Ethanol: Home Grown, Less Polluting, But You'll Pay More

We all like to complain about how much it costs to fill up our cars with gas. But what if paying even more meant reducing greenhouse gases that worsen global warming? And what if that fuel was home-grown and creating jobs here instead of coming from overseas oil? Would it be worth paying more?

Those are the environmental and national security issues posed by ethanol and so-called flexible-fuel vehicles that can run either on gasoline or E85--a mix of 85% ethanol and 15% gasoline. (The 15% gasoline is necessary for starts in cold weather.) Fuel across the country has long contained about 10% ethanol to help reduce air pollution. But E85 is just becoming widely available.

Still, auto companies are producing an estimated one million 2007 vehicles that can run on E85 as well as regular gasoline, and a total of about five million vehicles already on the road have that capability. (Almost 12 million vehicles were produced in the U.S. in 2005, which means that estimated E85 vechicle production for 2007 would account for around 8% of new car production.) Companies are talking up that approach as with the General Motors slogan "Live green, go yellow"--in a reference to the corn that is the raw material for most U.S. ethanol.

Environmentalists like ethanol. "With E85, you are cutting global warming pollution and avoiding the damage to wild places that often comes with producing oil," says Nathanael Greene, senior policy analyst for the Natural Resources Defense Council (NRDC), New York. NRDC has looked at critics' suggestions that growing corn and producing the ethanol uses up more energy than it produces and found net energy benefits in ethanol of from 1.3 to 1.6 times the energy used to produce it. (For a discussion of this issue, click here.) And Greene points out that developing technology for so-called cellulosic ethanol--not from corn but from corn stalks, wood chips, and other biomass materials--will produce from three to 10 times as much energy as it consumes.

The real cost of ethanol fuel is a confusing issue. E85 often sells for less per gallon than gasoline. But here's the problem: E85 produces about 25% to 30% fewer miles per gallon than gasoline. In recent test driving of a 2007 flex-fuel Chevrolet Tahoe sport utility vehicle, Consumer Reports magazine clocked 14 miles per gallon (mpg) with gasoline but only 10 mpg with E85. That translates to a trip to the gas pump every 300 miles with E85 instead of 440 miles with gasoline--possibly annoying on a cross-country road trip.

In addition, on a cross-country trip right now, you might have trouble finding E85 in many places. Of the 170,000 or so U.S. filling stations, only about 1,100 now have E85 pumps and most of them are in the Midwest. Ethanol advocates believe, however, that as more flex-fuel vehicles are built, E85 availability will spread. And unlike with engines that can burn only diesel fuel, if you cannot get E85, you simply can put gasoline into the same tank.

While E85 has patriotic and environmental appeal, many owners of flex-fuel vehicles keep an eye on the price. At the Phillips 66 station in Luverne, Minn., recently, E85 was selling for $1.93 a gallon and regular unleaded gas for $2.29--a 36-cent difference. "As long as the difference is close to 40 cents a gallon, E85 sells well. If the gap drops much below that, sales fall off," says Lila Sudenga, general manager of the station. Based on its energy content, the real break-even point for E85 would be only about $1.65 per gallon.

For 2007, ethanol production is estimated at about 6.7 billion gallons--nearly double its level in 2004--and could reach eight billion gallons in 2008. That could help lower price. "Supply always affects the price, but the E85 price will continue to fluctuate," says Ron Lamberty, vice president and director of marketing for the American Coalition for Ethanol, a nonprofit group that promotes production and use of the fuel.

If buying a flex-fuel vehicle that could run on 85% ethanol seems attractive, here are some issues to consider:

See if you can get E85 easily

Make sure you want that vehicle

While some sedans such as the Chevrolet Impala and Monte Carlo and the Mercedes C230 come in flex-fuel versions, E85 vehicles run heavily to big pickup trucks and sport-utility vehicles. This results in part from credits auto manufacturers get toward meeting federal mileage standards with such vehicles. For a list of flex-fuel vehicle choices, go to the National Ethanol Vehicle Coalition's Web site and click on E85 Vehicles.

Keep in mind, if you get a low-gas-mileage pickup or SUV, you will use a lot of fuel and spend a lot of money filling up whether you're using gasoline or E85. "Anybody who bought a Chevy Tahoe to save money on gas made the first mistake right there," says Ron Lamberty of the American Coalition for Ethanol.

Look at alternatives

You might decide that a small SUV like the Ford Escape has enough space for people and cargo. If you buy a gas-electric hybrid version that averages 30 mpg, you would buy about 500 gallons of gasoline in a typical 15,000 miles of annual driving. On the other hand, a flex-fuel Chevrolet Tahoe burning E85 but averaging only 10 mpg, as in the Consumer Reports test, would use up 1,500 gallons of fuel.

According to studies by the Natural Resources Defense Council, the average gallon of ethanol produced from corn by current methods reduces global warming pollution by 18% vs. a similar gallon of gasoline taking into account greenhouse gases released during its production. By using so much less fuel, the Escape Hybrid would be contributing less than half as much greenhouse gas as the E85-burning Tahoe.

On the other hand, if you need a big pickup or SUV for hauling or towing that you do regularly, flex-fuel choices can make sense. You are polluting less compared with a gasoline version of the same vehicle. You are supporting U.S. jobs and the farm economy. And if shortages ever return as in the 1970s oil embargo, the lines at the E85 pumps are likely to be way shorter.

Jerry Edgerton is an automotive writer whose work has appeared in Money and other national magazines. He also is the author of "Car Shopping Made Easy."

Published March 12, 2007