No matter who you talk to, everyone seems to have an opinion — one way or another — on ethanol.
You know the stuff… made from corn and mixed into your gasoline.
To be more exact, the gas has 10% ethanol content. It may sound like a great thing in passing, but it actually can have quite the detrimental effect on a few things.
Basically, the EPA is about to finalize new ethanol content quotas for gasoline. They are looking to raise it above the current 10% limit currently set.
The American Petroleum Institute commissioned a survey of about 1,000 registered voters from all over the US had been conducted regarding ethanol quotas.
The survey showed that generally, regardless of political party affiliation, people were concerned about having too much ethanol content in gasoline.
And they have every right to be, too…
You see, ethanol isn’t too good for your car’s engine, which is designed to run on gasoline, and extremely bad for smaller powered motors — like the one in your lawn mower.
Even with the normal “E10” blend, cars can be damaged in a multitude of ways. It can improperly dilute fuel with too much water content or absorption, it can cause undue vapor lock, it can cause a drop in octane, decrease fuel efficiency, decrease the lifespan of engines or parts of the engine, along with a bunch of other technical things. Breaking the “blend wall” could exacerbate the issue.
Car owners have other issues, however. Many automakers have expressed that they will no longer insure their customers cars if the blend percentage is increased.
Unfortunately, the problems don’t stop there…
You should already know that anything that needs to be heavily subsidized — in this case its corn farmers — will come with a lot of issues. Here, farmers are actually selling corn for less than the cost of production, yet their fields become more profitable as the government picks up the tab.
Look, although there’s a myriad of concerns over ethanol, we have to take realistic perspective here.
It doesn’t matter which side of the issue you fall on, the EPA will increase the ethanol quota for gasoline, perhaps as early as next week.
It’s an inevitability, especially with the amount of lobbying power being thrown behind the ethanol industry.
The only question is how the new “blend wall” will be tested…
Until next time,
A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.
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