Politics of an alternative: E85

Even though the oil companies and their political pundits would have you believe otherwise, the world does have at its disposal several energy resources with which to power North America's vast fleet of vehicles aside from regular gasoline. The petroleum infrastructure and prosperity however, carry considerable influence and incredible resources meaning that they can pretty well squash any campaign to introduce alternative energies, no matter how many celebrities, environmental impact studies and dandelions you throw around.

Lest we forget that these are some of the world's largest corporations who just had their most prosperous string in history and are certainly accountable in many worldwide political and social implications (read: wars), meaning they aren't about to let some guitar-slinging, ex-hippie and his biodiesel-powered bus jeopardize their empire.

Aside from alternative energies, their only real foes are anything having to do with the environment and fuel-saving technologies. (It is not a stretch to see how or why the automotive industry fits nicely into this equation, whereas someone like Amtrak does not.) As far as they are concerned, the more cars and gallons-driven, the better -- damned be the consequences. But you can't completely write them off as the villains, because as a society we demand their products. Asking them to do any different would be akin to asking the fast food industry to stop chopping down the rain forest and raising cattle because North Americans are already grotesquely overweight. As a matter of fact, if you could just swap petroleum products with something more environmentally friendly, which provided all the same returns, they would jump on it, wouldn't they?

The crude industry is a unique one and is characterized by high barriers to entry and a few large players. The academic term is oligopoly, but you may know it as a cartel, which by definition can act together to affect pricing and supply. The most similar businesses are probably the diamond and drug trades, hardly pillars of society.

So when Honda, Toyota and Ford put the collective electric pedal to the medal on hybrid technologies, I thought that for sure there would be some anonymous anti-hybrid slandering making headlines. For a while there were some suggestions that the production of batteries is more harmful to the environment and it would be interesting to see the source of the strongest cost arguments against hybrids, but this is where this technology is vastly different from diesel or bio-fuels, or (for the time being) hydrogen.

Appealing to mass media has hade it cool to drive a hybrid and promote peace, save the environment, and whatever else they say comes along with it. It has taken the might of at least three major manufacturers working simultaneously over a period of time to make it happen, but it has finally taken off in a way that a few farmers or environmental coalitions could only hope for.

At this point, is hybrid technology even on Big Oil's radar? Well, after $60+/barrel and record profits, probably not, but something has happened recently that makes you wonder if the long-term squeeze on light sweet crude may get a hand from technology. Fortune magazine has a large spread on the virtues of ethanol and GM used the backdrop of the Superbowl to kick off its Yellow Cap campaign. Looks like we may have a trend here.

I must say this approach is very different from Toyota's Hybrid campaign. Instead of propping up their technology in the spotlight, the Big Three have chosen instead to build and deliver nearly 5 million cars equipped to utilize E85 (ethanol/gasoline mixture) and not even tell the people who bought them. This supports the claims that they have done so merely to satisfy fleet standards for fuel efficiency. (They have countered that because only 600 or so of the 170,000 gas stations carry it, that it wasn't a major selling point).

GM's sudden interest in touting the technology has all of the markings of another company "about face" redefining the term "Detroit U-turn." It seems that many of the major advances in automotive technology start out as the enemy in Michigan (before coming a major proponent, Mr. Iacocca's Chrysler was adamantly against the use of air bags, presumably due to their associated costs).

President Bush dusted off the Ethanol argument in his "State of the…, Speech to the…Nation's Speech…Speech of the People" State of the Union address not only in response to the country's recent increase in energy prices, but possibly also because the Ethanol argument has taken some interesting turns.

Typically, the ethanol in E85 (mixture of 15% gasoline, 85% ethanol) is produced by the manufacture of corn. Without getting stalk deep into details, producing ethanol is quite similar to making grain alcohol from corn and other grains. Corn has been the natural choice because the US is good at it and has tried to neatly bundle farm subsidies in its production (but that is another story). It was easy for the oil companies to take this one on by "employing" a couple of University professors to come up with some elaborate formulas to say that it takes more energy to produce than it supplies.

Advances however, in the production technology have dramatically lowered the costs associated with ethanol and has identified other, more efficient biomass for the production of cellulosic ethanol. (Cellulosic ethanol is produced from fibrous material, which humans can't digest anyway, removing the "threat to food supply" argument).

GM isn't the only one leaving oil's corner on this one. Many high profile companies and personalities are jumping on the E85 bandwagon and use Brazil as their poster child. (Ethanol is available at nearly all of the country's filling stations and account for about 40% of the 16.5 million driver's fuel). The greatest indicator that E85 might just be for real is the "real" amounts of money the oil companies themselves are now dedicating to its research.           

In the end, E85 is likely no more perfect a solution to our fleet's energy solution than is diesel, hybrid, or pure electric technologies. As a matter of fact a combination of all of the possible technologies may be the best solution. Breaking away from the status quo, however, has proven very difficult. Ethanol is yet another argument in favor of alternative fuels.

Comments

[Mark Vane]

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[corndog]

I think the attack on ethanol will come more from the radical environmentalists than the oil companies. The green agenda has been hijacked by anti-capitalists, who seem to LOVE hybrids, but will abhor ethanol. Reason? Ethanol will enable Americans to drive BIG SUV's, not econo-boxes like the Prius, etc.

Just watch, soon some "expert" will be trying to convince us that ethanol harms ozone in some way. It is water-soluble and bio-degradable, CO and CO2 are not a problem, so their options are limited.