Sunday, April 23, 2006

Don't Blame the Solution!


The newspapers and local television stations in Virginia are reporting stories of stations running out of gasoline in the Hampton Roads area. There are predictions of very high prices because “the government is making oil companies add ethanol to their gasoline.” The complexity and disarray in the countries supply of transportation fuels has allowed some outrageous lies and misleading spin but this is one that reaches the ceiling

Because I am a chemical engineer who spent 15 years in the industry and known to favor ethanol as a contributor to our transportation fuels supply I have been besieged by friends asking for a explanation of this situation. To save my failing voice and to spare those who are tired of hearing it repeated I have decided to post the facts where anyone interested can read them.

The Truth
The current situation was born in the 60’s when the world finally became fully aware that the tetraethyl lead the oil industry had been adding to gasoline as an octane booster for fifty years was a first order environmental and health disaster. The lead containing exhaust fumes were contaminating the air and lead oxide was coating everything along the highways. Once washed off by rain it entered the streams and groundwater. It was showing up in blood samples of children living near traffic areas. I remember warnings against picking any berries growing along the roadside.

Forget current worries about CO2 emissions -this was real poison! Tetraethyl lead in gasoline is considered one of the major environmental disasters of the 20th century . Leaded gasoline was phased out in the US from 1975 - 1986. Europe banned it in the 1990s. It is still used in the developing world where it is a major health hazard. For the dismal history of tetraethyl lead in gasoline you can click HERE

The industry needed another additive. This time the additive would not just be for octane enhancement. It also had to improve the burning characteristics of gasoline to meet new air pollution requirements.

There were two options: MTBE and Ethanol

MTBE is a manufactured petrochemical, of unknown toxicity to humans at low concentrations, but a carcinogen on inhalation and very persistent when spilled into nature. It is very soluble in water and once in is hard to get out. At concentrations greater that 40 parts per billion-it creates a turpentine taste in the water.

Ethanol as we all know is so non-toxic we sometime drink it. It is created in nature when sugars and the right yeasts are present.

Because I have pledged to include no speculation in my discussion, I will only report that MTBE was chosen by the industry as the favored additive . The effect of the decision was to push ethanol out of a large potential market and provide one for MTBE.

As could be expected MTBE began working its way into water supplies-presumably by overfilling at the pump and gasoline tank leakage. In 1995, major contamination was discovered in water supplies in Santa Monica, CA. This triggered extensive further monitoring and the discovery of additional contamination across the country.

This time it was the states taking action. By September 2005 twenty five states had legislation to end the use of MTBE. In 2002, a California lawsuit came down against the oil companies. California started a four-year replacement program with ethanol in 2003.

With lawsuits multiplying the oil industry made a major push for federal legislation which would shield them against legal action. The last chance effort was for inclusion in the Energy Policy Act of 2005. The protection was in the House version but eliminated in the Senate. The political winds were blowing hard against the oil companies. The Act as passed had no MTBE lawsuit protection for the industry.

With no shield from lawsuits, the industry announced the removal of MTBE from all fuels by May 2006. It would reformulate with ethanol. This sudden decision placed a short-term strain on ethanol capacity and created tight timetables for conversion of the blending facilities. There are now 99 operating ethanol plants with 33 more expected to start up in 2006. The Renewable Fuels Association has testified to congress that these facilities will meet the capacity requirements for ethanol. Any short term problems can be resolved by temporally importing ethanol from Brazil and the Caribbean.

However, ethanol prices have gone up. At the current price of ethanol, the cost of adding it to the 10% level in gasoline should go up by a few cents, and then drop as ethanol becomes readily available.

This industry chosen rapid reformulation away from MTBE may cause a small disruption. It has nothing to do with the Energy Act of 2005 mandate for the long-term use of more bio-fuels by 2010. That requirement is easily met.

To their credit, many of the oil companies and distributors have professionally rounded up the ethanol they need and say they will meet their goals. They promise to be a reliable supplier of environmentally sound transportation fuels. Buy your gasoline from them!

Do not listen to those who are putting out the disgraceful spin that this problem is somehow due to ethanol and not past bad choices for additives. Do not buy anything from them!

Monday, April 03, 2006

Growing Houses Instead of Corn, Northern Virginia is No Longer a Player in the Ethanol Boom

During the first national push to replace a portion of the nation’s gasoline with ethanol derived from homegrown corn Virginia was one of the most active states. Because it was located close to the fuel consuming Washington area, grew lots of corn, and had a large dairy industry to consume the byproduct distillers grains Northern Virginia and the Eastern Panhandle of West Virginia were very attractive locations. The state legislature passed some tax incentives to get the industry moving and a number of ethanol plants were planned for the area.

This all ended in the early 80's when the Middle East suppliers dropped the price of crude oil to $15 per barrel and the nation was convinced that the problem was solved.

Twenty-five years later high quality crude oil is now approaching $70 per barrel and mostly available from unstable and unfriendly countries. The ethanol- for-fuel boom is back. There are 97 plants now operating and another 42 new plants going on line or expanding this year. Four billion gallons of fuel ethanol were produced in 2005. This amount will surely double within a few years. With all of the cash staying in the US instead of leaving the country, we appear to have finally learned our lesson. The industry is definitely here to stay.

But this time Northern Virginia will be a consumer, not a producer. The cornfields and dairy farms are replaced with housing developments and shopping centers. It is now more profitable to grow houses than corn. The excitement and energy of combining our agricultural strength with our process engineering skills to solve a national problem has all moved to the mid-west. That area deserves tremendous credit for keeping the vision alive until now, when the country desperately needs it.

On behalf of all those who were active in the early Virginia initiatives we are sorry our state can't be a larger part of the excitement.