Exposing The Renewable Fuels Con

Tyler Durden's picture

Authored by Eric Peters via EricPetersAutos.com,

You can’t just sell gas anymore.

Most people don’t realize it, but what they’re pumping into their car’s tank isn’t actually gasoline, properly speaking. It’s gasoline mixed with ethanol alcohol – the ratio currently set at 10 percent ethanol and 90 percent gas (E10).

“Diesel” often isn’t exactly diesel, either.   

The real stuff – the petroleum-based stuff – is mixed with bio-diesel, which is derived (like ethanol) from non-petroleum sources, usually vegetable matter.

The market isn’t demanding this – but the government is.

There is a law called the Renewable Fuel Standard. It  requires the “blending” of oceans of corn con ethanol and biodiesel boondoggle into the general fuel supply – ostensibly, to reduce America’s dependence on foreign (and non-renewable) oil.

Like so much that government does, it sounds good – but what it actually does isn’t so good.

The RFS has raised refining and distribution costs as well as the cost to motorists, who not only pay more for the Uncle-adulterated fuel but also for the fuel systems in their vehicles, which have had to be modified to be compatible with the not-quite-gas (and sort-of diesel) fuels the government is pushing.

These adulterated fuels are also – ironically – less efficient. A gallon of pure gas will take you farther than a gallon of 90 percent gas and 10 percent ethanol because the gallon of gas contains more energy than a gallon of E10.

As is almost reflexively true of everything the government mandates, we get less – and pay more for it.

But that doesn’t mean someone’s not making a buck – as is also usually true when government intervenes in the market.

In addition to the Usual Suspects – the ethanol lobby, for instance – there is a another group of crony capitalists making hay off the RFS mandate. These are the large refiners and chain gas stations, who can leverage – in the lingo of the federal bureaucracy – Renewable Volume Obligation (RVO) credits to gain an unfair competitive advantage over smaller refiners and independent gas stations.

To understand how this works requires a bit of semantic deconstruction.

The RFS mandate requires a certain volume of “renewable” fuel be produced each year and injected into the general fuel supply. But it does not require that every refiner or fuel wholesaler/distributor actually produce a given volume of it themselves.

They may purchase tradable credits instead – and use these to satisfy the RVO.

It works very much like the “carbon credit” con – which obliges car companies who want to be allowed to sell conventional cars in states like California to either invest huge sums designing and building electric cars that they can’t sell  . . . or buy credits from a company that builds only electric cars – like, for instance, Tesla. These credits are considered, for regulatory enforcement purposes, the equivalent of actually having manufactured the required number of electric cars. Tesla makes a fortune selling carbon credits to other car companies – which are basically forced to subsidize his business at the expense of their own.

The RVO works on the same model.

Each refiner/wholesaler is assigned a production quota for renewable fuels  very much like the one used to extort car companies into either building electric cars – or buying credits from a company that does build them.

A refiner/wholesaler can achieve compliance by meeting its RVO “in house” – by making or mixing its own renewable brew – or by purchasing credit for what they didn’t actually produce (or introduce into the fuel supply) from a refiner/wholesaler who did.

In both cases, it’s effectively legalized extortion, another government-mandated racket.

The larger refiners/wholesalers – who have economies of scale in their favor – have been using the RVO as way to strong-arm their smaller rivals. They are able to manipulate the price of the renewable fuels, underselling their smaller rivals, who cannot afford to sustain the losses – or compelling them (via the RVO) to buy credits from them at inflated prices.

Consumers, meanwhile, pay more for the adulterated/renewable fuel – which takes them less far per gallon as an additional kick in the keister.

It is important to keep in mind that all of this is artificial – not the supply and demand forces of a free market, working to the advantage of everyone. It is a colossal rent-seeking rip-off that uses legislated “demand” to distort the market for the profit of crony capitalists – whether they are of the Elon Musk variety or the Renewable Fuels variety.

It’s so lousy with price-fixing and outright fraud that even the former head of the EPA’s Criminal Investigation Division, Doug Parker, has called for a major overhaul of the entire architecture of the RFS mandate. Now in the private sector, Parker wrote a white paper last fall (here) detailing the systemic problems.

When a high EPA muckety-muck concedes there is a problem with a regulatory fatwa, it is a sure sign there’s a big problem.

There is nothing wrong with the idea of renewable or alternative fuels. That’s not what’s at issue here. The issue is using a good idea to camouflage and justify a rent-seeking rip-off, another crony capitalist con.

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pitz's picture

Wasn't there a case a few years ago where the Canadian National Railway was paid by an Ethanol broker literally to shuttle a train full of ethanol cars from one side of the border to another, and back a hundred or so times (or more) simply to collect some sort of tax credit? 

 

edit:  biodiesel I guess.  http://www.cbc.ca/news/canada/biofuel-credits-behind-mystery-cross-borde...

Pinto Currency's picture

"Put another way," Pimentel says, "about 70 percent more energy is required to produce ethanol than the energy that actually is in ethanol. Every time you make 1 gallon of ethanol, there is a net energy loss of 54,000 BTU."

http://www.news.cornell.edu/stories/2001/08/ethanol-corn-faulted-energy-...

Jimmy Jimmereeno's picture

Might we say, "Some people got corn holed?"

Cloud9.5's picture

What happens to the sour mash once the ethanol has been extracted? Is the mash used for animal feed? Is it composted?  Right after WWI, my grandpa was into making a little shine.  One great uncle ran a saw mill and built the barrels.  Another great uncle grew the corn.  Another great uncle ran an apiary and provided honey since the feds were watching sugar purchases.  And, one great uncle ran a pig farm and fed the sour mash to the pigs.  So the family enterprise produced shine and pork bellies.  I wonder if something similar is going on now and not being factored in to the equations submitted.

boattrash's picture

In Arkansas we know that you should drink your corn squeezins, and put the oil squeezins in your gas tank. FFS

Red Raspberry's picture

The left over is used for cattle feed. 

Mr. Universe's picture

"I am the Great Cornholio! I need TP for my bunghole!"

To understand how this works requires a bit of semantic deconstruction.

I understand how it works, the corporatocracy wins and citizen slaves lose. Call me anti-semantic if you wish, but I want to gas 'em all.

SILVERGEDDON's picture

Jesus fuck people. You just have to google ethanol free gas stations, and there are websites devoted to tracking active local gas stations that sell ethanol free fuel. 

Run your gas powered equipment on perishable dog shit fuel, or buy the real thing, which still stores damm near indefinitely.

Also, no averse effect on fuel systems in older cars and equipment. 

As for diesel, just make sure you buy Diesel Number 2 at the pumps. 

Or, just make sure you add a biocide diesel fuel preservative to long term fuel storage. 

 

Mr.BlingBling's picture

Or buy aviation gas at your local small airport. IIRC, it's unadulterated and high octane.

boattrash's picture

And 20 years later AvGas is still gas, not varnish.

GunnerySgtHartman's picture

http://www.pure-gas.org/

https://www.buyrealgas.com/index.html

All of my small power equipment gets ethanol-free gas.  They run so much better on it, and they need fewer repairs!

I would run ethanol-free gas in my truck full time, but it runs about a dollar a gallon more than E10 - and when you're buying 35 gallons at a clip, it adds up fast.  Truck does run good on E10, though.

jaxville's picture

  I once read an essay by Fidel Castro explaining the folly of using corn rather than a higher sugar vegetable such as beets to produce ethanol.  Very well reasoned.  So much so that it created much cognitive dissonance.  I thought it was a coincidence of name rather than something written by the Cuban dictator.

  Any rate .....There are far better choices than corn for ethanol.  A powerful lobby and a corrupt gov't are not concerned with what is best for the economy.

 

Vatican_cameo's picture

It's not just 10% Ethanol, Gasoline in the US is over 55% fuel additives.  Gasoline turns "sour" after 28 days (by design).  This means that no one can store fuel in case of an emergency.  Ethanol is just one expensive piece of the puzzle.

Masterhit's picture

http://sparefuel.net

9 gallons is $336 but it can be stored for a long time

manofthenorth's picture

$45 a gallon !!!!!!

WTF are you crazy ??

For FAR less you can buy real leaded high octane (115oct) racing gasoline that will store for deacades untreated.

Only $65 for 5 gallon can. https://vpracingfuels.com/product/115145/

FREE advice from an old motor head circle track junkie.

Arnold's picture

Not real sure of of your punch thrown, but I will look at it.
Interesting.
I am not testing the residual octane rating of my stored fuel, and I cannot, given the hurtles...
My stuff starts and runs for the length of the tank with Stabil added, that's all I can tell you.
And the synthetic oil stands pretty well without the formation of acids, for long term storage and intermittent usage.
I do not tear down engines, unless warranted, for critical measurements..

skinwalker's picture

I've stored gas for a year with stabilizers and it ran just fine.

Admittedly, I put it in a tank that had some new gas in it, so that may have influenced the outcome.

Mtnrunnr's picture

even liberal conservationalists know that biofuel is bad. its done so that farmers can turn a profit on land that would otherwise be unproductive. its a subsidy. it's also a repubican thing, so fuck off.

Mr. Universe's picture

Wow, did you read that gem of wisdom on Yahoo! News?

Mtnrunnr's picture

NO i worked in Ag extension at Penn State. Which is a damn sight more than your experience in your parents basement

Uncle Skid's picture

I too have stored gas for a year in a motorcycle with Stabil added.  The old gas smells okay and looks orange but runs all right in my zero turn. 

sinbad2's picture

About the only additive of any quantity added to gasoline is butane, to help vaporization in cold weather.

Fuel is good for at least 6 months if stored properly, and the reason it goes off is the more volatile short chain hydrocarbons evaporate.

Why would oil companies add expensive chemicals to an otherwise cheap product?

Adding ethanol is just a way of subsidizing American farmers.

 

jaxville's picture

   I keep ten gallons of gasoline in my garage.  Once a year I rotate it out by putting in my car and refilling the containers.  Never had any issues.  I do ensure there is as little air as possible in the jerrycans once filled and that they are sealed tightly.

izzee's picture

Switch Grass is the future. GWB

meditate_vigorously's picture

There are no "renewable fuels" that are positive net energy obtained without hydrocarbon (fossil fuels for the pinkos)fuels. The only clean energy technology capable of scale at this time is hydro-electric. Electric cars burn more carbon fuels at the power plant than they would if they burned diesel or gas.

New_Meat's picture

add in the energy to create nitrogen fertilizers and the economics get worse.

Of course, the use of corn lands to make ethanol for other than drinking purposes puts a strain on those who eat corn as a staple.

Thomas Malthus smiles from his grave.

- Ned

{We shall not, in this discussion, get into other uses of corn in places like Iowa and North Carolina.  Get it?}

sinbad2's picture

Actually all fuels are renewable, just not on a human time scale.

The CO2 produced by burning fuel will be used by plants to create more oil and coal over millions of years.

But I do agree hydro power is the cleanest form of energy, pity the hippies won't let western countries build dams.

Iran has a huge Hydro plan, and intends to export electricity on a massive scale.

Mr. Universe's picture

Check out the Nile and see how "wonderful" Dams are, not that a well planned and placed Dam is very useful. It's just that that is the exception rather than the rule. We run around acting like we own the place when we are only renting. Pretty soon the landlord is going to evict us all.

FIAT CON's picture

If I recall correctly dams have a life span of approx 100 years due to silt filling the resivoir renduring the dam useless.

Where I live the gov is planning on borrowing $9 billion dollars, most of it will be paid to foreign corporations or out of province corporations and when the dam is complete there will be very few full time jobs. They will need to flood 1000's of hectares of aboriginal  lands for this to happen.

This gov is already massively in debt. $57 Billion in debt already, which means $18 Million dollars in interest per day,  divided among the 4.6 million peolpe = that is $3.90  per person per day! As if the debts we all have isn't enough already.

 I wrote the BC Hydro corporation and stated that wouldn't it be better to encourage the use of solar panels. This would create investment and jobs for years to come, jobs in sales, installation and maintainence throught the entire province. we could set an example for the rest of the country and the world. Another bonus would be that people would have to learn how to conserve and respect how valuble the power is and to teach us all to conserve a little instead of rape and pillage the world with more unsustainable growth/consumtion.

 It is bad enough that most of the transmission lines/towers/poles are already in dire straits with little to no money to replace them as it is.

 I guess not. All gov's want is MOAR of everything debt/consumtion and especially moar power for the gov's.

 Our current preimier is close to not being reelected here next week! (at leaat I hope not).

sinbad2's picture

Have you looked at the pollution created manufacturing solar cells?

Refining silicon is one of the most polluting and energy hungry processes on the planet.

A solar cell has to produce energy for at least 7 years, to recover the energy that went into its creation.

Mtnrunnr's picture

so you're wrong. photovoltaic cells are net positive.. by a huge margin. wind energy is too. geothermal is too. stop trying to justify your position against renewable energy.

Arnold's picture

I'll have the same drugs you are having, please.

NurseRatched's picture

Photovoltaic cells and windmills are suppliers of intermittent energy and cannot be relied upon by modern man to produce energy as needed. And since battery technology has proven to be a rathole of wasted money, renewable energy has fallen flat on its face over the past decade.

Unreliable, expensive and uncompetitive. Other than that, renewable energy is a winner.

FIAT CON's picture

If you care to due some investigations, Battery technology is catching up, two new technologies are advancing quickly 1). salt water batteries 2). zink batteries. both are in tremendous abundance and are very cheap. The zink style if in your I-phone could be fully charged from dead in approx 5 min. If this was in your electric car, again it could be fully charged in a very short period of time.

 For those of you that think we will never replace fossil fuels and that we can also consume energy at the current rate forever will die a quick death once the oil runs out. Meanwhile the rest of us that adopt renewable energies will ive long and prosper, albeit with out the waste that we are all guilty of today.

I have installed 2KW of solar panels on my roof a couple of years ago, and although my panels are stationary (non tracking)  and also not facing the best agle and compass direction, in the BC west coast sunshine or lack thereof, my panels produce 25% more energy than my 2200 sqft house consumes for 1 year of heat and air-conditioning (I use a water source heatpump for heat and airconditioning), which is my biggest consumer of energy, I also have a solar HW heater on the roof which provides me with free HW for 6 months of the year.

 At the current rate of increases in the cost of power in the province, the time to pay off these devices is shorter and shorter.

One must use less money smarter and smarter.

BroadBit metallic sodium batteries, 10x more power than Lithium-Ion, 5-minute full charge

Solid State Batteries For Electric Cars: A New Breakthrough By The Father of the Lithium-Ion Battery

P.S. I didn't put solar panels up so I could waste more energy. I am more conscientious about how much power I waste more than ever.

Wulfkind's picture

It also subsidized the corn industry which would see catastrophic price DECREASES from all the excess corn produced that can't be eaten anyway but could be used to help produce E10.  And saves the government money by not having to give tax credits to farmers to left fields go fallow to artificially prop up corn prices from the lack of acreage planted.

Everything is a corporate/gov. racket.   This is the hallmark of fascism folks.  Government and Big Busienss....( and agriculture is BIG business now....forget your misconceptions of the "family" farm ) working together for THEIR benefit and not for the people.  That is the textbook definition of FASCISM.

Mr. Universe's picture

Last year Iowa farmer and cartoonist for the "Farm News" posted a cartoon with this text.

The cartoon features two farmers talking about farming profits.

The first says, “I wish there was more profit in farming.”

The second farm[er] answers, “There is. In year 2015 the CEOs of Monsanto, DuPont Pioneer and John Deere combined made more money than 2,129 Iowa farmers.”

He was promptly called into his boss's office and fired after receiving "complaints".

SamEyeAm's picture

Ethanol is a boondoggle that needs to go.

There's even less energy in the corn and biomass, so you lose mileage when they mix it in.

humptyhump's picture

Rent seeking and crony capitalism is all that's left. There is nothing else.

chunga's picture

Let's give a big shout out to the US Department of Gas Can Safety for mandating gas cans that build pressure, leak, and shoot gas every single time. Thanks, you frauds!

Lumberjack's picture

Way to go Nashville Predators!

Arnold's picture

Chunga, I bought a new small gas can.

There is very few things You say I agree with, but that is one of them.

What kind of idiots are we we dealing with here?

Lumberjack's picture

I spent some time in this renewables fuel thingy 17 years ago. It is a huge crock of shit and the players are all fucking rent seeking assholes. The energy required to produce that shit far outweighs the benefit. In Maine, outfits from....California and Florida wrecked the logging industry and negotiated vast land grabs to "further the cause" whilst devastating the communities and industry as a whole. It started with the biomass industry back around 2000 and the fucking geniuses including Enron and now Senator Angus King (also involved in the eind scam) caused electricity prices to skyrocket, thus forcing the issue if electricity de-regulation (and furthering then Governor Angus King's private business interests). More on that at a later date....

Renewable fuels at best are companies that mix used restaurant frying oil with #2 fuel oil and pawn it off as bio diesel. There should be no more grant money or subsidies for this racket, especially the algae effort which Diane Feinsteins family is/has been involved in.

Enough is enough.

http://bangordailynews.com/2017/05/05/business/subsidized-jonesboro-biom...

Arnold's picture

When I left the god's country up there, the Tribes were about to take possession of the Seven's and the Eastern lands.

The pulp mills are gone, but the Lands should have survived.

Haven't been back, or really paid attention to it, for thirty years though, I still have family down there...

Lumberjack's picture

Obama made a monument to himself on a lerge tract there recently. It is now being reviewd by the new administration. Mills are all but gone and REITs along with Yieldco's associated with environmental terrorist groups are snagging up more.

FIAT CON's picture

I have seen new ones here that don't.

Megaton Jim's picture

I bet there's LOTS of (((the Tribe))) crawling around in the background of this one. Like the human cockroaches they are!

VWAndy's picture

 Mixing those two fuels is sillyness.