Wednesday, December 24, 2008

Revisiting the case for ethanol

One of the top themes of the 2008 election cycle was energy independence, and each major presidential candidate presented a plan to achieve that goal. The McCain and Obama plans were remarkably similar, with each candidate emphasizing the need to replace petroleum based fuels with so-called green fuels.

Finding a replacement for petroleum is a good idea. Eliminating American dependence on foreign oil supplies makes good strategic sense, and reducing the environmental impact of energy consumption is simply good stewardship.

At first glance, and in theory, replacing gasoline with ethanol seems a perfect solution. Unfortunately, physics – and by extension economics – gets in the way.

On the physics side, alcohols such as ethanol contain less energy per volume than petroleum distillates like gasoline. Each gallon of gasoline contains 115,000 Btu (British thermal unit) of energy, compared to 75,700 Btu for ethanol, or only about 66 percent the energy of gasoline.

The ratio of energy input to work output is more or less constant in an internal combustion engine. You can think of it as 1:1; for each energy unit you put in, you get one work unit out. Put in less energy, you get less work out.

Blending gasoline with ethanol dilutes the energy content of the fuel. A 10 percent blend has only .966 (96.6 percent) the energy as straight gasoline. That 3.4 percent reduction in energy translates directly to fuel efficiency; a 10 percent ethanol blend will deliver 3.4 percent fewer miles per gallon than straight or non-blended gasoline.

Such a relatively modest reduction in fuel efficiency would be of little concern if the cost to energy ratio were the same as the volume to energy ratio. In other words, if the price of 10 percent ethanol blends were 96.6 percent that of non-blended gasoline, the cost per unit of energy would be the same.

Unfortunately, ethanol blends are 10-20 cents per gallon higher than straight or non-blended gasoline prices. On Dec. 17 in Scottsbluff, Neb., non-blended gas was $1.41/gal, while mid-grade and premium ethanol blends, containing four and 10 percent ethanol respectively, were $1.51 and $1.61 per gallon respectively.

To deliver the same energy value as non-blended gasoline, the ethanol blends must be priced at 96.6 percent of the non-blended price, or at the same energy to volume ratio. Therefore the break even price for ethanol blends in Scottsbluff on Dec. 17 was $1.36, or 15 cents lower than the mid-grade price, and 25 cents less than the premium price.

From an energy standpoint, ethanol blends cost more and deliver less energy.

This is just one aspect of the challenge facing America in the ongoing struggle to achieve the worthy goal of energy independence.

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