G.U.N. Oil Report

The Wisconsin Ag connection reports that foreign auto makers are turning their attention to E85.¹ They’re forecasting an announcement “very soon” from foreign auto makers to indicate plans to develop FFVs, or Flex Fuel Vehicles — vehicles that can run on gasoline, E85, or a combination of both.

One foreign car maker that is getting into the game is Volvo, says Azom.com in an article titled Volvo Creates Car that Can Run on Five Different Fuels.² Volvo’s new vehicle can run on hythane, biomethane, natural gas, bioethanol E85 and gasoline, making it one of the most adaptive vehicles ever introduced. It also is targetted as a high performance alternative-fuel vehicle.

I’m not a fan of Ethanol-based E85 due to all the farming regulations, subsidies and anti-competitive cronyism that exists in that industry. The Globe and Mail has a great article today titled Steering clear of the ethanol bandwagon that talks about the downsides of the alternative fuel market.³ As Professor Jim Lemon says in the article, Some sources are better than others — sugar cane is better as Brazil has proven; corn is not good. He also throws up his fists against the subsidies: In the United States, the federal government grants 51 cents (U.S.) per gallon to producers. I am a firm believer that the number one problem with gasoline and energy in general is too many subsidies and not enough of a competitive atmosphere due to overregulating of the industry, with too many preferential programs in place. We want freedom, not governance.

The politics of E85 always come into play ahead of the market efficiency, as we see in a campaign for a Michigan politician. U.S. Rep. Mike Rogers, the Republican incumbent in Brighton, MI, wants to promote ethanol production in order to bring Michigan more income.⁵ Lugar recently introduced the American Fuels Act with Democrat Obama from Illinois — an act that is supposed to promote locally produced and refined gas and gas alternatives. As many like me know, the U.S.’ largest fuel problem is the oversubsidization of a select few energy companies — subsidies that cost taxpayers billions and also keep competition from entering the market on the same level. Would you compete in a market if your competitors were receiving barrels of free taxdollars every day?

The debate on which fuel is better continues as NBC15 compares gasoline to ethanol.⁶ NBC15 is running an ongoing series titled “E10 on Trial” and ran a variety of tests to see if ethanol can hold up to gasoline. Their research surprised them by showing E10 ethanol to be more efficient in this test, with this particular vehicle. One thing to consider, though, is how much the subsidies cost and how far you have to drive to fill your tank.

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