The history of ethanol is convoluted. Some argue that it is good for the environment and others say the opposite. Historically oil companies and oil state senators oppose ethanol. Farmers and farm state senators are in favor of it. If you are an oil company with petroleum in the ground you rather pump it out and sell it, rather than buy ethanol from someone else. If you do not own oil in the ground, you may think differently.
Then add politics. Someone’s ox always gets gored when politicians tell us what we have to do. We the people used to pay oil companies about $.40 per gallon for blending ethanol into gasoline. Then came the renewable fuel standard (RFS), which eliminated the blender’s credit and mandated that the “obligated majors” (oil companies) use ethanol or buy credits (Renewable Id Numbers, or RINS) from those that buy more ethanol that they needed. So a secondary market developed for trading a 10% component of our gasoline. That engaged both fear and greed and upped the stakes for all, creating a lucrative opportunity for politicians to raise campaign contributions.
Today the fact remains that if the government got out of telling oil companies what to do, oil companies would continue to use ethanol because it is the cheapest way to boost octane. Our modern engines simply need something to cause the gasoline to properly ignite under pressure, and ethanol is currently the best low cost way. The alternative is to further refine gasoline, at higher cost to them and us, or use another petroleum product like MTBE’s, which are said to be environmentally dangerous. This is one reason why you pay more for 100% gasoline.
At least we are still free to choose. As for me, I rather buy from an American farmer than some questionable country that has even less interest in us than our own political class. (I apologize for the lengthy response.)
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