Flexi-Fuel Fairy Tale
December 11, 2008 § Leave a comment
The Utopian State, known the world over as the US, was in the throes of a dilemma. Much maligned for not doing enough to limit carbon dioxide emissions, it developed a plan that seemingly in one fell swoop tackled global warming associated with automobile emissions while at the same time reducing import of oil from nations, some of whom were deemed unfriendly, at least in the rhetoric of elections.
This solution was known as the 20/10 plan. The goal, to replace 20 percent of gasoline with ethanol in 10 years, was seen as visionary, if for no other reason as that 20/10 was about as good as one got with vision. However, even before vast quantities of alcohol had been consumed, a hangover of major proportions was in the making. Therein lies the tale.
The Utopian State, as befitted its name, was inclined to believe that the public would recognize a really good thing when they saw it. They especially believed in the maxim: If You Build it, They Will Come, because said maxim was irresistibly derived from the powerful combination of Kevin Costner, the National Sport and mysticism.
So they built it, a complex web of subsidies to farmers, automobile companies and refiners, and tariffs on imported ethanol, all designed to produce domestic ethanol to blend with gasoline, and vehicles that would run on the stuff. In a nod to perceived consumer preferences, they incentivized the auto companies to make flexi-fuel cars, capable of using regular gasoline and also E85, a blend with 85% ethanol.
They even created demand for these cars by ordering their agencies to use them and mandating the use of the new fuel. Waivers to the mandate were given generously, no doubt in the Utopian belief that said waivers would not be sought if not merited. It seems that some of these outfits are seeing a net increase in gasoline usage (Washington Post: Problems Plague U.S Flex-Fuel Fleet, Oct. 23, 2008), a result contributing in no small measure to the aforementioned hangover.
At the core of Utopian belief is that folks will “do the right thing.” So, purchasers of flexi-fuel vehicles were expected to purchase E85, even from filling stations some distance away, ignoring the fuel consumption getting there and back. Then word filtered through that E85 delivered 28 percent fewer miles per gallon. In short, it was more expensive to use and harder to find. They started filling up with regular gasoline because the flexi-fuel vehicle allowed that; filling stations noted the drop in volume and stopped stocking E85.
In time, it became apparent that the federal policy and legislation underestimated, or ignored, the fact that even in the US only market-based policies function. Into this nightmare scenario stepped in Prof. Wunderbahr from a prestigious eastern university, with an engine design that delivered a small car running on E85, delivering fuel economy and the muscle of a larger vehicle. The design took advantage of the high octane number of ethanol (113 versus 87 for regular gasoline), which allowed effectively high compression ratios, which in turn improved the efficiency of combustion. The result was elimination of the gas mileage penalty from using ethanol, increased power for an engine of given size, and retention of the improved emissions associated with ethanol usage.
Auto makers vied with each other to retool and produce these cars without any federal incentive because the public actually wanted them. Fuel distributors rushed to install E85 pumps and realized that this was simply achieved by eliminating one grade of fuel. They came to the realization that all vehicles on the road today specify either 87 or 91 octane. A third grade was not needed, and the third pump was now available with modification to dispense E85. The US government, not wanting to be left out of this, set policies to further these steps. Ethanol from sources non competitive with agriculture became cheaply available. All was well again.
And then they elected a new President who resolved never again to set policy that was not market-based. The country united behind him on this and it was never quite the same again. The country was henceforth known as the United States.