New West Energy Grok

Is Big Oil Blocking Ethanol?


By Richard Martin, 9-28-07

 
 

Earlier this month POET Biorefining of Sioux Falls opened its 21st ethanol production plant, a Portland, Ind. Facility that will produce 65 million gallons a year. Poet now has the capacity to provide 1.1 billion gallons annually, making it the world’s largest ethanol company.

Unfortunately, according to a report by BusinessWeek’s David Kiley, the spread of ethanol into America’s vehicles is being stalled by a likely suspect: Big Oil. “Despite collecting billions for blending small amounts of ethanol with gas, oil companies seem determined to fight the spread of E85, a fuel that is 85% ethanol and 15% gas,” Kiley writes.

Though the industry collects a 51 cents-per-gallon federal subsidy for sales of E10 (10% ethanol and 90% gas), “it’s working against the E85 blend with tactics both overt and stealthy,” the article claims.

Writing on his R-Squared Energy Blog, Robert Rapier calls the BusinessWeek story “very misinformed.” Among other things, Rapier claims that Big Oil doesn’t really benefit from the ethanol subsidy, and that the nation couldn’t produce enough ethanol to displace 15% of the conventional gasoline supply (the congressionally mandated target for 2017) anyway.

Rapier mainly disputes the peripheral points in the BusinessWeek story, and since Kiley quotes Big Oil officials as saying essentially “we’re against E85”, it’s kind of hard to disprove his central thesis.

In other energy news: Interior Department analysts allege big underpayment for oil and gas leases on federal land; first new nuclear plant in 30 years to be built in South Texas; and DOE funds development of new batteries for plug-in electric cars.

In other energy news:

-- The Western Slope residents who have objected to the terms at which oil and gas companies carry on exploration and drilling have a point, according to the head independent investigator at the Interior Department. The yearlong study, showing underpayment by companies that drill on federal land, “grew out of complaints by four auditors at the agency, who said that senior administration officials had blocked them from recovering money from oil companies that underpaid the government,” The New York Times reports.

-- Monday was a historic day for the renascent nuclear power energy: the first application for a construction and operating license for a nuclear plant in almost 30 years was filed with the Nuclear Regulatory Commission. NRG Energy, Inc. and South Texas Project Nuclear Operating Co. plan to build two new Advanced Boiling Water Reactor units, with a total capacity of 2700 megawatts, at the South Texas site.

-- The Department of Energy said this week it will provide almost $20 million to hasten development of advanced batteries for plug-in hybrid electric vehicles, with the aim of helping achieve the federal “Twenty in Ten” plan to eliminate 20 percent of nationwide gas consumption by 2017. Earlier this month, Google.org—the philanthropic arm of the California search-engine giant—offered $10 million to for-profit companies that are working to advance PHEV technologies.



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By Craig Moore, 9-28-07
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