GM and Ethanol

THE ETHANOL QUESTION

What say we: How's about GM leverages its ethanol-or-gasoline car flexability by helping gas stations to pay for the cost of putting up ethanol pumps. Then, it can start pumping out its FlexFuel cars. Would that not help everyone including the ailing GM?

Let's run it down:
It costs GM the same amount to build a FlexFuel car as a normal car. It costs less to grow and refine ethanol. (Ethanol can be made out of corn, vegetable waste, heck even algae.) Ethanol gets about 29.4mpg in a car that gets 30mpg. And lastly, to put up an ethanol pump at your local gas station, if your corporation will allow it, will cost around $40-50,000. (Only about 600 out of 170,000 gas stations currently offer it).

Background:
So Brazil has been selling ethanol (E85 meaning 85% ethanol, 15% gasoline) and GM manufactured FlexFuel cars for 4 years now. E85 fuel is far cheaper in that country and, of course, out sells gasoline. Refining (actually distilling) ethanol does not produce any air pollutants, only steam. And refining, say, corn is less expensive than refining oil. These are all facts that oil companies (you know, the most profitable corporations EVER) will deny. Now lead by Rick Wagoner, former head of GM operations in Brazil, GM is now just starting to amp up their marketing of FlexFuel cars in the US (some 1.5 million FlexFuel cars are already in use here). More here and here.

The Hybrid Question:
So, we've seen the popularity of Hybrid cars skyrocket, but are they the long term answer? With a Hybrid Civic beating out a normal Civic by only 4 mpg on average, I have to wonder. Ethanol beats out Hybrids by further decreasing our use of gasoline, which is something that makes us reliant on not only foreign oil, but on oil companies. Moving to ethanol also releases the taxpayer from the huge tax breaks, contracts and allowances that are/were given to oil companies by the federal government. And, of course it puts more jobs back in America-- on farms and at any business who couldn't to stay in operation or expand because of high gas prices. (This also includes local and state municipalities who have had to reduce police patrols and other spending.) And then: And then we sell ethanol to China and India and the rest of the world. Heck, we might even rejuvenate our agricultural industries and start feeding ourselves again! Please share your thoughts!


This entry originally appeared in my Myspace blog. Here are the comments as posted:

Posted by Eric on Thursday, May 18, 2006 at 2:15 PM

Interesting points; thanks for posting them.

The Hybrid Question, however, overlooks the decline in sales of hybrids (down 69% in April, according to the latest Newsweek; this is compared to the 129% increase in Cadillac Escalades in the same period); Hybrids fail to be the answer as long as they cost more to the consumer than they will save.

I'm an atypical commuter -- I drive about 300 miles a day (yes, I know it's crazy, etc. but I have valid reasons for doing so) -- and Hybrids would not save me a nickel on gas. But the minute there's a fuel source (hydrogen fuel cells, or bio-fuel) that either a) gets considerably better mileage or b) costs considerably less at the start, thus lowering the barrier to entry, I for one would invest heavily in the company producing both fuel and car, and second, would buy one immediately.

But the fact that SUV sales are up, despite SKYROCKETING fuel costs, leads me to the inescapable conclusion that, well, people are not very smart, or perhaps more charitably, people don't really want to do something different, even if it's better for them.

That's the real barrier that needs to be overcome first, on a wider scale, before any kind of alternative fuel will gain traction in the U.S.

(Thanks for the message, by the way; check your MySpace inbox for my reply.) :)

-Eric ("Yes, the one from Malone") T.

Posted by Ben'jamin on Friday, May 19, 2006 at 1:13 PM

Thank you for your comments, very informative. I guess the Escalade phenomenon, which I find quite remarkable actually, is much like the house building going on in southern NY and elsewhere. People buy a big house, level it, and build a HUGE, towering house as wide and long as the zoning will allow. The houses leave no lawn and you could almost lean out and knock on your neighbor's mammoth house. WHY? Oh yeah, status. I guess having a lawn isn't viewed as a status symbol anymore. Also, I think it's also a sign that a certain segment of our population is either not concerned enough about rising interest rates, is too desperate to look rich or simply are sitting on too much cash and want to show it. You're right though; people are reluctant to help themselves if the action isn't somehow almost the same as what they're already doing. That's the beauty of ethanol and FlexFuel cars; you don't have to change your habits and it will cost you less if you have a station with an ethanol pump. That's why I think GM should just DO IT regardless of handshakes with oil companies or whomever. This is business. I agree that hybrids are not the answer, although wouldn't an ethanol-electric hybrid kick ass? On the other side of the coin, there's no reason why there couldn't be an ethanol-guzzling SUV

In the end, I think the root of the Escalade culture is that somehow the idea of big, gaudy, energy consuming things has mutated the American Dream. I like to think that the Dream was about family and living a fruitful and fulfilling life. A life where you can make choices that lead to a comfortable lifestyle. Today, all that seems to matter is that you look like money. Who cares if I drown in debt, I need all these shiny, inefficient and useless things so people will think I'm important, successful, attractive and HAPPY! Are we saying that what other people think is all that really matters? Taking into account the last 20 or so years, I'd say that's a resounding YES. In the 90's we looked back and called the 80's extravagant like we had grown out of it. I don't know what I'd call these times. We're so far beyond extravagant. And to anyone who thinks that disliking this kind of lifestyle is somehow un-American, I say, I love being an American and I sure wouldn't mind being wealthy, it's just that I don't feel the need to flaunt it.

PS If cars ran on water, I guess the ethanol question would be moot. HAHA! That will never happen. What?! It has? Check it out: here

Posted by Eric on Friday, May 19, 2006 at 1:45 PM

The "water as fuel" video is the coolest bloody thing I've seen in months.

Wow.

-E