Rapier Rips Rauch Pro-Ethanol Stance
EDITOR'S NOTE: About two weeks ago, The Auto Channel published Marc Rauch's rebuttal to five editorials written by Robert Rapier for the Forbes Media website. Marc's response to Mr. Rapier, along with links to all five Rapier editorials can be found by CLICKING HERE.
Robert Rapier has replied with a new Forbes article, primarily a counter-rebuttal to Marc's comments. We present the complete reply below, followed by Marc's closing argument (maybe, there could be more):
An Ethanol Defender Misses The Point
How To Use A Rapier In A Gunfight...
Marc Rauch of The Auto Channel has long been one of the most consistent ethanol defenders you will find anywhere. We have engaged in a number of cordial exchanges over the years regarding our respective views on ethanol. However, Marc took exception to my recent ethanol series, and wrote this response: Never Bring A Rapier To A Gun Fight. As I replied to him -- and as I will show today -- a rapier's point can be highly effective if the other person is shooting blanks. That’s mostly the case with Marc's response.
My Proposal for Fixing the Ethanol Industry
Allow me to briefly summarize my argument before I address the blanks Marc shot at them:
1. The Renewable Fuel Standard (RFS), which was passed in 2005 and expanded in 2007, has created an ethanol market utterly dependent upon the continuation of the RFS. It pits powerful interests against each other, which means ethanol interests must constantly lobby to keep the blending quotas at a high level. This also puts them in a situation where their destiny is controlled by the federal government. It’s a highly desirable situation for ethanol lobbyists, as they must constantly lobby for continued federal support of ethanol. 2. The RFS has failed to bring long-lasting prosperity to farmers or the ethanol industry, and it has failed to create a sustainable ethanol industry (i.e., one that doesn’t require continued mandates). At the same time, it maintains the perpetual risk of being abolished or weakened (as it is being done now -- which I warned would happen two days after President Trump was inaugurated). You can look at the stock prices of ethanol companies over the past two years to see the impact. 3. If Midwest states band together, they could make the RFS irrelevant. They could pass their own legislation that would encourage E85 (or E30 for that matter) to become the default fuel across an entire Midwest corridor, where potential demand for E85 is 5x current ethanol production volumes. This would put ethanol interests in charge of their own destiny. This is critical, because ethanol support may swing back and forth on a national level, but will always be consistent in the Midwest.
That’s a pretty straightforward argument. If you read that and conclude that I am anti-ethanol, then you either 1). Don’t understand my argument; or 2). You do understand it, but assume I am not being sincere.
Because Marc immediately accuses me of intellectual dishonesty -- something nobody who knows me well would ever accuse me of -- then he seems to believe I am not being sincere.
No Point in Rebutting Straw Men
Most of the pushback to my articles from ethanol interests have been focused on the idea that oil has a lot of negative aspects, and therefore we should be using ethanol instead. That’s an interesting rebuttal, considering it is entirely irrelevant to the argument I am making. My plan would actually boost ethanol consumption, but do it in a way that is no longer at the mercy of four-year election cycles.
Much of Marc’s response is along these lines, and as such, there is no point in rebutting these specific arguments. They are straw men, diversionary tactics, or simply emotional arguments for ethanol. They are, however, blanks when it comes to the points I have made.
I will, however, make one ironic point. Much of Marc's reply focuses on the many evils of the oil industry. But, this is the same industry that powers the ethanol industry. Corn farmers aren't using ethanol to run their trucks and tractors. They aren't using ethanol to dry their corn when they need to. They don't use ethanol to produce the fertilizer to grow the corn. Ethanol plants aren't using corn stover to provide process heat for their factories. Those are all petroleum product inputs. Yes, in addition to being utterly dependent on the federal government, the ethanol industry is utterly dependent on petroleum. My plan takes aim at both of those dependencies.
Addressing Specific Points
With that, I will address some of Marc’s specific points, quoting some excerpts and then addressing them immediately after. After taking objection to my point that the ethanol industry’s business model has long been to lobby the federal government to force their product into the market, Marc responds with this:
Marc: I believe that these comments from Robert are intellectually dishonest and historically inaccurate. The petroleum oil industry enjoys its position of dominance for one reason only: Federal government interference.
Again, you can call me a lot of things, but intellectually dishonest I am not. I have warned about the ethanol industry’s business model for over a decade, because of exactly the situation we are seeing now. But to rebut Marc’s last statement, one wonders why petroleum became the fuel of choice in every country in the world. It’s simple. It’s not actually because of interference. It’s because it was cheap, abundant, and had high energy density. That’s why the greenest countries in the world continue to rely on oil -- not because there is a powerful oil lobby in all of these countries. This argument presents the ethanol industry as a poor victim against the powerful oil industry, but seeking the federal government to fix this ignores the fact that many do not see it this way -- and sometimes their point of view will prevail.
Marc: At this point in time, shouldn't the oil industry be free from all governments supports and be standing on its own?
This reminds me of two points, the first of which strikes at the very core of almost every ethanol interest’s arguments. There is a difference between the refining industry, and “Big Oil.” Refiners must buy oil, refine it, and sell the finished products. Their margins are usually squeezed when oil prices rise. I can tell you with authority -- as someone who has worked in refining and blended gasoline -- that what they care about is margins. If they can make more money blending ethanol, that’s what they will do. This model represents the vast majority of refining in this country (e.g., Valero, Phillips 66, Marathon).
The exceptions are the real “Big Oil” -- ExxonMobil, Chevron, Shell, BP. They produce oil and refine it, thus one could argue that they have incentive for keeping ethanol out of the market. But they represent a minority of refining in this country, whereas ethanol interests paint them as a unified majority set on blocking ethanol’s markets. It’s a false argument, but makes up the basis for many arguments in keeping ethanol mandates.
The second point is that a high-ranking person in the ethanol lobby did write to me and acknowledge that ethanol has an entitlement mentality. So they granted one of my key points, which is instead of trying to grow their markets at home where they have political power, they insist on taking on interests that in some cases are aligned against them.
But, as Marc does here, this person went on to say “But the entitlement is justified given history.” It’s like saying “We were victims in the past, so it needs to be made right.” Look, we could argue about that all day, but it doesn’t change the fundamental fact: There will always be interests -- and not just oil interests -- aligned against the ethanol industry outside of the Midwest. No matter how you try to paint the opposition, they will exist. You can either keep fighting them -- with the predictable results we are seeing now -- or you can take control of your own destiny.
Marc: In any event, the $.45 per gallon subsidy that Robert refers to didn't go to the farmers or the ethanol industry, it primarily went to the oil/gasoline blenders to make up for having to use 10% of someone else's product.
I have seen this argument before, and the rebuttal is quite easy. Who howled when Congress was debating eliminating this subsidy? It wasn’t the oil industry. It was corn farmers and ethanol interests. That tells you everything you need to know about who this subsidy actually benefited, regardless of how it was structured.
Marc: Correcting an injustice is not an injustice.
The whole point is, not everyone agrees that it’s an injustice, and they don’t agree that if it was an injustice that this is the correct fix. So, we return to my argument: There are going to be vested interests lined up against you, and sometimes they are going to win. That’s exactly what has hurt the ethanol industry since President Trump’s election. He has primarily favored the refiners over the ethanol industry -- which would be irrelevant if the Midwest was driving this market themselves.
Marc: I'd say that Forbes must view Robert's editorials as being anti-ethanol enough to meet their criteria for bashing ethanol, thereby allowing Robert to publish five unfavorable ethanol articles in such quick succession.
Let me just clear that up right now. As long as I stay in my lane (energy), Forbes doesn’t object at all to what I write. They haven’t censored a single column of mine ever. Others have argued that Forbes is anti-climate change, yet I have published multiple articles arguing that this is a serious problem that must be addressed. So this is really an ad hominem argument, and an unwarranted shot at Forbes given the latitude they give their contributors. And, I might add, I am working on an interview with one of the pro-ethanol groups to allow them to make their points. But, I will be challenging them on those points, as I am challenging Marc here.
Marc: Robert wants to compare Iowa to Saudi Arabia, and he wants to treat Iowa as an isolated sand locked country. He wants to treat Iowa as if its ruled by a "royal" dictator and his family, and commands that Iowans use ethanol before using any other fuel.
That is an utter misrepresentation. I used Iowa as an example, but go on to point out that the entire Midwest is where most of the ethanol is produced. Further, ethanol enjoys far more political power than oil interests in the Midwest (most of which has no oil production at all). Thus, Midwest governors could easily band together and come up with policies for vastly increasing the use of ethanol in the Midwest. It would be far easier than forcing more ethanol into Texas or California, which are states where you will find some staunch opposition to ethanol mandates.
Marc: Robert implies that the oil industry has been consistently profitable; as if oil industry entities have been immune to financial downturns; as if the oil industry has not had to rely on a perpetual cycle of government largesse to survive.
Absolutely not. What is the government largess of which Marc speaks? These oil companies that over-leverage and make bad decisions are allowed to go bankrupt. They aren’t lobbying the federal government for policies like “Ban oil imports, so we can sell all of our oil at better prices and stay in business.” That would be a perfect example of government largesse. The oil industry enjoys its tax breaks, as every industry does, but they are not lobbying for federal intervention in forcing consumers to use their product.
But again, to reiterate what I wrote above, the “oil industry” is not the refining industry. Refiners are middlemen. They couldn’t care less whether they are blending ethanol or selling refined oil. Heck, Valero bought a bunch of ethanol plants because they felt like they could make money selling ethanol. What refiners care about is being able to decide what to do given market economics, and not having to make long-term plans on the basis of a mandate that could disappear. If they can make more money selling ethanol, that’s what they will do. What I am arguing is for Midwest states to pass laws to make it easier for them to profit from selling ethanol.
This is really enough said on my part. In summary, I will say that the status quo -- the federal government mandating ethanol blending -- is exactly the reason we are in the present situation. My plan would address the status quo. The primary objections to my plan can be boiled down to “We just need more of the status quo.” That’s a position that is doomed to fail, and right now we can see the impact of relying on that status quo. You won’t always win the argument with the federal government. But you would always win it if you relied on Midwestern state governments to help drive demand.
The Best Defense Is Still A Good Offense
...You Forgot To Take The Safety Tip Off Your Points
By Marc J. Rauch
Exec. Vice President/Co-Publisher
THE AUTO CHANNEL
Second, I did indeed say that Robert was being intellectually dishonest, and then upgraded it to intellectually bankrupt. However, you will note that I never said he was stupid or ignorant, which are words that I have often used when referring to others who present anti-ethanol positions. Robert is definitely not stupid, and he definitely is knowledgeable about energy matters (and I suspect a great many other things). I freely and happily admit to using Robert and his media materials on The Auto Channel to help present good information about the energy industry. I believe he is sincere; it's just that I sincerely think my friend is wrong in the position he espoused in the recent Forbes editorials, and wrong in his defense of that position.
The thing that I find funny about "straw man" arguments is when the opponent defers responding to a statement by saying "oh, that's just a straw man argument." In effect, the opponent is using a straw man argument to parry a straw man argument, instead of actually responding to it. Alex Epstein (who I referred to in my initial rebuttal to Robert Rapier) does this to nearly any argument made against his absurd position that there is morality to "fossil fuels." You see this in action in his YouTube videos when he conducts street corner interviews (a la Jay Leno's STREET WALKING segments on his "Tonight Show" - yes, young people, Jimmy Fallon is not the original host of NBC's "Tonight Show"). Claiming a "straw man argument" is not a get out of jail free card.
I find that using analogies and allusions are an important part of any disputation and conveyance of information. Moreover, I believe that presenting background (history) is extremely important when trying to get an opponent and/or audience to understand the information you are conveying. In this case, I'm specifically referring to factual information related to the dangers in using petroleum oil fuels. For 100 years (give or take), the American public has been bombarded by the oil industry with warnings about the dangers of using alcohol fuel (ethanol). Simple statements like "ethanol damages engines" have become axiomatic. An ethanol advocate can't reply with just a simple 3-word "no, it doesn't." An explanation is required...more information is needed.
To the vast majority of people who hear about the ethanol-versus-gasoline issue they will immediately think "ethanol, who needs it, ethanol damages engines." But this isn't the truth. Ethanol does not damage engines, ethanol cleans engines. It is gasoline and petroleum diesel that damages engines. This is a paradigm shift in most people's thinking, so it requires explanation and substantiation. I'm happy that Robert chose not to address this point except by seeking asylum in the straw-man-shelter-ruse. By doing so he concedes the validity of my statements regarding this specific issue. Most people have no knowledge of the history of engine fuels. Many people in the ethanol industry have no knowledge of this history; and if there is a sizeable number of people in the ethanol industry who are unaware of the history, then you can imagine how few people in the oil industry have any idea of the true history of engine fuels, and (of course) they have no incentive to want to learn it.
To Robert's claim that the only reason I publicize facts regarding the danger of petroleum oil fuels is to make an emotional appeal, I say you're damn right it is! As often as I can, I try to remind/inform people of the millions of lives that have been lost because of petroleum oil. Every time I do a live speaking engagement, I present an update to the number of consecutive days that have gone by since the 1973 Oil Crisis in which no American service man or women has been killed defending ethanol (that number, by the way now stands at 16,735 consecutive days). Conversely, American casualties defending the oil industry are never more than a few days between incidents. EMOTIONAL, YOU BET!
Is it diversionary to tell people salient details as to why something exists? I don't believe so. Is it diversionary to know all the letters of the alphabet before wring an essay? I don't think so. Is it diversionary to know how to add and subtract numbers before learning multiplication or division? I don't think so. Is this a straw man argument? Yeah, so what if it is, I got my point across, right?
In my original rebuttal on August 24th, I wrote "The petroleum oil industry enjoys its position of dominance for one reason only: Federal government interference." Robert disagreed and responded with "It’s because it (oil) was cheap, abundant, and had high energy density. That’s why the greenest countries in the world continue to rely on oil -- not because there is a powerful oil lobby in all of these countries."
Well, "cheap" (as it relates to cost) is a relative thing - something can be cheap compared to one thing, but more expensive than something else. Kerosene (the first petro-fuel that competed with alcohol) became cheaper than alcohol because of a huge tax that was placed on alcohol to increase government revenue to pay for the Civil War - kerosene was not cheaper because it cost more to produce alcohol, not cheaper because alcohol was less cost efficient as a burning fluid to light a room, not cheaper because alcohol could only be obtained at the loss of human lives...but because of an enormous sin tax that was placed on alcohol. The sin tax was levied by the government. The government "interfered" with the normal marketing of alcohol. The government tipped the scales in favor of petroleum oil...hell, they didn't just tip the scales, they turned the entire equation on its head. There was no comparable tax placed on kerosene production. Hence, the petroleum oil industry enjoyed kerosene's dominance over ethanol because of federal government interference.
When gasoline was invented it inherited this position of dominance due to government interference on the price of alcohol. The tax remained in place for more than 40 years after the conclusion of the Civil War. Although Henry Ford powered his first automobile on an alcohol-turpentine blend, other early inventors admittedly used gasoline because of the lower price. However, in European countries, where a usurious tax was not placed on alcohol production (or where equal taxes were placed on alcohol and petroleum fuels), ethanol enjoyed at least equal acceptance to kerosene and gasoline.
As for the second part of Robert's "cheap" retort, oil wasn't abundant everywhere (Germany, France, Great Britain, Spain, Italy, Sweden - the European car manufacturing countries - had no petroleum oil at that time), and the issue of energy density was irrelevant. Alcohol was known to provide greater power in any internal combustion engine (early gasoline was around 50 octane), and engines could just as easily be manufactured to optimize ethanol as gasoline - something that is also true today.
Furthermore, oil wasn't abundant everywhere in America, it was abundant in only a few places. But with the interference of the federal government's taxes, and then interference from Prohibition, the products manufactured from oil were distributed throughout the country. In a reverse argument for Robert's business model plan to make ethanol the dominant fuel in just specific parts of America (I'll get into this in greater detail shortly), perhaps gasoline today should only be sold in those areas where there are oil wells and refineries?
In estimating the role that the "oil lobby" played in government actions and decisions, we don't have to look any further than the relationships that Rockefeller and Standard Oil, and Deterding and Royal Dutch Shell had with Imperial Germany, Britain, Nazi Germany, and Lenin's Russia. Then we don't have to look any further than the Teapot Dome Scandal in the U.S., along with Rockefeller's involvement with the passage of Prohibition, and all the campaign donations given to individual American politicians from the oil industry.
I honestly have no idea of the comparative difference of donations and underhanded deals that existed between politicians and oil men vs. politicians and alcohol men, but I'd wager everything I own that the oil industry was the key player in that game. Moreover, in line with my calculations on the number of American service men and women who were killed defending oil, I'd say that the number of wars we fought during the 20th century proves the power of the oil industry to influence and control government decisions. The ethanol industry was a poor victim against the powerful oil industry, saying anything else is intellectual dishonesty. And while it is displeasing for many people to hear it, short of the oil industry acknowledging their wrong-doing and unilaterally announcing the cessation of producing engine fuels, the federal government is the only entity that can right the situation.
A variation on the Pimentel-Patzek maneuver
Robert brings up one of my favorite points-of-contention, the issue of the use of petroleum oil products in the ethanol production process. His point is best summarized, I think, by his statement "the ethanol industry is utterly dependent on petroleum." Robert arrives at this conclusion by identifying how farm equipment uses gasoline or diesel to power their engines, how fertilizer can be made from petroleum products, and how heating the production plants use a petroleum fuel.
Usually, when a person writes to me about this issue they add in how the use of the petroleum products contributes to the high cost of producing ethanol, which makes producing ethanol "energy negative." Typically, I do a few things. I start by saying that all usable energy requires lots of raw energy. I often cite the example of electricity and how the production of electricity can be the most energy negative of all usable energy. This doesn't mean that electricity is bad, and there's certainly nothing else you can use to power a TV set or a toaster or an air conditioner. If you tried to generate electricity by using electricity, the cost ratio would be outrageously bad. The other thing I always add at this point is that ethanol production is energy positive, but that gasoline production is energy negative. Often people include a link to a study done by David Pimentel and Tad Patzek more than a decade ago to prove that ethanol is energy negative.
The key to Robert's statement here is that ethanol is not utterly dependent on petroleum. Any fuel needed to run the farm equipment can easily be ethanol or biodiesel. Fertilizer doesn't have to be made from petroleum by-products, it can come from corn remnants itself or from any other remnant of the base material used to make ethanol. My understanding is that the ethanol remnant materials are more valuable when used in other ways than fertilizer. Something that most people don't know is that the same corn or sorghum or wheat or sugar cane or beets that are used to produce ethanol are also used to make other products. So it's not just the case of taking an acre's worth of corn and turning it into ethanol, the same corn is used again for other purposes.
But, I'm personally willing to make a deal on behalf of the entire ethanol industry (even though I'm not authorized to do it, I'll do it anyway). Here's the deal: If the oil industry agrees to stop producing fuels for passenger cars, trucks and buses, the ethanol industry will agree to only use petroleum oil fuels to power its farm equipment. How's that?
Seriously, though, I am going to be tell you something. I have thought of this issue myself, and I have brought this point up to ethanol makers. I said to them that I thought it would be a good idea if only ethanol fuels or other biofuels were used to power the equipment. I received a couple of replies, and those replies are reflected in the information contained in the immediate preceding paragraphs. But I think there could be better replies, and so I'm doubly glad that Robert raised this issue because maybe it'll motivate more of the ethanol industry to stop using all petroleum fuels. How's that!
On the face of it, whenever this topic is first thrown up as a challenge, it sounds like an "uh oh" moment; as if you were a MacDonald's employee and you got caught going into a Burger King on your lunch break. But, the issue is toothless.
In my first rebuttal, I stated "At this point in time, shouldn't the oil industry be free from all government supports and be standing on its own?" Robert replies with a description of the oil industry that tries to humanize it, to portray it as a collective of mom and pop companies with a couple of major players. There may be some truth here (not all oil entities are the size of ExxonMobil), but one thing changes everything, and that one thing is the American Petroleum Institute. The API is the face, the head, the heart, and the arm of BIG OIL. API is an outgrowth of an association that was headed by Alfred Cotton Bedford, Sr., who was president and then chairman of Standard Oil of New Jersey. API's own introductory statement on their website announces their position as the industry's unifying entity . They "speak for the oil and natural gas industry to the public, Congress and the Executive Branch, state governments and the media."
Frankly, I think that the API claim to ultimate authority is a bit of puffery, which is not altogether surprising - they are in the business of exaggerated hyperbole. There are a couple of other players, such as American Fuel and Petrochemical Manufacturers association that have a significant leadership role in the oil industry. AFPM claims to be "the leading trade association representing the makers of the fuels that...make life better, safer, healthier..."
I'm willing to accept their declarations of importance. As it happens, API and AFPM work together on many things, and they and their marketing agencies are responsible for all the myths and lies concocted since Prohibition to defame any competitor to gasoline and diesel fuels (ironically, this includes defaming their own products - compressed natural gas* and propane). This group is the ANTI-ETHANOL INDUSTRY. And three of the members of the Anti-Ethanol Industry are Valero, Phillips 66, and Marathon - the three companies that Robert identifies as examples of the vast majority of lesser refiners.
Robert writes: "I can tell you with authority -- as someone who has worked in refining and blended gasoline -- that what they (the refiners) care about is margins. If they can make more money blending ethanol, that’s what they will do."
I believe that that's what individuals in these companies might say if asked, but I'd also wager that if you asked any of these individuals about ethanol that they would rattle off the usual litany of myths that were invented by the Anti-Ethanol Industry to malign ethanol. This is what I regularly hear from people who claim they work for refiners and blenders. They tell me about how ethanol is the cause of engine damage, and that they know this because they've worked in the oil industry for X years. Is this important? Is it important for "the makers of the fuels that make life better, safer, healthier" to know the truth about the poison petroleum products they sell? I think so. Is it a diversionary tactic for me to point out this incongruity? Maybe, but so what? Wouldn't you rather be diverted from a planned route because the road ahead is washed out than to be faced with having to discover if your car is capable of crossing a 4-foot high raging river? Is this a straw man argument? Maybe, but you get my point, right?
Robert says that he has been in contact with a high-ranking person in the ethanol lobby, and that that person has acknowledged that the ethanol industry has an "entitlement mentality." I can believe this, but so what? I'm a citizen of the United States, I'm entitled to vote. I'm over 21, I'm entitled to drink alcoholic beverages. I have a drivers license, I'm entitled to drive a car on the public roads. Entitlements are not necessarily bad.
What Robert got wrong in his understanding of the issue of entitlements, as it pertains to the ethanol industry, is that he links the acknowledgement from the unidentified ethanol industry guy to the questionable proposition “We were victims in the past, so it needs to be made right.”
In doing so, Robert basically suggests that bygones are bygones and that the ethanol industry should get over it. However, Robert got it backwards. The ethanol industry is a victim NOW, today. The big concern is that entitlements that were part and parcel of the RFS and other government sanctions that enabled ethanol fuel to be sold at fueling stations around the country are being interfered with, by the government...again.
The purpose of my history lessons isn't to say that ethanol should be the dominant engine fuel today because gasoline was poison 140 years ago. I say ethanol should be the dominant engine fuel today because gasoline is still poison, the difference is that now we know it is poison. Ethanol didn't suddenly become a cleaner, safer, more powerful fuel than gasoline; it always was. Gasoline didn't become a cleaner, safer, more powerful fuel than ethanol since removing TEL and MTBE and therefore deserves government help in remaining the dominant fuel. It was poison 140 years ago, it is poison today. However, if one would argue that gasoline today is better than the gasoline of 100 years ago - or 50 years ago - the reason for the improvement is that it now contains ethanol instead of tetraethyl lead, ethylene bromide, or methyl-tert-butyl-ether.
Robert suggests that instead of relying on entitlements that the ethanol industry should take control of its own destiny. Saying this is as much of a joke today as it would have been in 1921, during Prohibition. For the ethanol industry to begin to take control of its own destiny it would require all government agencies to immediately remove all restrictions on the use of ethanol as a fuel, including the requirement to denaturize ethanol. It would require the removal of all restrictions on pumps at fueling stations. It would require the honest acknowledgement by all government authorities that ethanol is not any more harmful to engines than gasoline and diesel, in fact that it is less harmful. It would require government action to prevent the oil companies from exerting any influence whatsoever on the fuels sold by filling stations. The ethanol industry could announce that E50 will be available, and that it is available for all vehicles, and that all auto manufacturers will honor the vehicle warranties, but without the government removing restrictions and/or enacting the appropriate legislation the ethanol industry can not take control of their own destiny.
In regard to my comments about the old 45-cents per gallon blenders subsidy and that the oil industry only hurt itself by instigating a removal of the subsidy, Robert writes that the ethanol industry's howling about the pending action proves it hurt ethanol more than oil. Well, the howling went on before the removal of the subsidy, and at that time the only thing the ethanol industry had to go by was the known reason for the oil industry pushing it: to hurt ethanol. I think everyone expected that the action would increase the price of E10 to E0 or higher, including me. We were all delighted that it actually had no effect at all. I used to get people writing to me saying, "Just wait until the subsidy is removed and E10 costs more than ethanol-free gasoline..." They don't write that to me any more, although I gets lots and lots of people who don't know that the subsidy was removed several years ago - and they're demanding that it be removed now.
Robert takes exception to my comments about Forbes publishing his 5 unfavorable ethanol editorials (note that I didn't say his anti-ethanol editorials, just unfavorable). I don't know of any favorable ethanol editorials that have ever been published in Forbes, I only know of the negative ones. I can say with certainty that they have refused to publish anything I've ever tried to send them, and there doesn't seem to be a place where I can enter my comments rebutting any of the anti-ethanol editorials. I have, and do send my comments directly to the authors, as I did with Robert Rapier. I think Forbes' omission of any content that advocates ethanol fuel speaks for itself.
Okay, time to tackle Robert's big issue, his new and improved business model for the ethanol industry. I did understand Robert's suggestion when he made it in his fifth editorial a couple of weeks ago; I just didn't agree with it. On the other hand, he didn't seem to understand my analogy to Saudi Arabia, so I'll try another analogy...
Let's say that Iowa (or all the main corn growing states together) was an independent sovereign nation, which we'll call Corn Country. Imagine Corn Country surrounded by other sovereign nations that are either hostile to it or not interested in conducting trade with Corn Country. What's more, they have no intention to share any of their petroleum oil, regardless of price (not unlike a certain small sovereign nation in the Middle East). Corn Country would tell its citizens that they should use all the corn they grow themselves. They would use it for human food, animal food, drinking ethanol, engine fuel, and ancillary products. They wouldn't require any outside fuel, and the corn they ate would be a significant part of their diet - which is okay because corn tastes good. And so there you'd have it, Corn Country would be relatively self-sufficient and their ethanol industry would be viable.
Incidentally, this scenario also fits Brazil to a great degree, the difference being that Brazil couldn't afford to buy any more outside petroleum, so they changed the paradigm and moved to ethanol fuel made from cane sugar.
In order for these scenarios to work, Corn Country would have to block the importation of any competitive fuels from coming into their country. Corn Country would have to do what Brazil did: Stop lying about ethanol being unsafe and dangerous to engines; require that manufacturers of vehicles and power equipment warranty their products to match their national ethanol fuel specifications, and make sure that the ethanol is available at all fuel dispensing outlets. These are practical, logical steps for Corn Country to take.
The reality is that Corn Country isn't surrounded by hostile sovereign nations; Corn Country isn't protected by restrictions on outside fuels; the people of Corn Country aren't faced with fuel shortages and rationing; the people of Corn Country continue to be bombarded with denigrating propaganda about ethanol.
Rather, Corn Country is a part of the United States of America. In the United States of America there is unrestricted entry and exit points (California does have agricultural checkpoints to enter the state, but there's no restriction on items leaving the state). I don't think you could get the Iowa state legislature to block the entrance of oil product tankers or to dismantle any oil pipelines running through the state. And if they tried, I believe the federal government would overturn the restrictions. Additionally, I think the oil industry would challenge the restrictions in court. So, Robert's suggested business plan is a moot plan. It would be like saying to the people of Wisconsin: "Hey, why are we sending our delicious cheese to other states? Let's keep it here, eat it ourselves, and block all other cheese from other states." Imagine the idiot governor of California saying: "No more wine from outside California. No more beer from outside California. No more grapes and tomatoes from other states. We're gonna eat our own." (Actually, I could image Gavin Newsom saying this, but that's another matter).
Let me suggest another scenario. Let's say that in exchange for Iowa and the Corn Country states agreeing to not export any ethanol to other states, the petroleum oil industry must agree to not sell any gasoline or diesel fuel in any states in which there is not an oil refinery. Would the oil industry be okay with losing New York, all of New England, Virginia, the Carolinas, Florida, Arizona, Oregon, Idaho, South Dakota, Nebraska, and Iowa? It would be interesting to hear if the ethanol industry would agree to fuel exclusivity in these states in exchange for agreeing to not distribute to the refinery states.
If this occurred, by the way, what we would have are 30 states allowing the sale of poison gasoline with increased levels of benzene, toluene, and xylene; and then twenty states with clean burning ethanol. I don't think Californians, Washingtonians, and Hawaiians would be okay with the increased use of aromatics, and I doubt the states downwind (or eastwind) of California and Washington would allow this to happen without suing California, Washington, and Hawaii. Is this logical and practical solution? I don't think so.
I think a much more practical plan would be the plan I published in the summer of 2008. Here's the take away:
• The federal government would immediately order that all new spark-ignited internal combustion engines of any type sold in America must be fully optimized to run on either E85 or higher.
• Lift all restrictions on the sale of ethanol-gasoline blends.
• Allow the uploading of new software to all vehicle onboard computers to make them immediately compatible with higher ethanol-gasoline blends.
• Place a moratorium on all new domestic drilling, fracking, and exploration of oil and natural gas reserves.
• Ban all imports of foreign petroleum oil.
• Ban the use of petroleum oil in the manufacture of any product that can be manufactured with an alternative (such as alcohol/ethanol).
• Allow (of course) and encourage all "oil companies" to become "energy companies." If a company wants to be in the energy business in America, and sell fuels in America, they should be in the business of making and selling fuels that are legal in America. They can get in the ethanol business. They can invest in or buy existing businesses. They can start their own. They can invent or innovate new ways to make ethanol. They can make methanol (as long as it's not produced from petroleum, but from waste matter).
• Continue to produce petroleum oil fuels and products required to serve out the life of existing engines.
One last piece of business: The issue of industry profitability, and relying on government support (subsidies, allowances, tax credits, and other government provided largesse).
Robert made very strong assertions that the ethanol industry is in a precarious position that could be collapsed at the whim of any presidential administration. I countered his assertions with equally strong assertions about the precarious position that the oil industry is in. I provided several links to legitimate stories detailing the collapse of dozens...hundreds... of oil industry companies in short periods of time. I suggested scenarios in which a presidential administration, or a united congress, declares an end of financial support to the oil industry. And on the subject of government largesse, I naturally mean the many subsidies provided to the oil industry (many of which are decades and even a century old). I'm also referring to the free security service provided to the oil industry by our military. It is the U.S. Military, not the API Military.
In closing, I sincerely want to thank Robert Rapier for writing those five Forbes editorials and then for engaging with me in this exchange. Robert is someone who is as experienced and knowledgeable in the oil and energy industries as anyone I've ever come across. His opinions on certain aspects don't agree with mine, and ultimately it will be up to individual readers to determine who won this debate. But you've undoubtedly noticed that Robert doesn't offer up any of the hackneyed myths about ethanol's inferiority to gasoline, or everlasting damage that ethanol is causing to man/machine/nature. In explaining his proposal for the Midwest states, he never once said anything like: The ethanol people in the corn states will have to take responsibility for mucking up the Gulf of Mexico or Lake Erie. He never once expressed concern that the people in the Midwest will suffer from catastrophic phase separation. So here we are, at the end of five Forbes editorials, plus one more to reply to my rebuttal to the five editorials, and he has offered no damning evidence against the use of ethanol (the reason for this is that all the anti-ethanol claims are just myths). There's merely difference of opinion between Robert and myself that is related to implementation making ethanol fuel the dominant fuel.
I point this out because other Forbes authors have made wild accusations about ethanol...in fact, next week I will be directing you to another debate I've just concluded with one of these Forbes authors. As you will see after reading next week's debate, we have come to the end of the Internet, so to speak. All negative claims about ethanol have been defeated. There is no doubt that ethanol is as good or better than any petroleum oil fuel. There is no doubt that ethanol is less corrosive and therefore safer than gasoline and aromatics. There is no doubt that this has been understood since the invention of the internal combustion engine. There is no question that all negative claims about ethanol are solely the product of the Anti-Ethanol Industry. Recently, the oil industry tried some Hail Mary passes with new alarms about ethanol production causing greater GHG emissions than gasoline and diesel, and some college professors accepted whatever rewards were offered by the oil industry to disseminate this nonsense. However, very recent new studies by government entities, combined with the excellent studies undertaken by Urban Air Initiative have re-confirmed ethanol's cleaner characteristics and smacked down the Hail Mary passes. There is still work to be done; the message has to be told to the people. Ethanol is the clean fuel for internal combustion engines; it is the safe and healthier fuel; it is a completely domestic fuel; it is the fuel of the future and the future is now.
* I originally met Robert Rapier some years ago when he asked if he could republish my comments about compressed natural gas (CNG). I had written some articles that told the story of how the oil industry's actions against CNG wound up killing the manufacturing of CNG-powered vehicles in the U.S. and how their lobbying against CNG placed heavy financial restrictions on converting gasoline-powered vehicle engines to CNG-powered engines. All of this was despite CNG being a product of the oil industry. They hate competition, even when the competition comes from themselves. Many of the same lies created to defame ethanol were used to defame CNG.