Octane Can Save Agriculture—and Agriculture Can Save Octane: Averting A Farm Crisis with the Right Approach to Biofuels    

By Doug Durante, Executive Director, Clean Fuels Development Coalition and Doug Sombke, President, South Dakota Farmers Union
Special to The Digest

As usual there is a lot of angst in middle America these days with uncertainty over RFS volumes, small refinery waivers, bird flu, budget cuts, and looming trade wars.  But the greatest threat is the potential for a full-blown farm crisis which RFA’s Geoff Cooper framed well in his recent remarks at the National Ethanol Conference.  While many of us remain puzzled as to why we seem to be limiting ourselves to 15% blends, putting that aside, Geoff raised some important historical lessons and identifies potential common ground as he correctly noted:

 “Two decades ago, the RFS created a thriving market for renewable fuels, pulling family farmers from the brink of economic collapse and sparking the most prosperous era in American agriculture. As farmers now face new financial challenges, it is more critical than ever that we turn to ethanol once again to secure rural America’s future and our nation’s energy security. We’ve seen it work before and with the right policies in place, it can work again.”

Many of us were in the trenches 20 years ago when the bi-partisan Senate duo of Democrat Tom Daschle and Republican Dick Lugar introduced the first RFS.  We can attest to the fact that the skeptics were many and the believers were few. Daschle/Lugar not only had to overcome the formidable opposition of oil interests and the EPA, but many in the agricultural community were opposed.  Geoff is right when he says it sparked the “most prosperous era in American agriculture”, and he is right when he says it can happen again, but we would add, only if we take it to the next step.

RFS1 and 2 were not intended to be the final destination—they were vital catalysts paving the way to a much larger vision. As Senator Daschle several years ago told the Iowa Renewable Fuels Association annual meeting: “RFS was the launch vehicle and higher octane fuels like E30 will keep the industry in orbit”. Ethanol’s superior octane qualities are even more critical today as President Trump looks for ways to eliminate oil imports and insulate the nation’s economy against supply interruptions like the 2022 Russia invasion of Ukraine, which forced a spike in gasoline prices and inflationary pressures that rippled through the entire economy.

In his recent flurry of Executive Orders, President Trump declared a national energy emergency. In fact, he called for the establishment of an “Energy Dominance Council” where the Departments of Interior and Energy, along with EPA and others would coordinate efforts to produce domestic energy and fuels.  Ethanol can play a key role in such an initiative, but again, only if we stop thinking small.  He pledged to “refill to the brim” the Strategic Petroleum Reserve (SPR) which the Biden Administration drew down by 50% to blunt the inflationary spiral caused by $120/barrel oil prices. Even though they were temporary, according to the Federal Reserve reports, they caused hundreds of billions—perhaps trillions– of dollars of damage to the economy when interest on the federal debt is considered.

Thanks to the RFS ethanol miracle and oil industry fracking technology advances, today the U.S. is a net exporter of petroleum products and to a lesser extent, crude oil. However, due to geographical transportation costs and imbalances in the types of crude oil, US refiners still import six million barrels per day of oil which means consumers and our economy remain vulnerable to global oil supply disruptions. A 2024 DOE Energy Information Administration (EIA) report underscored a deeper problem: At a point in time when more than half the new cars being sold either require or recommend high octane premium gasoline, U.S. petroleum refiners are facing a worsening bottleneck in octane boosting capacity. The report warns of continued upward pressure on gasoline prices because “U.S. refineries are likely to produce less gasoline because of difficulties producing enough high-octane, low-sulfur blending components”. [See EIA STEO May 14, 2024 report: “How might gasoline prices change if U.S. refiners face production and distribution limitations?”] 

The ethanol industry would be wise to focus more of its attention on DOE and its broad authorities under the SPR statutes. Unlike EPA’s irrational hostility to ethanol, DOE and its respected national laboratories have been supportive of ethanol’s superior octane boosting characteristics for many years. For example, DOE’s Oak Ridge Labs agreed with the Mathpro – Ford/GM et al. study that found adding E30 blends to U.S. gasoline would cost effectively produce 100+ RON (94 AKI) consumer gasoline and in the process reduce refinery crude oil losses by 10% (and their carbon emissions by 8%). Oak Ridge National Lab (ORNL) scientists have identified E30 – E50 blends as the “sweet spot” for optimum gasoline octane enhancement. 

An orderly transition from today’s nationwide E10 standard to a nationwide E30 standard—as happened with the RFS, moving gradually from E10 to E15, E20, E25, and ultimately E30+ as ethanol production ramps up over the next ten or so years—would increase ethanol’s contribution to the U.S. gasoline pool by approximately three-fold, from today’s 1.05 million bpd to 3 million bpd, approximately 1 billion barrels per year. In terms of replacing oil for the purpose of making gasoline, ethanol’s value doubles and could displace 2 billion barrels/year of crude oil — 100% of U.S. oil imports according to EIA’s 2024 statistics !!  

How so, you might ask? For starters, all barrels are not created equal.  A 42-gallon “barrel” of ethanol produces 42 gallons already refined into a 130+ RON low sulfur octane vastly superior to any other legally permissible octane component and ready for splash blending into gasoline.  The average 42-gallon barrel of crude yields just 45% gasoline, or 19-20 gallons.  And it’s not just a volume advantage.  Those 19-20 gallons are significantly lower in octane— as much as 7 points when ethanol is blended to E30.  With an estimated octane value of 5 cents per point of increase, this represents new value ethanol can capture that would extend to corn growers.  Lastly, an E30 high octane fuel allows automakers to increase compression and achieve as much as a 7% increase in efficiency, savings consumers billions in fuel costs.

Connecting the Dots With Oil and Agriculture 

So how does this propel us into a new era of agriculture prosperity and avoid a catastrophic collapse?  It begins by protecting the 5 billion bushels currently going into ethanol production and then creates a pathway to another 5 billion.  When that happens the whole playbook opens up—job creation, taxes paid to state and federal governments, farm equipment and suppliers get back to work, and rural communities prosper.  The 45% of the barrel not processed into gasoline is refined to diesel, jet fuel, or used for chemicals.  These products can be easily replaced by biodiesel, renewable diesel, and sustainable aviation fuels that have also been encouraged by the RFS targets, creating more opportunities for America’s financially strapped farmers.  Working in tandem with the domestic oil industry—as radical as that might sound—fits glove-like into the Energy Dominance Council which is chaired by Interior Secretary Doug Burgum.  As the former Governor of North Dakota, he understands both oil and ethanol and how tenuous things are with American agriculture.  Geoff Cooper’s dire warnings are being echoed in major ag publications, in state legislatures, and global trade circles. 

Since we live in a DC world of acronyms (DOGE,  anyone?) just for fun around the office we call moving to E30 the Superior Performance Internal Combustion Engine Fuel Standard , or SPICE.  But it’s no joke– The creation of a 3mmbpd program to complement the existing SPR and replace toxic, expensive BTEX as required by the Clean Air Act would benefit all parties: octane-strapped petroleum refiners; farmers desperate for a domestic market insulated from geopolitical disruption, tariffs, or supply chain concerns; children and other vulnerable Americans desperate for reductions in particulate-borne toxics; automakers desperate for higher octane consumer fuels; and Congressional budget negotiators desperate for sustainable revenue offsets that do not require new statutory authorizations. 

This year is the 100-year anniversary of the Surgeon General’s approval of leaded gasoline, which numerous studies confirm cost the U.S. economy trillions of dollars in premature mortalities, lower IQs and higher crime rates, and reduced economic productivity. Millions of lives were ruined. How Alice Hamilton Waged a One-Woman Campaign to Get the Lead Out of Everything | Smithsonian

Thanks to EPA’s 30 years’ refusal to enforce mandatory Clean Air Act provisions to reduce/eliminate gasoline BTEX, we are all being forced to watch the same horrible movie again. Transitioning from today’s E10 to tomorrow’s E30+ SPICE fuels would be a cost effective, timely, and appropriate way to put an end to such a needless repeat of history. We would get bonus points for a more energy secure nation, a thriving rural economy, higher performance, cleaner burning vehicles, and billions in savings to hard-working consumers.