Does Ethanol Save Consumers Money at the Pump?

Does Ethanol Save Consumers Money at the Pump? By Marlo Lewis
Planet Gore/NRO, Monday, February 09, 2009

Excerpts:

That’s what the corn and ethanol lobbies claim. In fact, filling up with ethanol is a big fat money-loser, as you can see for yourself by visiting www.fueleconomy.gov, a website jointly administered by the Environmental Protection Agency (EPA) and the Department of Energy (DOE). Once you’re there, click on “Flex-Fuel Vehicles,” then click on “Fuel Economy Information for Flex-Fuel Vehicles,” and then click on “Go.”EPA and DOE compare the average annual cost of using regular gasoline and E-85 (motor fuel blended with 85 percent ethanol) for 90 different flex-fuel models. In every case, regardless of make or model, fueling the vehicle with E-85 costs more than gasoline—lots more.Consider a few examples:

[table removed]

The other neat thing about this site is that it compares the annual carbon footprint of using E-85 versus regular gasoline for each vehicle. In every case, ethanol has a lower carbon footprint (emits fewer annual tons of CO2). This is controversial in light of research (see here and here) indicating that ethanol is a net contributor to greenhouse gas emissions when you take into account emissions from fertilizer used to grow corn and the carbon released from forests and soils as corn cultivation expands into previously unfarmed areas.

Nonetheless, even if one eschews a lifecycle analysis and considers only the direct emissions released by burning equal volumes of gasoline and ethanol, the cost per ton of CO2 avoided by using E-85 is ridiculously expensive.

Consider the Nisan Titan 4WD. According EPA and DOE, using regular gasoline, the Titan emits 13.1 tons of CO2 per year; using E-85, it emits 11.1 tons of CO2 per year. So fueling the Titan with E-85 instead of gasoline reduces the vehicle’s annual CO2 emissions by 2 tons. However, the E-85 costs $2,259 more, which means the per-ton cost of reducing CO2 by using E-85 instead of gasoline is $1,129.50. That's a dozen times more costly than the “social cost of carbon” (how much damage each ton of CO2 allegedly does) as estimated by Richard Tol, perhaps the world's leading climate economist, in a major literature review.

For additional perspective, the Energy Information Administration estimated that emission permits under the Lieberman-Warner Climate Security Act (S. 2191) would cost $16.88 per ton in 2012, $29.88 in 2020, and $61.01 in 2030. So the per-ton cost of reducing CO2 emissions by switching your Nisan Titan from gasoline to E-85 is between 18 and 66 times more costly than emission permits under Lieberman-Warner, a bill the U.S. Senate did not see fit to pass.

Although EPA and DOE established fueleconomy.gov partly to promote flex-fuel vehicles and E-85, the information they provide demolishes claims that ethanol reduces pain at the pump and provides a cost-effective antidote to global warming.