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Open Letter to Barry Ritholtz and Bloomberg About Ethanol - with responses and additional replies


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By Marc J. Rauch
Exec. Vice President/Co-Publisher
THE AUTO CHANNEL

               Originally published February 4, 2016


Hi Barry:

I just finished reading your article "Enough With Ethanol" that was published yesterday (February 3, 2016) on Bloombergview.com.

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Marc Rauch

I want you to know that regardless of how much criticism you receive about the article and the information you presented that you are not the biggest knucklehead disseminating lies and incorrect information about ethanol, you are merely the latest knucklehead to do so.

It appears that about the only thing you got right is that you spelled the word "ethanol" and your name correctly (although not having your photo ID in front of me to verify the spelling of your name I'm just taking your word for it).

You begin by writing and complaining about the ethanol subsidies. There are no ethanol subsidies. The subsidies that knuckleheads like you refer to expired about four years ago. So when you write "Why we still subsidize turning food into an inefficient fossil-fuel substitute is anyone's guess...," I would ask you: How is it that a person with your experience and knowledge of finance, the economy and the business world doesn't know this?

And how is it that you don't seem to know that there was never an ethanol subsidy, there was a biofuel subsidy that went to the blenders (the oil industry) not the ethanol producers?

People used to say, let's end the "ethanol" subsidy that makes ethanol-gasoline blends cheaper than ethanol-free gasoline and we'll see that ethanol can't compete in a free market. Since 2011 we've been able to see how well it competes: ethanol-gasoline blends are still cheaper than ethanol-free gasoline...STILL, and sometimes it's a lot cheaper, often $2-$3 cheaper per gallon than ethanol-free gasoline.

In fact, what's interesting is that service stations that sell E85 and E10 still have the same general price difference they had before the subsidy ended. E85 sold for about 50 cents less than E10. The subsidy provided about 50 cents per gallon, leading many to believe that the biofuel subsidy accounted for that difference. But E85 is still about 50 cents less per gallon that E10, so that means that the consumer never benefitted from the subsidy, only the oil industry benefitted - they never passed the benefits to the consumers. E85 should probably have been about $1 less per gallon than E10.

There's also no "ethanol mandate." There is a biofuel mandate, not an ethanol mandate. I'm curious to know why you don't know why ethanol is necessary. Don't you own a car? As a teenager did you never sit around talking cars and engines with your buddies? Don't you know that gasoline without an anti-knock additive will destroy a car's engine? Even if you didn't know that ethanol was the first additive that could tame knock in a high-compression internal combustion engine, didn't you know that tetraethyl-lead was the oil industry's answer to engine-knock (instead of ethanol)? Didn't you know that tetraethyl-lead is deadly to touch or inhale?

Didn't you know that the oil industry's solution to tetraethyl-lead was MTBE, which is also poisonous; and don't you know that the oil industry's current alternative to ethanol-gasoline blends is gasoline with significant quantities of other poisons such as benzene and toluene?

Don't you know or care that hundreds of thousands of American servicemen and women have been killed defending the oil industry around the world? Do you not know that no American soldier, sailor or airman has ever lost his or her life defending ethanol fuel production and distribution?

Barry, you then move into a series of lies and misinformation about corn crop land use, food deprivation, ethanol EROEI (energy returned on energy invested), environmental issues, and the myth of ethanol causing engine damage. I thought I was going to have to address all these issues individually. But you gave me a gift, you quoted Robert Bryce, author of such fairy tales as "GUSHER OF LIES." This means that he is at the least one of your resources for bad information.

Robert Bryce, in contrast to how I ranked you earlier, is the biggest knucklehead disseminating lies and incorrect information about ethanol. He's held this title for a number of years. In this arena he's even a bigger knucklehead than Lauren Fix, although she retains the title as the biggest female knucklehead disseminating lies and incorrect information about ethanol.

Therefore, instead of having to address each of the knucklehead comments you made, I'll simply point you to the 60+ page report that I published in June 2013 about Mr. Bryce and his view of ethanol and alternative fuels. You can find that report by CLICKING HERE.

Incidentally, I don't want to not mention that you also quote from the Environmental Working Group as if they were an authoritative independent resource on the environment and alternative fuels. EWG is a shill organization supported by the oil industry and/or friends of the oil industry.

By the way, you should probably be careful of using EWG as a trusted or authoritative resource because you may find that several of their other opinions are in fierce conflict with other opinions that you and Robert Bryce have. If EWG were correct about corn crops and ethanol they could easily be correct about all kinds of other things that are in direct conflict with information that you probably tout to your financial clients.

I'll give you a good opportunity to prove me wrong. Read my report, consult with whomever you wish (especially Robert Bryce), and then challenge me on any of the facts. I'll publish your findings word for word, regardless of what you find out. You don't have to do it today or tomorrow, you can do it next week or next month or next summer. Prove to yourself, your clients, to Bloomberg that you're not a knucklehead...if you can.

Thanks for your time.



February 5, 2016

REPLY FROM BARRY RITHOLTZ

Sir:

I just finished reading your response to my column "Enough With Ethanol."

My only wish is that YOU had read the column, and responded to what I wrote. Instead, you responded to what others have been saying about Ethanol. It appeared you misread or misunderstood what I put on paper.

First, I wondered "why we still subsidize turning food into an inefficient fossil-fuel substitute." I did not say we had tax subsidies; The word has a very precise meaning -- the dictionary definition of the word "subsidize" is:

        Verb to purchase the assistance of by payment of a subsidy; to aid or promote (as a private enterprise) with public money or efforts

We have "subsidized" Corn Ethanol with direct tax subsidies through 2011; we have also subsidized ethanol by mandating the usage of ethanol through the Renewable Fuel Standard requirements.

This is not the free market at work, but rather an EPA decree that requires retailers blend almost 15 billion gallons of corn ethanol a year into the gasoline they sell to the public.

It may not be a tax-based subsidy (a phrase I never use in the article) but it is a direct support of the product. And that sir, is a subsidy. So too was the a 54-cent per gallon import tariff, making US made ethanol that much more expensive, but that was not in the final version of the column.

That definition aside, you never respond to the direct points of my column that Ethanol is:

-Anti-Free Market
-Damaging to engines
-not especially efficient;
-Drives up the cost of water to local Midwestern consumers
-Causes pollution via runoff to Gulf of Mexico
-Barely generates more energy than it takes to produce it

You also made a number of misstatements in your letter; You say there never was an ethanol subsidy, ignoring both the 45-cent per gallon payment to blenders, as well as the aforementioned import tariff. That subsidy, whether to farmers or blenders still operates to lower the cost of ethanol, distorting the market. That anyone can imagine it is not a subsidy is astonishingly silly position.

Last, I have long ago learned that people who engage in Ad hominim attacks and name-calling in debate do so because they either lack the ability to make a coherent argument, or because their position is without merit. I suspect in your case it is both.

Good day sir.
www.Ihatecorntethanol.com



MY REPLY TO BARRY RITHOLTZ

Hi Barry -

I do appreciate that you replied to my earlier letter, thank you.

I'd also like to thank you for providing further evidence that you know very little about the issue and that your general business knowledge is severely limited. You say that you wish that I would have read your column, instead of just responding to what others have said about ethanol. I did read your column, which is why I was able to reply to your comments and then, when it was evident that you were simply parroting what others have said (most notably Robert Bryce), I thought the most expedient use of my time was not to repeat how I have responded to Mr. Bryce in the past, but to simply provide a link to a very lengthy report that I wrote in reply to his cesspool book "GUSHER OF LIES" (I say cesspool rather than seminal because it better describes the quality of his work).

Unfortunately, it doesn't appear that YOU read your column. Both words "subsidize" and "subsidies" appear in your article. But even if the word "subsidies" didn't specifically appear in your article, you are correct that the word "subsidize" is a verb defined as "to purchase the assistance of by payment of a subsidy..." Consequently, by definition, the use of the verb automatically inserts the word "subsidy" or "subsidies" into the reading of your article. I suggest that in an effort to find some fault with my criticism that you felt semantic subterfuge would suffice.

In any event, you are incorrect, especially referring to the real issue (not just the use of the words subsidies or subsidize). The Renewable Fuel Standard doesn't mandate the use of ethanol, it mandates the use of a renewable substance, of which ethanol is just one possibility - although it is the best currently available.

You say that the subsidy is (or was) "...a direct support of the product" (meaning ethanol). However, the subsidy wasn't in support of ethanol, it was in support of gasoline. The subsidy went to the blenders to make up for what they lost by having to blend in what is for them an unprofitable non-petroleum ingredient. As I wrote in my earlier initial response to you, that subsidy should really have been passed along to the consumer to make ethanol-gasoline blends even more affordable than ethanol-free gasoline.

The general anti-ethanol argument that cites subsidies is quite preposterous because if subsidization is just the issue, then the subsidies that go to the oil industry, which are many times greater than any subsidies of any kind that could be said to benefit ethanol, should be the true object of your enmity.

If you dislike subsidies, and think that subsidies are a restriction to a free market, then you should hate all the subsidies that go to the oil industry. In looking over your other published articles I don't see any that are critical of all the subsidies that go to the oil industry. If you don't like standing outside when it drizzles, why do you like standing outside in a downpour?

Incidentally, at the bottom of your reply, you included a link to a website called "IHateEthanol.com." I thought it would have some information in support of your position. I was anxious to read it. It doesn't, in fact the link doesn't work. Investigating a bit further, I found that it is simply a URL that you purchased a few years ago to display your dislike for ethanol and "ethanol subsidies." So if you hate subsidies so much, do you also own the URL "IHate Gasoline?"

Now let me address your comments about free market: Having restrictions doesn't necessarily mean that a market isn't free, it may mean that in order to insure a free market that some regulations are required. Stop lights and stop signs at street corners don't restrict the free flow of traffic, they insure the orderly and safe free flow of traffic. Putting age restrictions on the purchase of alcoholic beverages or tobacco products are considered by most members of society as a necessity to keeping the markets open, instead of being legislatively closed due to health and danger concerns. Even the most ardent libertarians understand and accept these measures.

The concern for us, at least for me as a patriotic American, is to insure a safe and sane American free market. I'm not interested in helping foreign ethanol producers at the expense of American farmers and producers. There is no benefit to allowing someone else to dump products in America. Domestic ethanol is already cheaper than gasoline and diesel, and if we want our fuels at the pump even cheaper then there should be no restrictions on how much ethanol can be sold at a fueling station.

The free-market restriction we should all be concerned about is that higher level ethanol-gasoline blends are not allowed at every single service station. Pumps should be available that allow the consumer to choose whatever blend level they desire, from E0 to E99, with all the stops along the way. Who is stopping this from happening? Not the ethanol industry, it's the oil industry.

What's more, it should be illegal for an oil company to impose severe financial penalties on independently-owned stations for adding in independent fuel options. Let the power of the consumer's purse control the market; make all and any blend level available; remove the subsidies that have been given to the oil industry - as they have for more than 100 years - and let the price of gasoline and diesel reflect their real cost, which might be as high as $15-$20 per gallon.

But, for argument sake, let's say that all import tariffs are removed from foreign ethanol, at this point the biggest losers wouldn't be domestic ethanol producers, if would be the oil industry. Cheaper ethanol would make ethanol-gasoline fuels even cheaper than they are now; they would be more of a competitive threat to the oil industry. It would force your precious oil industry to lose money, or for the government to impose greater at-the-pump taxes to quell the oil industry's complaints. The irony of your solution would be to create more taxes, not less.

The oil industry is the most heavily restricted industry in the world; there is nothing free about it. It's worse than the diamond cartel restrictions because not everyone needs diamonds on an every-day basis. We can get along without diamonds, but we can't get along without engine fuels. They have us over a barrel, pun intended.

To sum up the issues of subsidies and free markets:

The subsidies are and were to support the oil industry; import tariffs on foreign ethanol protect the oil industry as much or more than the ethanol industry; import tariffs on foreign ethanol protect American farmers and keeps jobs, taxable revenue and salaries in America. And of course, having a strong domestic ethanol industry means that we will never have to send troops to Brazil or any other country to defend access to their ethanol.

Moving on, you again bring up the myths of engine damage caused by ethanol; inefficiency; cost of water; pollution; and EROEI. This means that YOU not only didn't read your column, you didn't read my 60+ page report in answer to Robert Bryce. If you had, you would have been embarrassed to repeat these childish points and obvious lies.

Lastly, in reply to your taking umbrage at my calling you a schmuck (I used "knucklehead" in the published version of my response to your article), your accusation that my use of pejorative terms indicate an inability to make a coherent argument is in actuality an example of your inability to respond to facts.

Words are a wondrous thing; they are tools. And like other types of tools, the use of the right tool can accomplish a task much more efficiently than using complicated work-arounds. Many words have the ability to express something that might otherwise take an entire sentence or even a paragraph to explain. Consequently I think using the word "fork," for example, to describe the more historically-recent eating utensil that combined attributes of two older utensils (spoon and knife) is a very handy and thrifty way to express what the utensil is and does. So when I say you are a schmuck/knucklehead, it displays my ability to succinctly express what you are. And, given your inability to provide any contrary information to the facts I've set forth regarding ethanol, along with your reluctance to read my additional writing on the subject, you have produced no evidence to show that you are not a schmuck/knucklehead.

As a matter of interest, to support the idea that my use of a pejorative term is an indication of my high level of intelligence, I invite you to read the report of a study conducted last year and reported in the journal "Language Sciences" - http://www.sciencealert.com/people-who-curse-a-lot-have-better-vocabularies-than-those-who-don-t-study-finds.

Again, I welcome any response you would like to make, and I will faithfully report every word of your response in my published reporting of our communications.

Good day to you, Barry, and have a great weekend. By the way, who are you rooting for, the Panthers or the Broncos?



February 8, 2016

REPLY FROM BARRY RITHOLTZ

You still have not responded to the main points I raised about Ethanol.

Let's try a numbered list format

1. Do you claim it is not damaging to engines? Can you explain why small engine makers will not warranty their engines if more than 10% of ethanol is used?

2. Do you believe ethanol as an energy source is especially efficient?

3. Do you disagree with the complaints that it drives up the cost of water to local Midwestern consumers?

4. Do you not accept the scientific assessment that it causes pollution via runoff to Gulf of Mexico?

5. Do you disagree with the contention that after being a negative net energy producer, it now barely generates more energy than it takes to produce it?

6. What makes this corn-based ethanol so special that it does not have to compete in the Anti-Free Market for customers?

Those were the key issues I raised in the article you pushed back against.

You have yet to respond to those issues -- please do.



MY REPLY TO BARRY RITHOLTZ

Barry - So nice to hear from you again. I tried over two separate emails to suggest that you read the 60+ page report I wrote, which would have answered all your questions...and more. I provided the link, and there's no cost, so I don't know why you wouldn't have availed yourself of the opportunity since you seem to want to see how I respond to these points.

But, okay, I'm happy to take you by the hand through the information.

1. You use the word "damage," but by itself it's a meaningless word. What damage are you referring to? Internal combustion engines operate on thousands of small explosions per minute, regardless of the type of fuel being used. The explosions eventually "damage" the engine. Ethanol does not cause explosions that are any worse than gasoline or diesel fuel. In fact, in higher compression internal combustion engines (such as those found in cars and trucks), gasoline without ethanol or another anti-knock ingredient will knock the engine apart. Now that's damage.

The issue that you are probably referring to are the three complaints typically made about ethanol-gasoline fuel blends. The first is that the ethanol causes sludge, tar, gunk, goo, crap (or whatever you want to call it) to appear in the fuel tank, thereby clogging the filter, spark plugs, fuel injectors, carburetors, etc.

The second complaint is that the ethanol corrodes the rubber hoses and some metal parts.

The third is that the ethanol in the fuel-blend magically sucks water right out of the air and drops it in your fuel tank, thereby causing some type of water-related problem.

Of the three, I'd say that the first - "the sludge quagmire" is the most often heard, so I'll begin here.

To get to the bottom of this issue, basic questions must be asked:

Question #1 - Does sludge/goo/gunk/crap form in an internal combustion engine? The answer is yes.

Question #2 - Is the sludge/goo/gunk/crap because of ethanol? The answer is no; it is because of the gasoline and oil used in the fuel.

While ethanol is a fuel, it is also a very effective solvent. Solvents are used to clean and remove the residue and deposits left after a substance has been used, such as the residue and deposits left after gasoline and/or oil is burned.

Gasoline is also a solvent, but it's not as effective a solvent as ethanol. Gasoline and petroleum oil products are, however, very effective in leaving residue. They are champs in leaving behind deposits.

In short, if you were choosing up sides to compete in a national residue-making competition, you would be better to select gasoline or petroleum oil for your team. But if you were choosing teammates for a national clean-up competition, you'd be better off to pick ethanol.

How much more residue does gasoline or a gasoline-oil combination create as compared to ethanol? Watch this video from 2009 to find out:




Now, imagine that the glass jars shown in the video are the insides of an internal combustion engine. Imagine, if instead of burning just fuel-soaked wicks for a few seconds, you were to burn the fuel-sole wicks for an hour or two every day for a week, a month, a year. Based on the results of the video the residue and deposits from the gasoline and gasoline-oil fuels would be caked on.

Would the caked on residue affect the functionality of an engine's pistons? Would the solid caked-on bits break off and affect the functionality of other parts of the engine? Of course it would. This is one of the reasons why engines fail and why mechanics have to clean out an engine. To mitigate this problem gasoline companies add "detergents" to the gasoline to help dissolve the build up. If gasoline was a more effective solvent it might be able to remove the residue that used-gasoline creates.

In an article published by GasBuddy.com on June 29, 2013; Gregg Laskoski wrote about automakers' efforts to encourage the development of more effective gasoline detergents. Mr. Laskoski is Sr. Petroleum Analyst at GasBuddy and, interestingly enough, had been Managing Director of Public Relations at AAA Auto Club South. Here's are some excerpts from that article:

"The automakers formed a consortium, Top Tier Gasoline, that certifies retailers as meeting their standard for detergent. They say it's necessary because detergents prevent deposits of leftover material from building up in engines and exhaust systems. The deposits are like the ash that remains in a fireplace, and their presence in your car's engine can reduce fuel economy and performance."

"We strongly recommend Top Tier detergent gasoline to keep your engine clean,” GM fuel specialist Bill Studzinski said. “Fuel economy, emissions and acceleration all suffer when there are deposits in an engine."

I hope you noticed that there isn't one single mention of ethanol in these two paragraphs that attribute the deposits and residue problem to ethanol. And if you have the opportunity to read the entire article you'll see that the word ethanol never appears anywhere in the text of the story.

Let me take you in a different direction. Imagine having a fuel that creates much less residue and is a very effective solvent at the same time. In other words, something that might a small mess, and then cleans up after itself...along with cleaning up the mess left by the petroleum-based fuels. Isn't that better? How could it not be better?

But wait, some engines do have problems with sludge, tar, gunk, goo, crap (or whatever you want to call it) after the fuel has been switched to ethanol or an ethanol blend. There, I said it; I admitted it.

If you could fault ethanol fuels for anything, it's that they are too efficient at cleaning the residue and deposits. But that's like complaining that your toothpaste whitens too much; that your hand soap gets too much dirt off your hands; that your greasy pots and pans clean up too quickly.

If you have an engine that has used some type of gasoline fuel or gasoline-oil fuel then the engine will have substantial deposits throughout, and you will have to have it serviced. You will have to change filters, spark plugs, anything and everything that comes in contact with the burned fuel deposits. Through the life of the engine and the device that the engine powers, you will have to do this, maybe multiple times. The good news is that once you have had this service completed ethanol-gasoline fuels will keep your engine clean longer and better than any non-ethanol gasoline with detergent.

So if petroleum oil products, like gasoline and diesel, are the cause of the build up of all the engine "ash," or engine "plaque," then why do some people and organizations claim that ethanol is the cause of the problem? Well, you could say it's a lie to blame ethanol. In fact, I will say it: It's a lie.

Hopefully you watched the video at the link above and you read the quotes from the GasBuddy.com article. If you have just the most rudimentary knowledge of internal combustion engines then you know that what I've written is true. If you have zero knowledge of internal combustion engines then you won't recognize what I've written as true; but if this is the case, then you shouldn't be commenting on engine damage in the first place.

In the broadest terms possible it could be said that all fuels used in any type of engine will contribute to the engine breaking down. It could be a spark-induced internal combustion engine, a compression-ignited internal combustion engine, a steam engine, a water or wind turbine, or an electric motor; they all break down, and the fuel that supplies the power helps to cause it. Engines have moving parts; moving parts wear down. Internal combustion engines suffer from thousands of small explosions per minute.

Barry, when anti-ethanol people like you talk about a fuel damaging an engine they make it seem as if only ethanol causes the wear and tear. They make it seem as if the gasoline somehow cushions the explosions or coats the engine components to prevent deposits from forming. There is no fuel used in an internal combustion engine that is worse for the engine than gasoline. Gasoline damages engines. Small engines suffer from gasoline problems. Ethanol helps to clean the engines.

If gasoline was not harmful to engines, America would not have had thousands of engine repair shops and mechanics spread throughout the country in all the years during the age of leaded gasoline.

If you've been paying attention, you'll have noticed that I said there were three often quoted engine problems attributed to ethanol. The above explanation only refers to the "sludge" issue. Now I'll address "corrosion."

All liquids are corrosive, including and especially water. Air, wind, solar rays are also corrosive. Gasoline is of course corrosive, which is why certain materials cannot be legally used to hold gasoline. But guys like you make it seem as if only ethanol causes corrosion. When you're faced with a corrosion causing factor you use materials that are not susceptible to corrosion: You use paint that can withstand solar rays and metals that don't rust. It's not a big deal. As corrosive as water is, we drink it and bathe in it.

During the decades in which tetraethyl-lead gasoline was the only real fuel available for spark-induced internal combustion engines, engine designers used parts that were least susceptible to gasoline corrosion.

After leaded gasoline and gasoline with MTBE were banned engine designers had to change parts that were susceptible to ethanol corrosion. So they did, and now the vast majority of passenger cars and lights trucks on the road today now have engine parts and fuel system parts that are no more susceptible to ethanol corrosion than the previous parts were to gasoline. Small engine manufacturers have also been making the changes and more and more new equipment is approved for ethanol fuels.

Yes, older engines may require the replacement of parts, but older engines require the replacement of parts at some point anyway, so parts that are not susceptible to ethanol should be used. The replacement parts are usually readily available and cost differences, if any, are negligible.

The third engine-problem issue is the myth that alcohol (ethanol) sucks water right out of thin air and puts it in your fuel tank. This concept is a joke. Mercury Marine, the largest manufacturer of marine engines, has clearly and repeatedly stated: "ethanol does not grab water molecules out of the air." And they correctly attribute water collecting in boat fuel tanks as the result of condensation, not because the ethanol in the ethanol-gasoline blend sucked the water molecules out of the air. You can hear more about this for yourself from an extensive webinar that Mercury presented 2011. The full webinar can be found at:
http://dcd96xmek71bc.cloudfront.net/archives/email/Trade/BoatingIndustry/MythsofEthanol-August252011.mp4.
An abbreviated version of the results can be found at:
http://www.boatus.com/magazine/2011/december/ethanol.asp.

I purposely cite the Mercury Marine report because it also addresses the general nonsense about ethanol-fuels being harmful to boats. If you do avail yourself of the links just above, you'll find that Mercury says that E10 may be better for marine engines than non-ethanol gasoline.


2. You ask if I believe that ethanol as an energy source is especially efficient. Of course I do, as have top scientists around the world for more than a century. An internal combustion engine optimized to run on ethanol will out perform a comparable internal combustion engine optimized to run on gasoline. The early automobile inventors knew this, Henry Ford knew this, and General Motors top fuel scientists (Kettering, Midgley and Boyd) knew this. Incidentally, the GM trio were responsible for inventing leaded gasoline.

In addition, USDA tests in 1906 demonstrated the efficiency of alcohol in engines and described how gasoline engines could be modified for higher power with pure alcohol fuel or for equivalent fuel consumption, depending on the need. This was testified to during the "Free Alcohol" Congressional Hearings held by the Ways and Means Committee of the 59th Congress in 1906.

The U.S. Geological Service (USGS) and the U.S. Navy performed 2000 tests on alcohol and gasoline engines in 1907 and 1908 in Norfolk, Va. and St. Louis, Mo. They found that much higher engine compression ratios could be achieved with alcohol than with gasoline. When the compression ratios were adjusted for each fuel, fuel economy was virtually equal despite the greater B.T.U. value of gasoline.

Elihu Thomson reported that despite a smaller heat or B.T.U. value, "a gallon of alcohol will develop substantially the same power in an internal combustion engine as a gallon of gasoline. This is owing to the superior efficiency of operation..." (New York Times Aug. 5, 1906) Other researchers confirmed the same phenomena around the same time.

In recent times, other studies have been done to prove this. For example, in 1998 the Ethanol Vehicle Challenge staged by Wayne State University proved that ethanol optimized engines out performed comparable gasoline optimized engines.
(https://wayne.edu/newsroom/release/1998/06/04/high-performance-wayne-state-ethanol-car-wins-1998-ethanol-vehicle-challenge-1464)

In 2010, Argonne National Laboratory presented their study, "Ethanol-fueled racecar engines outpower lead-fueled engines."
(http://www.anl.gov/articles/ethanol-fueled-racecar-engines-outpower-lead-fueled-engines)

In 2011, a joint study conducted by the U.S. Dept. of Energy, Ford Motors, and AVL Powertrain Engineering presented similar positive ethanol results.
(http://www.ars.usda.gov/SP2UserFiles/Program/213/Teleseminars/Robert%20Stein%20(AVL)%203-29-11.pdf)

Barry, before I continue, let me point out that you have never provided any information as to why you believe ethanol is bad. All you've done is publish a couple of articles where you take pot-shots and invoke the name of the king schmuck (Robert Bryce) and the scam entity (Environmental Working Group). So at the end of my answering your "numbered list," I'm going to expect you to provide information that shows your position is correct. I already know you're a schmuck, but do you want everyone including all those at Bloomberg to realize that you're also a blowhard?


3. Do I disagree with the complaints that ethanol production drives up the cost of water? To begin with, I don't think that I've seen specific complaints that ethanol production drives up the cost of water. If you have actual quotes or statements about this please submit them.

I am aware that the issue of the quantity of water use is cited as an issue. This was particularly true during the recent Midwest drought years. However, golf courses, residential lawn use, corporate and scholastic campuses, and ubiquitous restaurant serving of water as soon as a customer sat down at a table were also areas of concern. Therefore, to single out ethanol production is deceitful.

Is it possible that local communities raised water prices during the Midwest drought? Of course, that's what they do; that's what governments do to try and reduce the use of whatever they think is being used too much.

There are areas of the west that have been faced with rising water prices because of the drought in the west, not because the western states are growing an abundance of corn for ethanol. In California, for example, the crops include lettuce, oranges, olives, almonds, pumpkins, hops, grapes, tomatoes, cotton, walnuts, grapefruits, and flowers. Several of these crops are water intensive. Are you aware that lettuce production, for instance, has had a steady increase year after year? Maybe people should stop eating so much salad.

I checked the Internet and didn't find one source that blames lettuce growing on the increase of water prices. See, your argument about ethanol causing water prices to rise is disingenuous and puerile.

What does trouble me about your asking if I disagree with the complaints that ethanol production drives up the cost of water is that this isn't even the correct water issue to wonder about. The correct issue to be concerned with is how much water is required to produce ethanol. So not only is your question irrelevant, you didn't get the question right. If we were playing Jeopardy on television you would have lost.

I'll pose the problem for you - Barry: "Hey Marc, don't you think that ethanol production uses far too much water?"

Barry, I'm glad you almost asked about this subject because it's one of my favorites to address - it always makes me laugh. Can you imagine the oil industry and its shills pretending that they have a concern for water issues? It is the ultimate in hypocrisy. It’s not just Nazi-like double speak, it’s like double speak to the 10th power.

The people who brought us global fresh and salt water disasters, who have killed untold millions of wildlife, who have destroyed untold miles of beautiful beaches; they’re raising a red flag warning about the water requirements to produce ethanol.

The issue of water use may be the single best example of the advances that have been made in ethanol production. The schmucky people, you know the anti-ethanol crowd, say that ethanol requires huge amounts of water, not just in the actual distillation process, but in the growing of the crops that are used to make the mash that gets fermented and then distilled. It’s true; water is required for these tasks. In his book, Robert Bryce cites various studies that reveal the amount of water required. He then uses various voodoo equations to paint a picture that would show the Earth turning into the desert planet Arrakis from Frank Herbert’s “Dune Saga.”

As expected, Mr. Bryce foresees absolutely no circumstances in which the “Dune Saga” scenario wouldn’t happen. He doesn’t consider that desalination plants or technological advance could mitigate the problem. Nor does Bryce consider that there is a fairly large variety of raw materials that could be used instead of corn that require less water and/or provide much greater yields of ethanol. Bryce, and people like him are completely wrong. Here's some facts from POET ETHANOL, one the largest producers of ethanol in America:

"The first plant that POET purchased took in 17 gallons of water per gallon of ethanol in 1987. Today, POET averages less than 3 gallons of water, an 80 percent reduction from where it started. But we're not done yet. POET believes that water is a precious resource and is committed to using as little of it as possible in our ethanol production process. So we have set a goal...of decreasing the overall annual water intake at our plants 22% by targeting an average usage rate of 2.33 gallons of water taken in per gallon of ethanol produced. This will reduce our total annual water use by one billion gallons based on POET's 2009 production capacity of 1.5 billion gallons of ethanol."

"POET engineers have invented a new way for its facilities to use water which results in a decreased intake with a reasonable economic payback. Named Total Water Recovery, it ensures that our facilities don't have to choose between profit and planet. As of December 2011, 18 POET plants had installed Total Water Recovery."

"Most of the lifecycle water used in ethanol production is for growing the feedstock. According to the National Renewable Energy Laboratory, almost all of that is from rainfall as less than 5 percent of corn used for ethanol production is irrigated. Still, water requirements of the feedstock represent the vast majority of the total lifecycle water use for ethanol production. POET is working with our feedstock producers to understand the amount of irrigated corn coming into our facilities in order to identify opportunities to collaborate for additional water conservation."

To support POET’s comments, consider these comments made in 2011 by Forrest Jehlik, Research Engineer at Argonne National Laboratory:

"The amount of water used to make ethanol has declined dramatically. Today, producing one gallon of ethanol requires about 3.5 gallons of water. That’s a little more than it takes to process a gallon of gasoline. Much of the criticism about ethanol’s water requirements stem from the need to irrigate feedstock crops in drier climates. But most ethanol is produced from rain-fed crops grown in the Midwest."

"In addition, ethanol is not carcinogenic and doesn’t poison groundwater or the ocean. Ethanol rapidly biodegrades. Concerns over ethanol spills are muted by ethanol’s low toxicity. In fact, you’ll find ethanol in beer, bourbon and other happy-hour beverages you’ve probably consumed."

Water advancements are possible, they have been made, and they will undoubtedly continue. However, the key item I would like to point out to you in Mr. Jehlik’s comments is this part, “Today, producing one gallon of ethanol requires about 3.5 gallons of water. That’s a little more than it takes to process a gallon of gasoline.” Yes, it also requires lots of water to make gasoline, but you people never think of telling that to your audience.

If you'd like more information about POET and the water issue you can listen to an audio interview I conducted with Jeff Broin, Chairman and CEO of POET on January 27, 2016:





4. You ask if I accept the scientific assessment that it causes pollution via runoff to Gulf of Mexico? I'm presuming you mean that "it" is ethanol. If you are meaning that "it" is ethanol, then the answer is, no I don't accept this scientific assessment (if there is such an assessment).

The pollution you're referring to is caused by fertilizer, not ethanol. Corn crops are not used to make fertilizer, they are used to produce food and fuel. Golf courses, residences, corporate and scholastic campuses, and other crops use fertilizer. Did you know that in the 10 states that border the Mississippi River, and the states whose minor rivers and streams feed into the Mississippi, that there are thousands of golf courses - the number may be as large as 10,000 golf courses. They all use fertilizer. That fertilizer contributes to the pollution that runs into the Gulf of Mexico, and yet, probably not one of those golf courses grows crops intended for ethanol production.

So again, you have posed a question/concern that is fatuous. If you had a true concern for the Gulf of Mexico you would want to ban all golf courses; all residences and campuses with lawns; and all farming, regardless of the crops grown.

Plant life requires fertilizer of one type of another. So the solution is not to eliminate the use of fertilizer, it is to employ fertilizer types and techniques that minimize down-river pollution. One very, very good concept is to harvest the algae that grows abundantly in the Gulf of Mexico because of the fertilizer and use it to produce ethanol and organic fertilizer for the farms, golf courses, campuses, etc. Not only would this be an excellent fertilizer but it would diminish the amount of algae that exhausts the oxygen in the water that prohibits marine life from existing in those areas.


5. You ask if I disagree with the contention that after being a negative net energy producer, that ethanol now barely generates more energy than it takes to produce it?

I absolutely disagree with that contention, both by implication and by fact. The question implies that only ethanol requires energy to produce, or that it has the worst EROEI statistics. This is another disingenuous issue that shows you have no understanding whatsoever of energy in general, and ethanol in particular.

All fuels require vast amounts of energy to transform it into a useable state and bring to market. This is true for coal, gasoline, diesel, nuclear, hydroelectric, steam, natural gas, propane, hydrogen, solar, methanol or ethanol. Therefore, they all begin as being energy negative.

Some fuels, such as solar, may require little energy to capture and transform, but it's output is so restricted (with current technology) that it's not very efficient or economical for broad application.

The only question that is relevant is how much energy is required to produce ethanol compared to gasoline. The answer to this question is that gasoline is more energy negative than ethanol. Since you cite Robert Bryce, and no other resource that might have given you the wrong information, I'm presuming that you're referring to David Pimentel and Tad Patzek's studies (whether you know it or not) - Bryce doesn't cite any other work.

If Robert Bryce is the kahuna of schmucks, Pimentel and Bryce are little better than village idiots. Almost as soon as their study was completed and published in 2006, their findings were rendered incorrect and irrelevant. The counter studies were conducted far and wide by different individuals and institutions, including Patzek's home facility, UC Berkeley. If you had taken the time to read my 60+ page report you would have learned the following:

The Pimentel-Patzek studies were hatchet jobs because they calculated in extraneous materials, they under-estimated crop yields, they over-estimated other aspects of farming (either intentionally or because the information they used was out-of-date), they exaggerated possible worst case agricultural scenarios, they created deceptive algorithms to calculate and compare statistics, and they purposely ignored certain other aspects of oil refining and gasoline production that make gasoline EROEI horribly negative.

Perhaps the most shocking item that Pimentel and Patzek left out in their gasoline EROEI calculations are the hundreds of thousands of American military personnel (past and future) who were killed or wounded to protect and defend the oil industry’s status quo. I’m sure they never calculated in the cost of continually treating those service personnel who sustained long-term and life long injuries. Then there are the accidental deaths of oil industry workers (past and future). Then there’s the destruction of beaches, and the loss of employment for those non-oil industry workers who live near the oil disasters, and then – as in the case of the Gulf of Mexico fiasco – the destruction of millions(?) of birds and fish.

Then you’d have to figure in all the energy expended in making every bullet, every gun, every tank and cannon and jet and ship and pair of shoes worn by our men and women who are being used to protect the oil industry. These are all a part of the cost of doing business oil-style.

Okay, okay, I’m not playing fair; I’m using tragically true but typically side-line aspects of oil EROEI. Of course, I don’t know how you can overlook the deaths of thousands of Americans, but the oil industry does. I should be comparing apples with apples, even though Pimentell and Patzek used bad information and irrelevant factors, such as farming equipment that is un-necessary.

See, one of the things that Pimentel and Patzek did was to try and reinvent the wheel, so to speak, even though the wheel has been with us for thousands of years. Here’s what I mean; they started with a zero–based budget as if America had no farmers. They even calculated into the energy equation the energy required to build some of the equipment that’s used in farming. Not only were the tractors they selected unsuitable for the job because they were too large and cumbersome, but they ignored the fact that almost all corn farmers already own the equipment necessary to grow corn or other products. They stacked the deck against ethanol. To be fair, P&P should have calculated in every aspect that goes into what it takes to get the gasoline to the pump, and that would have been to add in all of the costs for war, and every single item right down to the energy it takes to make the zippers on the pants worn by our military service personnel.

Alright, you have my take on what Pimentel and Patzek did. Consider some examples of studies that studied the Pimentel-Patzek studies. The first of which comes from Tad Patzek’s own school, UC Berkeley. It was a study completed in 2006 after the Pimentel-Patzek studies and it was conducted by UC Berkeley’s Energy and Resources Group.

Here’s some highlights of the results:

ETHANOL CAN REPLACE GASOLINE WITH SIGNIFICANT ENERGY SAVINGS, COMPARABLE IMPACT ON GREENHOUSE GASES
“The analysis, appearing in this week's issue of Science, attempts to settle the ongoing debate over whether ethanol is a good substitute for gasoline and thus can help lessen the country's reliance on foreign oil and support farmers in the bargain.”

“Dan Kammen and Alex Farrell of the Energy and Resources Group at UC Berkeley, with their students Rich Plevin, Brian Turner and Andy Jones along with Michael O'Hare, a professor in the Goldman School of Public Policy, deconstructed six separate high-profile studies of ethanol. They assessed the studies' assumptions and then reanalyzed each after correcting errors, inconsistencies and outdated information regarding the amount of energy used to grow corn and make ethanol, and the energy output in the form of fuel and corn byproducts.”

“Kammen estimates that ethanol could replace 20 to 30 percent of fuel usage in this country with little effort in just a few years. In the long term, the United States may be able to match Sweden, which recently committed to an oil-free future based on ethanol from forests and solar energy. Kammen last year published a paper, also in Science, arguing that even Africa could exploit its biomass to build a biofuel industry that could meet energy needs for the poor and develop a sustainable local fuel supply, a future much better than using fossil fuels.”

“The goal of the UC Berkeley analysis was to understand how six studies of fuel ethanol could come to such different conclusions about the overall energy balance in its production and use. Farrell, Kammen and their UC Berkeley colleagues dissected each study and recreated its analysis in a spreadsheet where they could be compared side-by-side. The team said it found numerous "errors, inconsistencies and omissions" among the studies, such as not considering the value of co-products of ethanol production - dried distillers grains, corn gluten feed and corn oil - that boost the net energy gain from ethanol production. Other studies overestimated the energy used by farm machinery.”

"The assumptions made by some of the authors were not based on the best data, or were just a little bit too convenient, and had a strong impact on the results," Kammen said.”

Included in the UC Berkeley review were the following:

Thermodynamics of the Corn-Ethanol Biofuel Cycle Patzek, T.W., Critical Reviews in Plant Sciences 23(6), 519-567 (2004). Ethanol Production Using Corn, Switchgrass, and Wood; Biodiesel Production Using Soybean and Sunflower David Pimentel and Tad W. Patzek, Natural Resource Research, 14(1), 65-76 (2005).

Another study, conducted by the United States Department of Agriculture, was presented in 2007 at UC Berkeley – what a coincidence - by Roger Conway, Office of Energy Policy and New Uses at the United States Department of Agriculture (USDA). The report showed huge discrepancies in the figures that Pimentel and Patzek used to arrive at their conclusions versus the figures used by USDA’s efforts to conduct their own studies on ethanol vs. gasoline EROEI. The USDA studies were significantly more favorable towards ethanol production.

A Michigan State University study conducted by Bruce Dale, Professor of Chemical Engineering, found that the Pimentel-Patzek methodology is flawed. The measurements of BTU are irrelevant and that the net energy of ethanol is actually higher than gasoline (in other words, EROEI for ethanol is positive, while the EROEI of gasoline is more negative).

In 2005, Bruce Dale participated in a C-SPAN televisied debate against David Pimentel and Tad Patzek. Speaking on Dale's side was John Sheehan, Senior Engineer, National Renewable Energy Laboratory. The debate was supposed to center on the issue of net energy balance. One of the most important points illuminated in the debate was that even if Pimentel-Patzek's finding that corn ethanol production results in a negative net energy equation that gasoline production is far worse and electric energy is horrendously bad compared to both ethanol and gasoline. After watching the video of the debate it's hard to believe that anyone has taken Pimentel-Patzek seriously, unless all other opposing information is kept from the viewer. The entire video can be watched at:
The Net Balance of Ethanol - Debate.

Another report critical of Pimentel-Patzek was published in 2006 by Justus Wesseler, an agricultural economist and professor of Agricultural Economics and Rural Policy at Wageningen University in the Netherlands. He called the Pimentel-Patzek work "flawed" and "misleading." This report can be found at the Elsevier Energy Policy website.

Also in 2006, the spring edition of The New Atlantis (Journal of Technology & Society) had this to say about Pimentel and Patzek’s studies: "Professors Pimentel and Patzek have published several studies on this subject, and these have been thoroughly and repeatedly debunked in the scientific literature, in government reports from the Department of Energy and Department of Agriculture, in congressional testimony, and elsewhere…Reputable scientists have publicly called the work of Pimentel and Patzek “shoddy,” “unconvincing,” and lacking in basic scientific transparency. The most recent dissection of their claims, appearing in the journal Science in January 2006, found that their results depended upon “some input data that are old and unrepresentative of current [ethanol-production] processes, or so poorly documented that their quality cannot be evaluated.” The complete editorial from The New Atlantis can be found at:
http://www.thenewatlantis.com/publications/addicted-to-bad-data.

In 2011, Forrest Jehlik, Research Engineer, Argonne National Laboratory responded to what he felt are the 5 most prevalent myths about ethanol. He said that ethanol does not take more energy to make than it yields, “Argonne National Laboratory research has shown that corn ethanol delivers a positive energy balance of 8.8 megajoules per liter. The energy balance from second-generation biofuels using cellulosic sources is up to six times better…”

In 2012, the U.S. Department of Energy concluded a report on LIFECYCLE ENERGY BALANCE by stating "...corn-based ethanol shows a clear benefit over gasoline." You can read this report at:
http://www.afdc.energy.gov/vehicles/emissions_balance.html.

So Barry, unless you have some other information - which you don't - say goodbye to the issue of EROEI.


6. You ask "What makes this corn-based ethanol so special that it does not have to compete in the Anti-Free Market for customers?"

My answer to this today is what it was in my last two replies to you: It's not ethanol that should have to compete in the free market, it's gasoline that should have to compete in a free market without all the subsidies and allowances they have been given continuously for more than a century. In addition, oil companies and gasoline distributors should be charged with restraint of trade and anti-trust violations. There is nothing so special about gasoline and other oil products that deserve the protection of an anti-free market.

As I wrote in my last reply to you, the concern for us, at least for me as a patriotic American, is to insure a safe and sane American free market. I'm not interested in helping foreign ethanol producers at the expense of American farmers and producers. There is no benefit to allowing someone else to dump products in America. Domestic ethanol is already cheaper than gasoline and diesel, and if we want our fuels at the pump even cheaper then there should be no restrictions on how much ethanol can be sold at a fueling station.

The free-market restriction we should all be concerned about is that higher level ethanol-gasoline blends are not allowed at every single service station. Pumps should be available that allow the consumer to choose whatever blend level they choose, from E0 to E99, with all the stops along the way. Who is stopping this from happening? Not the ethanol industry, it's the oil industry.

What's more, it should be illegal for an oil company to impose severe financial penalties on independently-owned stations for adding in independent fuel options. Let the power of the consumer's purse control the market; make all and any blend level available; remove the subsidies that are given to the oil industry - as they have for more than 100 years - and let the price of gasoline and diesel reflect their real cost, which might be as high as $15-$20 per gallon.

But, for argument sake, let's say that all import tariffs are removed from foreign ethanol, at this point the biggest losers wouldn't be domestic ethanol producers, if would be the oil industry. Cheaper ethanol would make ethanol-gasoline fuels even cheaper than they are now; they would be more of a competitive threat to the oil industry. It would force your precious oil industry to lose money, or for the government to impose greater at-the-pump taxes to quell the oil industry's complaints. The irony of your solution would be to create more taxes, not less.

The oil industry is the most heavy restricted industry in the world; there is nothing free about it. It's worse than the diamond cartel restrictions because not everyone needs diamonds on an every-day basis. We can get along without diamonds, but we can't get along without engine fuels. They have us over a barrel, pun intended.

There you have it, Barry, a numbered list of responses to your numbered list of childish, ignorant questions. Now it's your turn to provide information that you think contradicts, challenges and/or corrects anything I've presented.

No more dancing; no more semantic games. Frankly, if Bloomberg doesn't terminate its relationship with you immediately, they have no credibility.