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 # 356  

 September 2001




New Bio Oil Grown by American Farmers Offers Benefits to Farmers, Consumers and the Environment

by Tom Randall

 

A massive fire on August 14 knocked out a Citgo refinery southwest of Chicago, threatening to cause gasoline price increases and shortages in Chicago and other parts of the Midwest.1 A similar fire in southern Illinois sent prices soaring earlier this summer. Two pipeline breaks spiraled prices out of control in the summer of 2000.

The coming price hikes could have been avoided, as could earlier ones.

The problem is not the refiners, who will be the first to feel the wrath of politicians, seeking next year's votes from a populous eager to blame the price hikes on big business. The refiners are victims, too.

The real culprit in this, as well as the earlier price spikes in the Midwest, is the U.S. Environmental Protection Agency and the congressional mandate for oxygenates, such as ethanol, that the agency lobbied for, received and has fiercely defended for over ten years.

Mandates for oxygenates and other compon-ents of reformulated gasoline have resulted in numerous, specialized blends of gasoline being required for many areas, such as Chicago, across the country. This means when a refinery or pipeline goes down, the gasoline it supplies cannot be replaced with alternatives from other parts of the country. Inventories run short. Wholesalers and retailers bid up prices in an attempt to avoid running out. Consumer prices soar.

It doesn't need to happen.

According to the National Research Council: Ethanol in gasoline does not improve air quality.

In fact, ethanol increases emissions of oxides of nitrogen.

It also increases emissions of volatile organic compounds.2

So, just why do we have an oxygenate requirement? This, by the way, is essentially an ethanol requirement since the other oxygenate, MTBE, pollutes ground water so badly it has been banned by many states.

The requirement to use ethanol in gasoline is a boon for its producers, such as Archer Daniels Midland, which receive a 54-cent per gallon subsidy from our tax dollars. Although there is little evidence that this subsidy raises the price of the corn from which ethanol is produced, many corn growers believe it does. And as many on Capitol Hill have said, time and again, agriculture represents many votes for many congressmen and senators.

Consumers represent votes, too.

But consumers aren't an organized voting block.

But they shouldn't have to be.

The oxygenate mandate should be repealed.

Farmers shouldn't be abandoned in the process, either.

Congress should act to help both consumers and farmers.

There are promising new products from farm products on the horizon - the very near horizon. The authoritative automotive industry publication Wards Engine and Vehicle Technology Update reports in its August 1 edition that a revolutionary new motor oil has been developed. It is made from oil seeds, such as canola. In the near future it will be possible to make it from soybeans, which, fortunately, are grown by most corn producers.

According to Wards, this new motor oil is superior to the petroleum-based variety in virtually every way, including the fact that it reduces vehicle emissions dramatically. That's right. Unlike ethanol, this oil actually cleans the air.3 Yet, unlike ethanol, it is competitive in the marketplace without a subsidy of our tax dollars.

Tests are continuing to confirm what industry experts call amazing results with the new bio-oil. However, with up to three years of successful use in approximately 35 U.S. Postal Service vehicles in the Midwest, expectations are high.

As for corn, a consortium of the agricultural giant, Cargill, and the big chemical company, Dow, is nearing production, at a new plant in Nebraska, of a plastic made from corn. It is so rugged it will make super-durable carpet and could dramatically reduce the annual demand for eight billion tons of petroleum-based plastic. Another plus: Under the heat and pressure of a landfill, it biodegrades in just 45 to 60 days. Like the new oil, it doesn't need a government subsidy to be competitive.4

Research on hundreds of similar products is taking place in corporations and universities around the country.

Imagine if the 54-cent ethanol subsidy, which amounts to billions of dollars, was directed instead toward another round of tax cuts.

The consumer would benefit.

The farmer would benefit.

We all would benefit.


Footnotes:

1 Art Golab, "Fire Hits Refinery in Lemont," Chicago Sun-Times, August 15, 2001, p. 8.
2 Testimony of William L. Chameides, Chair of the National Research Council Committee on Ozone-Forming Potential of Reformulated Gasoline before the U.S. House of Representatives Subcommittee on Energy and Environment, Washington, DC, September 14, 1999.
3 Robert Brooks, "Tests Confirm Heavy NOx Cut for Bio Oil," Wards Engine and Vehicle Technology Update, August 1, 2001, p. 1.
4 Janet Ginsbury, "Plastics as High as an Elephants Eye," Business Week, July 9, 2001.

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Tom Randall is director of the John P. McGovern, MD Center for Environmental and Regulatory Affairs of The National Center for Public Policy Research in Washington, DC. Comments may be sent to [email protected].





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