On June 18 in this space I described a loss of mileage in my vehicle and questioned some of the benefits of ethanol-blended fuels.

A few days later I received a letter from Stephanie Page, renewable energy specialist at the Oregon Department of Agriculture. I thought you might be interested in her view. This is an abridged version of her letter:

"Per gallon, a 10 percent ethanol blend (E10) has about 3 percent less energy than pure gasoline. (A gallon of pure ethanol has 67 percent of the energy of a gallon of gasoline, or 33 percent less energy, so E10 has 3.3 percent less energy.) ... Studies evaluating gas mileage with E10 have shown it has minimal impact on fuel economy.

"Ethanol is now in 50 percent of the fuel supply in the U.S., so this fuel is widely used and has been widely tested. Out of 40 scientific studies over the past several decades, the average fuel economy reduction in all cars tested was about 2.5 percent, and none showed reductions of more than 4 percent.

"If consumers experience a greater drop in fuel economy than 3 percent, their fuel filter may be clogged or their oxygen sensor may need to be replaced.

"I can certainly relate to the pain at the pump that you and other consumers are feeling because of fuel price increases, but ethanol is helping to moderate these increases, rather than contributing to them. The ethanol currently blended into our fuel in Oregon is helping to keep fuel prices 30 to 40 cents lower per gallon compared with pure gasoline. This savings should more than compensate for the small decrease in gas mileage associated with the E10 fuel blend.

"... Ethanol production is also boosting Oregon's economy because of the jobs created at production facilities. Much of the ethanol blended into Oregon's fuel has been produced locally at the Pacific Ethanol plant in Boardman, supporting several family-wage jobs.

"Ethanol also has a variety of environmental benefits. It takes approximately 3 gallons of water to produce one gallon of ethanol, compared with 8 gallons of water to produce a gallon of gasoline. For every unit of energy invested in ethanol production, the output is 1.3 to 1.6 units, compared with only .8 units of output for every unit of energy put into gasoline production (this is because some of the energy in oil is consumed in drilling, pumping, transporting, and refining it).

"Ethanol reduces emissions of several types of pollutants, including fine particulates, ozone, and carbon monoxide. Greenhouse gas emissions associated with ethanol production and combustion are also lower than those from gasoline.

"The benefits above are from corn-based ethanol, but ethanol produced from plant materials such as wheat straw, switchgrass, wood chips, and other plant materials can provide even greater benefits. We hope that Oregon's agricultural producers, including wheat growers of Umatilla County, will be able to sell plant materials to cellulosic ethanol producers and benefit from advances in cellulosic ethanol production technologies that are expected over the next decade."

As ethanol plants begin to produce, a greater demand is placed on whatever available feedstock is the preferred choice, be that starch-based grains, sugar, or cellulose. That demand always increases the price of the feedstock. The more ethanol that is produced the greater demand for the feedstock and the higher the price.

As ethanol enters the total pool of motor fuel the supply of available fuel increases almost proportionally to the amount produced (remember there is less energy in the ethanol than in gasoline).

As supplies increase, prices begin to come down. The more fuel that is produced the greater supply and hence the lower the price.

The fundamental principles of simple economics preclude the financial viability of the industry.

Increased demand for feedstocks increases prices. Increased supply of fuel decreases prices.

Operational success thins profit margins because demand for feedstocks and supply of fuel run contrary to long-term financial viability.

The future of this industry rests primarily in the hands of those who create and enact energy policy and the state and federal levels.

Strategically placed subsidies, inducements, incentives, stimuli and exemptions can inhibit market forces and prop up the industry as long as the public agree with these policies.

Kim B. Puzey is general manager of the Port of Umatilla. Readers may call him at (541) 922-3224 or e-mail kimpuzey@uci.net.

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