Government-propped industries have always been controversial. The alternative fuel industry is definitely no stranger to government incentives.
I’m guessing that most Americans are unaware that Uncle Sam provides 26 alternative fuel incentives, ranging from growing crops to fuel production to fuel consumption.
One incentive really caught my attention: If you grow an approved biomass crop, the federal government will cover half the cost.
That’s pretty impressive. However, is it appropriate? At some point the training wheels have to come off and the free market has to determine the viability of a product.
A good example is the ethanol business. This controversial alt fuel has been propped for over a decade. Strong political and financial interests across party lines have kept it going strong despite objections coming from a variety of folks ranging from reputable scientists to politicians to everyday consumers. Even Al Gore, no stranger to environmental causes, called first generation ethanol a mistake.
One of my vehicles is a 2000 Plymouth Grand Voyager. It was built at at time when auto manufacturers thought ethanol was the next big thing. It’s a flex fuel vehicle. However, we’ve never run it on E85 (85 percent ethanol) because we’ve never come across the fuel.
That’s interesting. It’s not like we live in a barren wasteland. We live in Florida which has long championed various alt fuels.
However, something happened here which got lawmakers in the Sunshine State concerned about ethanol: consumer demand.
Constituents began complaining about how their small engines and marine engines were failing (it’s no secret that Florida is teeming with boaters). More reports emerged about fuel pumps and gas tanks failing owed to corrosion issues. Turns out, the hygroscopic nature of ethanol—it wicks moisture from the air—had been introducing water in fuel systems that were never intended to do battle with the substance. Living in a humid region only increased the chances for water intrusion.
Fuel mileage began dropping, because nature can’t be fooled: ethanol, a type of alcohol burns up faster than gasoline. It takes more trips to the pump to make-up for the loss, which ironically enough, means greater emissions.
But the free market did respond as well as it could, considering the dark, political clouds overhead. Business began booming at shops that found themselves taking on more engines and components damaged by the alt fuel. New fuel additives hit store shelves promising to combat the fuel’s negative effects. Prices on corn-related food items shot up because the demand for corn at ethanol production plants skyrocketed.
Thankfully, The New York Times and other notable publications sounded the alarm about air quality and corrosion concerns with ethanol. The mix ratio was also found to frequently be in error.
It was hoped that fuel trucks traveling and sloshing around their loads down the road would keep the oil and water-based combinations of petroleum gasoline and plant-based ethanol thoroughly mixed. However, that didn’t always work out so well, leaving percentages of ethanol sometimes well below or well above the threshold of 10 percent. As the old saying goes, oil and water do not mix.
Consumers at odds with the mandated mess began asking for more non-ethanol fuel. Florida lawmakers pushed back and required on Dec. 31, 2010 that ethanol had to be used in all contemporary vehicles. Exceptions were granted for airplanes, antique cars, small engines, boats and other recreational vehicles.
Florida went so far as to require that non-ethanol fuel pumps be oversized so that they would fit only in antique vehicles that had large enough fuel filler necks to accommodate them. Some gas stations even banned the practice of filling up portable gas cans with non-ethanol.
There were times when I wondered if neighbors would start turning in neighbors for breaking Florida’s fuel laws. It was a bizarre time.
Consumers kept pushing back and news of lawsuits began popping up. It was mainly perturbed boaters who were seeking compensation for engine and even tank damage by ethanol.
It took a while, but finally Florida lawmakers backed off and made the fuel less Soviet-like and reinstated the free market option: Florida consumers could now use it or not.
More ethanol-free gas stations have since popped up in response to consumer demand. However, the price of ethanol-free gas—which costs less to produce—is actually about 50 cents more a gallon where I live.
It’s actually a twisted consequence of the law of supply and demand: as long as the U.S. continues to demand that ethanol be added to the nation’s fuel supply, the law of the free market will never fully apply.