 this needed high octane fuel was actually selling for a cheaper price than the base gasoline it was blended with. Yet Congress failed to adjust their policy or tax credit for blending ethanol. Which was no longer needed, based on the price of ethanol and fuel demand. But now because of cosmetic budget cuts, the credit will now drop to 45 cents/gallon in 2009 under the new farm bill.
So on the day I watched tankers load 8500 gallon of gasohol, someone in the petroleum industry was still pocketing $433/load. Easily enough to equal the shipping cost of a typical load of fuel to a gasoline station 65 to 70 miles away. So now in 2009 the credit will be $383/load and with dropping fuel prices will still easily cover the cost of freight to the average Minnesota station from a terminal.
Yet when I observed the loading I found a simple loading and blending process conducted not by big oil but by truck drivers. Who safely load and deliver gasoline, diesel fuel and heating oil daily to retail or wholesale outlets in the area. So when I asked some questions, drivers said adding ethanol was no problem just part of the job. For I watched them use the same terminal loading and metering equipment used for other fuels without ethanol. So when I timed the loading, I observed less than a minute's interruption of fuel flow in the ethanol blending process. Yet no one seemed to know who got the tax credit and I'm still trying to track that!
For after an hour and half of observing well over a dozen truck's load fuel. I talking with the people in this well run terminal and driver driven fuel delivery system. For once the trucks drove into the loading position, it took only 15 to 20 minutes to load 8500 gallons of ethanol blended, gasoline or a multiple load of gasoline, diesel or heating oil.
What is still missing in this report is ethanol has been selling for about 45 cents/gallon cheaper than 84 or 85 Octane gasoline and less than gasoline for the last eighteen months. So with ethanol at 114 octane, ethanol actually helps the terminal and petroleum interests reach the 87 or 89 octane fuel grade consumers need, at a cheaper price than the base fuel gasoline.
So the question for the nation is this. Do we think someone in the petroleum industry needs help paying the freight to a local station or compensated for blending ethanol while we pay historically high gasoline prices? Or do all Americans need a proven alternative fuel additive for all gasoline sold nation wide anyway? So why not credit the cost of shipping unit trains of ethanol to all markets in the U.S. so all drivers enjoy the benefits of ethanol blended fuel like Minnesota has done for years.
For this years corn crop will deliver enough corn based ethanol, for 8 to 9% ethanol in all the American gasoline used, even with out imported ethanol. While posted rail rates show we could move ethanol nation wide for half the cost of the new blending rate of 45 cents per gallon. As the trucks said they would gladly blend the ethanol, it's part of their job as good citizens.
So I believe consumers would be outraged, if they could see what I have seen, even corn farmers. Alan Roebke (REB-key) defeated in the republican primary but still seen at www.congressionalchange.com