In many parts of the country, when you fill up at the pump, the fuel is 10 percent ethanol, which is alcohol made from corn. In 2005, Congress mandated that refiners increase the ethanol content in gasoline. It also declined to protect refiners against lawsuits filed when the additive MTBE leached into water supplies. That gasoline additive can cause cancer.
So in much of the country, it was out with MTBE and in with ethanol. Almost 80 new ethanol plants are under construction.
Politicians from California to New York protested that their motorists would spend more than necessary on fuel to bolster farmers' incomes.
Of about 140 billion gallons of gasoline that we pump every year, overall only about 2 percent to 3 percent is ethanol. But 20 percent of America's corn crop is made into ethanol.
Ethanol Boom Raises Corn Prices
By Christopher Joyce
For farmers who raise corn, the ethanol boom has been a long time coming.
The Delmarva Peninsula lies just inland from the swanky beach hotels along the Maryland coast. It's green and pool-table flat, and its soil has fed Americans for more than 300 years.
For about 120 of those years, the Hutchison family has farmed here. They've raised soybeans, hogs and even a crop called kenaf, used to make paper.
Right now, corn is the hot crop, and Robert Hutchison's silos are bursting with shelled corn that's drying.
"We start selling January, February, March, and we'll empty our tanks by June," he said.
Corn farmers such as Hutchison are getting about $4 a bushel.
He says these high corn prices — pushed up in part by the demand for ethanol fuel — have farmers eager to buy seed.
"I sell seed corn as part of my other business," he said. "Every farmer I go to is planting additional acres of corn."
President Bush set the goal that in 10 years, Americans would replace one-fifth of the gasoline they use with ethanol.
That goal could also reshape the farm economy in unexpected ways.
Hutchison's a big fan of ethanol — but it also worries him and other farmers in the Delmarva Peninsula. They don't sell much corn to ethanol distilleries; their most important customers are hog and poultry producers.
"They are our No. 1 user of grain. We need to be concerned about that, and they need to remain viable," he said. "This whole thing will have to shake out to readjustment of prices and uses of grain."
Farmers here are happy to get record prices for corn, but they don't want to alienate the livestock producers, who are unhappy about the way ethanol is pushing up corn prices. And if those prices go too high, the livestock growers will switch to another kind of feed.
The challenge, he says, is find a way to keep feeding the new ethanol market without losing his old customers.
The ripple effects of higher demand for corn could reach far and wide. Pricier corn could mean pricier bacon, pricier steak, pricier Coke – because it uses corn syrup.
And an ethanol boom could have environmental costs, too. Elizabeth Marshall, an energy economist with the World Resources Institute in Washington, D.C., notes that corn uses a lot of fertilizer and a lot of herbicides. These have damaged rivers, lakes and especially the Chesapeake Bay along the Delmarva Peninsula. She says if the country wants more ethanol, it should help farmers find friendlier ways to grow corn and other crops in less harmful ways.
"A lot of people are looking for alternatives, including corn growers, but it's a very risky field," Marshall said. "You can't experiment with new technologies year-to-year and expect to stay in business if you hit a really bad year."
Delmarva farmer Robert Hutchison is already taking that risk, however.
Hutchison is growing a new kind of crop for the ethanol market — barley.
Most barley has a tough seed-hull that ethanol distilleries can't handle. So Hutchison is growing an experimental hull-less barley — the hull drops off during harvest. On a bumpy ride out to his test field, Hutchison says his first job is to persuade farmers to grow it.
"Part of the challenge of doing this ethanol plan is making sure we could pay the farmer enough additional that he would still net out the same, or more, as he would growing conventional barley," Hutchison says.
The idea is that farmers could grow winter barley for the ethanol market and summer corn to keep the chickens and hogs fat and happy. Moreover, barley keeps soil from blowing away in the winter, and sucks up excess fertilizer that might otherwise run into local waterways.
Hutchison says his hull-less barley is a gamble, but the ethanol boom has helped him make more from his corn crop than he has in decades.
"It's been since the '70s since I've been able to say farming is really profitable beyond just barely making a living and squeaking by."
Ethanol, Once Bypassed, Now Surging Ahead
By Robert Siegel
Bill Kovarik wrote a history of alcohol fuel, which he says was a popular lamp fuel as early as 1840.
During the Civil War, alcohol was taxed.
The target was whiskey — but alcohol fuel got caught in the crossfire.
"By taxing industrial alcohol along with beverage alcohol, they basically put a bunch of distilleries out of business in the 1860s and the 1870s, and opened the door for the Pennsylvania oil boom," Kovarik said.
The Civil War tax wasn't repealed until 1906 when Theodore Roosevelt was president, and no friend of the oil industry.
In the early 20th century, road tests showed that alcohol was a competitive fuel.
As an additive, it boosted the octane of gasoline. Alcohol mixes were used in many countries.
Henry Ford called alcohol the fuel of the future. His critics added, "And it always will be."
"Ford said at some point in the future, we'll run out of oil, but before that time, oil will become so expensive that we'll be looking for some alternatives," said Bob Casey, who works at The Henry Ford Museum in Dearborn, Mich. "He was 80 years, perhaps, too early, but he was looking into the future."
Charles Kettering of General Motors was also an alcohol booster. But his engineers figured it would take a new process using cellulose to make enough fuel.
Just a few years after the crippling tax was removed, Prohibition became the law of the land and the peddler of alcohol motor fuel was maligned as the colleague of moonshiners and bootleggers.
And — as Bill Kovarik tells it — alcohol was dealt out of the auto fuel business, in favor of another additive that boosted octane. He said General Motors made a deal with Standard Oil, which is now Exxon, to go with leaded gasoline, with an additive called tetraethyl lead.
There were already complaints of the toxic effects of lead, but alcohol was still on the sidelines. And, as new oil fields were being discovered around the world, alcohol looked even more expensive.
In the 1970s, Midwestern politicians came back to ethanol. And by the 1980s, with a jumpstart from politicians and subsidies, motorists in the Farm Belt were filling their pumps with a mix of oil and corn byproduct. Back then, they were calling it gasohol.
Loran Schmit, an early backer of ethanol in Nebraska's state senate, said more than 30 years ago that it should be used to replace lead in gasoline, and by doing so, it would reduce reliance on foreign oil and create a new market for farmers.
The last two reasons for promoting ethanol are still cited today.
But do they really check out? Tetra ethyl lead is gone; its successor additive, MTBE, is on the way out.
But is it a net environmental gain?
Ken Cook of the Environmental Working Group says it's a close call.
"It helps us with climate change. We're producing less CO2 from ethanol than with gasoline. It definitely helps us with respect to cleaner air in some circumstances. But it has some environmental drawbacks, too," he said. "More soil erosion, more runoff from farm fields growing corn for ethanol plants, pretty heavy use of nitrogen fertilizer."
Does it reduce America's dependence on foreign oil?
John Felmy is chief economist for the American Petroleum Institute. The API speaks for the oil industry, which now welcomes the role of ethanol. Given the federal mandate to use it, the oil industry doesn't really have a choice.
"Ultimately, (ethanol) is limited by the size of the corn crop," Felmy said. "We've already seen corn prices go up sharply over the last couple of years, as the amount of ethanol has increased in the fuel supply."
Felmy, like the president, alludes to a new technology, such as cellulosic ethanol, as a more significant solution to oil imports.
But as for Schmidt's third aim, to help farmers find a new market for their grain, the benefit is unmistakable.
Environmentalist Ken Cook says the enthusiasm for ethanol in the rural Midwest is remarkable.
"This is the No. 1 hope for their future," he said. "They used to be excited about getting the next women's prison located in the county. Now, they're excited about the ethanol plant.... Really the political momentum behind it is incredible."
It is heavily subsidized, federally mandated, and wildly popular on the farm. For Henry Ford's Fuel of the Future, the future never appeared so near.
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