Gasohol Power

Putting corn in the tank

It looked like a practical, patriotic and eminently political solution to the problem of what to do with the grain that Jimmy Carter embargoed. Some of it, pledged the President, would be used for a "massive increase" in domestic production of gasohol. A federally supported program would provide something for almost everyone: more customers for farmers, more fuel for motorists and more protection for the nation from OPEC'S oil price increases and supply cuts. But, when the Administration plan to boost the gasoline stretcher was unveiled last week, it looked a lot less than massive and even a bit ill conceived and unrealistic.

The problems lie not with the processing or marketing of the fuel itself. Gasohol is already sold at more than 1,000 gas stations across the country. Since gasohol seems to offer slightly better acceleration in exchange for only fractionally less mileage per gallon, it is also increasingly popular with drivers.

It is simply a mixture of unleaded gasoline and anhydrous ethanol, which is 200-proof, water-free grain alcohol much like the stuff that gives the kick to gin and vodka. In the U.S., the mix is 9 to 1, but in other countries the ethanol content is higher to save even more oil. Brazil, for example, expects all of its citizens to be driving on gasohol with a 4-to-1 mix by the end of 1980, at a saving of about $500 million on its oil import bill. Moonshiners can distill a lower proof ethanol from such materials as corn, sugar cane, potato peelings, even garbage or grass. Says Victor Ray, an alcohol expert at the National Farmers Union "It is about as complicated as making bread. We tell farmers that if they cannot do it, their wives certainly can."

The reaction of the oil companies to gasohol remains mixed. Exxon has refused to let its credit card be used to buy gasohol. Texaco, by contrast, is expanding its network of gasohol pumps, from 600 to 1,100 this spring, and is studying a joint project with CPC International, the former Corn Products Refining Company, to make ethanol. The largest manufacturer of the additive, Archer Daniels Midland, has increased annual output at its Decatur, Ill., plant from 5 million to 55 million gal. in less than two years.

But the political promise of gasohol outreaches reality. As prematurely outlined two weeks ago by Deputy Secretary of State Warren Christopher, the Administration program called for about "5 million tons of corn" to be used this year to make "over 500 million gal." of ethanol. That would be enough to displace a little more than one day's worth of oil imports. The present annual U.S. alcohol distilling capacity is only about 80 million gal. and nowhere near enough to consume 5 million tons of corn a year.

The Administration's actual gasohol incentive program aims to boost production and consumption. It defers that annual target of 500 million gal. of ethanol production to 1981. While generous, it falls far short of what some had hoped. It fails to ensure that federal farm policies will provide distillers with enough grain year after year. Instead of big new investment tax credits, it offers would-be distillery builders loans and loan guarantees totaling $300 million a year for ten years.

If Congress approves, the program would also extend to the year 2000 the exemption that gasohol now enjoys from the 40 federal tax on each gallon of gasoline. The tax break adds up to 400 per gal. of ethanol since there is only 10% alcohol in each gallon of gasohol. The benefit only partly offsets gasohol's cost disadvantage. The wholesale price of a gallon of ethanol can be as much as $1.70 vs. about 85-c- for premium unleaded gas; at the pumps, gasohol typically retails for 6-c- to 8-c- more even with the federal tax advantage. Adding together the costs of the new program, the tax breaks and several existing gasohol support programs in place at the Departments of Energy, Commerce and Agriculture and the Small Business Administration, the Administration's entire support package will cost between $8.5 billion and $12.8 billion in the current decade.

Ultimately this energy source stands to succeed. It comes not from OPEC but from the nation's own abundant natural resources. Even if the big distilleries are never built, there is much promise and fast growing interest in the fuel self-sufficiency that could stem from cellar and barnyard do-it-yourself stills. The ethanol they produce could be mixed with gasoline and used to fuel private autos and tractors.

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