The truth about ethanol

by Sen. Tom Daschle

On April 1, USA Today ran a story, "Ten Tips for Getting the Most at the Pump," that missed the boat when it recommended that price-conscious consumers should not use ethanol-blended gasoline. The truth is that, with gas prices rising, now more than ever it makes sense for motorists to purchase domestically produced, clean-burning ethanol-enhanced gasoline.
USA Today bases its recommendation on the argument that ethanol has a slightly lower energy content than gasoline. It fails, however, to recognize the reduced federal tax on ethanol blends or its higher octane rating. The fact is that the higher octane ethanol blended gasoline allows motorists to purchase mid-grade gasoline at the pump for 4 to 5 cents less than conventional regular gasoline.

The addition of as little as 10 % ethanol to gasoline increases a gasoline's octane by 3 points, which means increased performance. Moreover, ethanol's increased oxygen content ensures that the gasoline burns more completely, thus reducing tailpipe emissions, especially harmful carbon monoxide. Since 1978, the US Congress has recognized these benefits of fuel ethanol by reducing the tax on ethanol-blended gasoline. Today, the cost of gasoline containing ethanol reflects 5.2 cents per gallon less in federal excise taxes than conventional gasoline, which enables marketers to reduce the pump price accordingly.
Finally, as we look to the future, it has been suggested that rising gas prices argue for drilling for oil in the Arctic National Wildlife Refuge or other environmentally sensitive areas. It is worth comparing the potential benefit of opening up ANWR to that of increasing domestic ethanol production.

A recently released Department of Energy report concludes that if ANWR was opened to drilling this year, crude oil could begin flowing at the earliest by 2013, and that such reserves could reach a peak flow of 876,000 bpd by 2025. The report also concludes that tapping into ANWR would only reduce our dependence on imported oil from 70 % to 67 % and, at full production in 20 years, would reduce US oil prices by a negligible 50 cents per barrel, or 1.12 cents per gallon.
Contrast these projections to those of the renewable fuels standard (RFS) established in the pending energy bill that will increase ethanol production steadily over the next 10 years. The RFS alone, conservatively estimated, produces 500,000 barrels of ethanol per day, and, since it is a refined product (unlike crude oil) and is high-octane, it actually is equivalent to two barrels of crude oil. Therefore, if the RFS were enacted this year, ethanol would displace more than 3.5 bn barrels of crude oil by 2025.

Simply put, ethanol will displace many times more barrels of foreign crude oil than ANWR could ever hope to displace. This increased volume of domestically produced, already-refined, high-octane product will reduce gasoline prices by several cents per gallon during this time period, a greater cost reduction impact than the DoE projects for ANWR.
The truth of the matter is that savvy consumers should look for ethanol-blended gasoline wherever they can. They will save themselves money and contribute to important national policy goals at the same time. At a time when our nation's dependence upon oil imported from dangerous regions of the world threatens our security, economy and potentially American troops, we should all be looking for ways to use domestically produced renewable fuels whenever we can.