POSTED ON JULY 30, 2008:
Fill 'er Up?
Tulsans debate the benefits/detriments of ethanol additives in gasoline
Worth the Price? The price difference between E10 and ethanol-free gasoline is a tremendous factor in the shift among Tulsa gas stations. According to a report on the Oklahoma Corporation Commission's website, "ethanol costs less than $3 per gallon wholesale, while [ethanol-free] gasoline is selling at about $4 per gallon nationally."
With gas prices ballooning indefinitely--and some girding their loins for $7 gas in 2010--Tulsans are paying more attention at the pump. Recent focus on global warming and carbon emissions has left many drivers feeling not only broke when refueling, but also guilty.
One hot topic in a time of fuel fixation is the addition of ethanol to gasoline, in particular the ethanol blending that occurs in Oklahoma.
Ethanol has long been a fuel additive, encouraged in large part by several federal policies meant to address pollution and energy independence. Gasoline containing up to 10 percent ethanol has been approved for use in automobiles and on the market for many years.
In many states, ethanol replaces other additives (namely MTBE, a potential human carcinogen that makes its way into groundwater) as an oxygenate that boosts octane levels, improves fuel combustion and reduces exhaust emissions, according to the Environmental Protection Agency. Oxygenates are required in metropolitan areas as per guidelines set by the EPA in 1998 for reformulated gasoline.
The Energy Policy Act of 2005 encouraged the trend of ethanol blending by setting a goal of four billion total gallons of biofuels (mainly corn ethanol) to be mixed with gasoline sold in the U.S. by 2006, to reach 6.1 and 7.5 billion gallons in 2009 and 2012, respectively. The US.. reached 6.5 billion gallons of fuel ethanol production last year. To put that in perspective, only 175 million gallons were produced in 1980, according to the Renewable Fuels Association.
Agricultural subsidies, tax credits and grants for ethanol production are also on the rise, as set by the Farm Bill, which was extended this year.
Though a 10 percent ethanol blend (known in the industry as E10) has been very commonly sold across the United States, it's taken Oklahoma a while to jump on the gasohol bandwagon. Even QuikTrip, the beloved Tulsa-based area business leader in gasoline, only started supplying E10 last October, announcing its decision via numerous media outlets. The infrastructure and supply of ethanol for E10 gas simply did not exist prior to that time, according to Mike Thornbrugh, QT's Public and Governmental Affairs manager.
Since then, however, the availability of E10 has grown such that it accounts for 98 percent of gasoline sold in the metro area, according to another representative.
Though we're nearing a year of E10 availability in the area, the majority of Tulsans were none the wiser that they had been fueling up with ethanol blends.
On July 1, the state mandated that pumps supplied with blended gasoline be labeled, giving customers fair warning as to what they are consuming. And Tulsans get opinionated when confronted with the contents of their gas tanks.
It's no wonder ethanol brings together so many hot-button issues: energy independence, global warming, agricultural subsidies, alternative fuels, etc. Many people are uneasy about fuel ethanol, and several are outright against it.
Steve Smith, a Tulsa native who "grew up in Tulsa during the muscle car era of the '50s and '60s," now hopes for an alternative to the inefficient internal combustion engine. Though he wishes he could drive an electric car, he has to make do with ethanol-blended gasoline--and he's not particularly happy about it.
"Biofuels from corn don't make sense to me," he said. "Directing a human consumable food product into a fuel for automobiles is lunacy."
He also cited the price impact on derivatives of corn, in light of the rising use of corn as an ethanol input. Increased demand for corn from the growing ethanol market combined with the diversion of corn supply away from traditional markets causes the price of corn to go up--and along with it, the prices of the endless other products that require corn, notably food products like meat and dairy.
The past few years have seen widespread upset in Mexico, for example, where rising ethanol production caused the price of staple food tortillas to skyrocket, tripling and even quadrupling according to a Washington Post article.
Other opponents of ethanol go so far as to put their money where their mouth is, boycotting E10 gas.
One such person is Karen Cline, who lives on Concharty Ranch on the southern outskirts of the Tulsa metro area. When Cline found out that QT had started selling E10 gasoline, she stopped buying.
"I've long been a supporter of [buying] 'local' and for me, the start of that thought process several years ago involved buying at QT because it was based locally," she said. "It was with great sadness that I stopped buying fuel from QT, but I cannot and will not support the use of ethanol made from corn."
Cline expressed disappointment when she learned of QT's decision. "There are so many ways that QuikTrip has been an outstanding leader in the area and the community, but they really missed the mark on this one," she said.
"For me, there are a whole lot of things involved in my boycott of ethanol fuels--the use of GMO corn, the use of chemical fertilizers, the false economy of subsidies paid to corn farmers, the high energy cost of producing ethanol from corn... and on we go," she said. "If QT stops using E10 fuel, I'll gladly move back to buying from them, but until then, I'm buying from the Philips station across the street."
Ballew's experience illustrates the price difference between E10 and ethanol-free gasoline, which is a tremendous factor in the shift among Tulsa gas stations. According to a report on the Oklahoma Corporation Commission's website, "ethanol costs less than $3 per gallon wholesale, while [ethanol-free] gasoline is selling at about $4 per gallon nationally."
This translates to an approximate 10-cent price difference across the city. For example, on July 21, QT was selling regular E10 at $3.79 and a Phillips station near downtown was selling ethanol-free gas at $3.89 per gallon.
But the gap can be bigger, as in Cline's neighborhood. At the time of interview, she was paying $4.04 per gallon for 100 percent gasoline while E10 was at $3.87.
In a time of high gas prices, more and more people are keeping an eye on their miles per gallon. Many claim plummeting gas mileage as a result of the E10 switch.
The industry does not deny that the blend does decrease gas mileage.
"We agree," said Thornbrugh. "The science shows that you do lose two to three percent of fuel efficiency." This has been confirmed by industry studies, and is accounted for by the fact that pure ethanol contains about one third less energy than pure gasoline.
According to calculations based on the national average of 12,000 miles driven per year, and the mileage of the country's most popular car (the Toyota Camry), this decrease does not amount to much. Choosing "pure" gasoline over blended would only save about $4.80 per year, with current Tulsa prices.
However, many Tulsa drivers report decreases in fuel economy far surpassing two to three percent.
Tulsa Now forum posters report drops ranging anywhere from zero to 16 percent, mostly in the upper reaches of that range. Only one forum member reported no change in fuel economy, but did not know that ethanol was being added to Tulsa gas until the signs went up, which signifies that the poster may have been using E10 prior to taking note of her miles per gallon.
Likewise, Karen Cline saw her mileage increase significantly when she switched back to ethanol-free gas.
"It's gone up almost two miles per gallon, which, with my truck, is huge," she said. "Two miles per gallon is a huge increase because I was getting about 14.5 and now I'm getting 16.5." In other words, a 12 percent drop.
Despite consumer complaints about price and mileage, things aren't likely to change soon, as gas companies worry about price as well.
"If you don't use E10, you're getting beat 10 to 15 cents per gallon," said Thornbrugh. And QuikTrip is not willing to let go of its position at the top.
On the other hand, some gas station owners have decided to go the opposite route, relying on consumers who, for whatever reason, do not wish to support the ethanol fuel industry.
University of Tulsa student Trey Ballew is another one of these customers. While not as firmly convinced as Cline, he is skeptical about corn-based ethanol as a workable alternative fuel source. Piqued by curiosity at the gas stations that tout ethanol-free gas, he decided to try it out.
"I stopped to buy fuel at a Phillips station, which advertised '100 percent gasoline' and a price on the sign which was identical to that of the QT just down the street. Once I pull in, I find out the advertised price is for their 'premium' gasoline, which contained ethanol, and the regular unleaded was actually $0.16 more a gallon than the QT's unleaded." he said. "I hopped back in the car and drove to the QT for fuel."
Fortunately for consumers avoiding ethanol, not all "pure" gas stations seem to be simply exploiting customers' aversion to E10. Moe's Quick Mart, a Phillips Station at 6th and Lewis, is one of them.
Operated by Morad (Moe) Sepahvand, this station advertises "NO ETHANOL" on its sign and means it. None of Moe's gas contains ethanol, and his prices are the expected ten cents more than the going rate for E10.
Sepahvand's decision was partly one of convenience. "I did not want to go through the extra expenses, change the filters in the pumps and whatever it would require to change the system for ethanol," he said.
But it was also a keen business strategy. "I thought, if everybody's going to use ethanol, I'll be the only one who doesn't," he said. "Maybe a lot of people don't want to use ethanol--and that's exactly what happened."
Sepahvand reports no decrease in sales, and said that in fact, he's seen a rise in business since consumers became aware of the widespread E10 switch.
QuikTrip seems to be doing just fine as well. "Have we lost any business? Well, our market shares don't show that," said Thornbrugh. "Our market shares have continued to climb."
Chad Settle, professor of economics at TU, also predicts a rise in the use of ethanol blended into the gas supply. "With the historic trends of ethanol prices being lower than MTBE prices and fuel prices, the use of ethanol as an additive does lower prices of gasoline," he said. "Conversely, gas stations that choose not to use ethanol would be at a competitive disadvantage in the market."
This does not bode well for boycotters. When asked what she'd do if ethanol-free gas became less available and more expensive, Cline said she'd make the most of alternative transportation. "I'll probably just have to ride my horse a lot more."
On the bright side, the future of ethanol may take a turn in the right direction, away from the controversial use of corn, which is a rather poor source of cellulosic ethanol compared to other crops.
The answer may be right in Tulsa's backyard: agricultural scientists in Nebraska and the Dakotas have been exploring the use of native perennial prairie grasses such as switchgrass, a major cellulose-rich species found in the tallgrass prairie.
Preliminary research has led researchers to believe that prairie grasses would solve many of the problems that corn-based ethanol production poses. Proponents of switchgrass say it would deliver more energy with far fewer inputs as well as possibly improving the soil and decreasing the net balance of carbon released into the atmosphere.
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