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Lamberty Report: Ethanol and the New Order of Things
by Ron Lamberty

"There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success than to take the lead in the introduction of a new order of things." – Niccolo Machiavelli

2008 proved to be a difficult, perilous year for the ethanol industry, and looking forward to 2009 offers no certainty for success. Perhaps we can take some comfort in knowing that this difficulty and peril is due to the fact that in America’s energy profile, ethanol has taken the lead in establishing a “new order of things.”

People like to talk about change far more than they like to actually change. Change is hard. It is hard for a livestock feeder, used to buying corn for two dollars a bushel, to suddenly pay a corn price driven sky-high by factors outside of his control. It would be easier to “go back to the way things used to be” and get rid of ethanol – one of the factors that may have changed that feeder’s life – but turning back would have been short-sighted and wrong.

It would be easier if petroleum marketers never had to change the type of fuel they offered to their customers. If they never had to clean a dirty tank, never had to check seals on underground storage tank lids, if they never had to answer questions about this new ethanol fuel that carries with it the baggage of misinformation it would be easier. But that also eliminates the marketer’s opportunity to offer customers a clean, domestic renewable fuel that could add to the bottom line.

It may be difficult for those same marketers – who saw the opportunity for increased profits when ethanol was much cheaper than gasoline – to continue to promote ethanol blends when the higher octane fuel costs more. It is much easier to sell people “cheap” fuel than to promote all of the things that make ethanol “worth it.”

To some extent, we have become a victim of our own success. Legislation was passed to ensure markets for ethanol, market development efforts convinced marketers to offer ethanol blends to consumers, and promotion assured motorists that ethanol was a performance fuel that cleans the air and creates jobs. More ethanol was used, less gasoline was purchased, and the price of gas came down – way down. We must remind people that ethanol – regardless of its price – adds to the gasoline supply and keeps prices lower. At times, it might seem like gas without ethanol would be a smart buy, but ultimately, less ethanol returns us to “the old order of things” – unchecked gasoline prices.

Our industry’s success becomes more certain as we do all of this difficult and perilous work. And as we gain new markets, we know that, as Machiavelli also writes, “Those who by valorous ways… acquire a principality with difficulty, will keep it with ease.”

 
© American Coalition for Ethanol, all rights reserved.
The American Coalition for Ethanol publishes Ethanol Today magazine each month to cover the biofuels industryís hot topics, including cellulosic ethanol, E85, corn ethanol, food versus fuel, ethanolís carbon footprint, E10, E15, and mid-range ethanol blends.
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