Can ethanol-optimized engines offer 25 percent relief in fuel costs?

March 26, 2012 |

As gasoline prices surge, why has ethanol’s popularity stalled? Are ethanol-optimized engines an antidote, or a cure too far away?

In New York, the April contract for RBOB gasoline reached $3.38 per gallon this week and the average retail gasoline price in the US reached $3.93 per gallon.

Meanwhile, the April ethanol contract at the Chicago Board of Trade stood at $2.29 per gallon, raising the question. Now, in Brazil, the generally accepted threshold point for ethanol and gasoline is around 70 percent – if the ethanol price is 70 percent, or less, of the gasoline price, flex-fuel drivers in Brazil general opt for ethanol. With US ethanol now at 67.7 percent of the US gasoline price, there ought to be, on that rule of thumb, a major upswing of ethanol purchasing by flex-fuel owners.

With US corn prices expected to fall (they are now at $6.46 per bushel for the May contract on the CBOT but the September futures price is currently $5.82), and no major relief for gasoline prices on the horizon as the summer driving season approaches, there’s even more reason to expect a swing to ethanol.

Sputtering E85 ethanol sales

Not happening. In January, E85 ethanol sales in Iowa, in the ethanol heartland, represented 0.7 percent of all fuel sales. Though the Iowa RFA points out that E85 sales grew 15 percent in the state last year.

Why is E85 struggling when there are 7 million flex-fuel vehicles now available in the US, and the prices are well-aligned between gasoline and ethanol? Routinely cited – access to fuel pumps, and lack of blender pumps.

Another culprit? The lack of ethanol-optimized engines.

The well-publicized differential between ethanol and gasoline’s energy content masks another important differential: the octane rating. Ethanol has a 113 octane rating (RON method) compared to 87 for unleaded gasoline.

For those newer to engine technology, octane rating measures the amount of compression that a fuel can tolerate before detonating. Premature detonation is also known as engine knock, which can cause severe engine damage. High-octane fuels can tolerate high compression, which increases engine efficiency.

At the Advanced Biofuels Leadership Conference this year in DC, we’ll also explore another opportunity. We have invited experts from Ricardo to speak on the topic of ethanol-optimized engines.

According to Ricardo, a fully optimized ethanol engine can come within a handful of percentage points, in terms of miles per gallon, of a gasoline-optimized engine.

Back in 2010, USA Today wrote that the Ricardo Ethanol Boost Direct Injection Engine optimzed fuel economy at 30-50% ethanol blends:

“The engine runs best on a blend with gasoline that is 30% to 50% ethanol, but, Ricardo says, can run on anything from all gas to all ethanol. Ricardo is bringing a GMC Sierra 3500HD pickup to the Washington, D.C., auto show this week that will be outfitted with its V-6 ethanol engine. On gas, it says, the GMC truck gets about 12.7 miles per gallon. On all ethanol, it would get about 12.1 mpg, the company says. But with an optimum blend, it says the engine could get 15 mpg.”

Saving 27 percent, mile for mile, over today’s gasoline prices

What would a five percent differential mean? For, say, E85, it would mean an engine performing on fuel that costs 28 percent less, and goes about 96 percent as far per gallon. That would equate to a 27 percent savings in fuel cost per mile

Ricardo’s scenario, based on a 50 percent ethanol blend for that GMC Sierra, the fuel would cost 16 percent less and travel between 95 percent and 118 percent of the distance traveled on straight gasoline. That would equate to a savings of between 15 and 19 percent savings, based on 50 percent ethanol content.

At the Advanced Biofuels Leadership Conference

Barriers to deploying such an engine? Formidable barriers of time to develop, auto manufacturer acceptance, and effort to deploy across the auto fleet. The engine would cost $4500 more than a comparable gasoline-based engine (but less than a comparable diesel engine). Just to name a few concerns.

Back in 2010, MSN ran a scathing review of the Ricardo technology’s economics, primarily focused on food vs fuel issues but also looking at Ricardo’s V6 engine performance compared to V8 hybrids available with, for example, the Chevrolet Tahoe.

Not to mention the question of who might capture that change in price. Consumers? Producers? Marketers, Growers? Some for each. Overall, transformative in prospect, which is why it will be among the issues on the table when the industry’s leadership meets at ABLC, starting next week in DC.

More on ABLC 2012 here, where more than 50 industry CEOs and US Secretary of Agriculture Tom Vilsack will be on the presentation platform next week.

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