A Blueprint for Keeping Midwest Dollars in the Midwest
By Dave VanderGriend, President of Urban Air Initiative
I think it is safe to say, in any endeavor, to go with your strengths, to do what you are good at.
In the case of Midwest Agriculture, we are good at growing corn. We are good at processing that corn into ethanol and adding value. What we are not so good at is capturing that value and keeping the dollars it generates at home.
Ethanol has been a lifeblood infusion to Midwest states and the entire rural economy. It is value added corn processing, creating clean, high quality, renewable fuel along with high protein animal feed. Despite the phenomenal growth of the ethanol industry we still depend on nearly 90% of our motor fuel needs from petroleum nationwide. But considering we produce enough ethanol in our states to reduce that dependency dramatically, why do we send it, and the dollar savings it represents, away?
Take Iowa as an example, with its 43 biorefineries producing 4.1 billion gallons of ethanol annually. Impressive for sure. However, we use less than 10% of that total in the state, exporting the balance to other states and even overseas. Every step of the way represents added transport costs and savings lost.
The problem lies in the fact that Iowa consumes 1.4 billion gallons of gasoline, none of which is produced in the state and all of which is consistently 30-40 cents per gallon more expensive than ethanol. So while we reduced the cost of 10% of Iowa gasoline, the other 90% is imported and costs consumers millions. It doesn’t have to be this way, we have the ability to reduce that cost. It’s pretty straightforward– we make fuel in Iowa at $1.30 and export it, and we import fuel at $1.70.
While we can’t replace all our gasoline, displacing 20% of our gasoline from the current 10% rate would increase ethanol sales in Iowa by 170 million gallons. At a 40 cents per gallon advantage over gasoline, we would save Iowa consumers $68 million dollars in fuel costs.
Impractical you say? Not at all. E15 has been approved for use in all vehicles 2001 and newer and President Trump himself has indicated support for allowing year round E15 sales. We are working with the auto industry to approve much higher blends which clearly improves fuel properties. Millions of miles are being driven on 20, 25, and 30% volume blends in various test programs with no adverse effects while reducing operating costs and improving performance.
This same example applies to Nebraska, Illinois, South Dakota, and any number of Midwest states. Imagine the control over our own future we would have if we adopted a regional compact to use higher ethanol blends.
So how do we get started? It must start from the top and our elected officials can take this initiative and lead by example. The Governors’ Biofuel Coalition is likely to get a green light from the U.S. Environmental Protection Agency to demonstrate E30 in state vehicles in the coming weeks. At the Urban Air Initiative we have petitioned EPA asking for no limits on ethanol volumes in gasoline.
By increasing the availability of ethanol blender pumps and higher blends, our Midwest states can use more Midwest produced ethanol, pumping millions of dollars into our economy. In so doing we will be providing cleaner air for everyone