ACE speakers answer Big Oil, ethanol critics

By Holly Jessen
Posted August 10, 2010, at 9:08 a.m. CST

At this year's American Coalition for Ethanol Conference & Trade Show, two speakers gave particularly strong arguments for chipping away at the power and monopoly of Big Oil. It just so happens that Anne Korin, co-author of "Turning Oil into Salt", and Marc Rauch, executive vice president and co-publisher of The Auto Channel, have polar opposite ideas on how to accomplish that.

ACE's 23rd annual conference was held in Kansas City Aug. 2-5. In all about 350 people gathered for the event, which included Korin as keynote speaker on Aug. 4 and Rauch as the last speaker of the event on Aug. 5.

Korin is slight woman with passionate ideas about fuel choice and the danger of relying on what she called an oil cartel. "We are at the mercy of countries that hate us," she said.

She made an aggressive case for supporting the Open Fuel Standard. If passed, the law would require mandated amounts of flex-fuel vehicles (FFVs) warranted to operate on gasoline, ethanol and methanol or biodiesel. Vehicles can run on ethanol or methanol with only a slight tweak, she said. Korin rallied hard that the ethanol industry band should together with other alternative fuels, not just pushing for ethanol FFVs, adding that in 20 years or so, FFVs could also be hybrid vehicles, providing further consumer choice.

Laws mandating FFVs have not gone anywhere, Korin asserted, because legislators coming from states outside the Corn Belt have no reason to support ethanol FFVs. If, however, methanol were added to the mix, FFVs would suddenly become much more attractive to legislators from coal and natural gas states. While most methanol is made from coal, China makes a large amount of it from natural gas. If the producers and supporters of corn, natural gas and coal were to join together to ask lawmakers to mandate FFVs, that would be a nearly unbeatable coalition, she said. "It's very, very hard to argue against that political clout," she said. "It's very, very hard to argue against people that say, we want an open and competitive market."

Korin also scoffed at politicians' hesitation at passing mandates for FFVs. Didn't Congress cooperate long enough to mandate the transition from analog to digital television broadcasts? That's an encroachment on a much more trivial part of our lives than fuel choice, she said. It's not enough for politicians to make speeches about their commitment to energy independence. If the U.S. doesn't move to an open market, there will be another crisis when there is another spike in oil prices. "We're going to have three-digit oil again," she said. "There's no doubt in my mind."

Explaining the title of her book, Korin told audience members that salt was once a commodity with the importance of oil. Wars were fought over salt, as it was the only available method of preserving food. The word salary comes from the word salt, she said, as soldiers were once paid in salt. She then asked the audience if the U.S. imports any salt. What are the world's largest salt-producing countries? No one answered, because, she said, we don't care. Salt does not have the same status it once did. "That's what energy independence is," she said, adding that if there were an open market and fuel choice, oil would someday become the equivalent of salt.

Rauch opened his talk by contrasting his beliefs with what Korin told ACE attendees. Some say there is no single bullet solution for replacing petroleum, no one alternative fuel that is better than the others. "We disagree," he said. "We think that there is one solution that can be used immediately-ethanol."

Big Oil uses a strategy of divide and conquer to keep ethanol from succeeding. Big Oil buys politicians, buys votes and buys media spokespeople, he said. They do this using misconceptions and outright lies. Some of the lies he listed off are that ethanol requires high subsidies to succeed, damages engines, provides low power and is less energy dense and that FFVs are insignificant. "The lies are so pervasive, so well spread that many people in the alternative energy space and the ethanol camp believe some or all of them," he said.

On the issue of subsidies, Rauch pointed out that oil has enjoyed high subsidies for years. It's unrealistic, he said, to think that ethanol would survive without subsidies in a few years. Everything big that has ever been accomplished-the railroads, highways, the Hoover Dam-has relied on heavy government support.

Rauch's favorite lie, he said, was that ethanol damages engines. Ethanol burns cooler than gas and doesn't damage engines, it cleans them. He told multiple stories of drivers using high blends of ethanol in vehicles that are not FFVs, with the same performance and reduced emissions. "All modern cars can use ethanol," he said. "They may not be able to use 99 percent ethanol but they can use ethanol." Although car companies are not marketing them as FFVs, Rauch asserted that many companies are producing what are essentially FFVs, year 1990 and beyond. More than 100 million cars on the road today can use high blends of ethanol, he said.

As for the argument that ethanol provides less power, he said an adjustment in thinking needs to happen. People need to start thinking in terms of cost per mile, not miles per gallon. He also pointed to a Switzer Performance HP vehicle that the company customized for a customer that wanted more horsepower. To reach 900 horsepower, the company made it an E85 vehicle. When Rauch asked if there was ever concern about damaging the engine, the company responded that if it thought ethanol damaged engines it would not put it in a $300,000 car. "Why in God's name would you not use ethanol," the man told Rauch. "If we could get E99 we would use E99."