Petroleum Distributor Responds to Wall Street Journal Anti-Ethanol Editorial With True Facts

EDITOR'S NOTE: On March 21, 2016, we wrote and published a reply to a fallacious anti-ethanol article written by George "David" Banks for the High Plains Leader & Times website. At the bottom of our reply, in the LiveFyre comments area, Walt Dwelle - Managing Partner or Flyers Energy - posted a copy of the reply that he sent to The Wall Street Journal to counter the anti-ethanol claims that appeared in a WSJ editorial.

Mr. Dwelle's reply is significant for two reasons: First, because he relies on real information, not lies and gross exaggerations. Second, because Mr. Dwelle and his brothers are non-biased second generation fuel producers and suppliers. Their company's business pratices espouse values that are great for their customers, and great for America. As this is Memorial Day Weekend it's a fitting time to feature what Walter Dwelle told The Wall Street Journal.

Dear Sir,

My brothers and I own a large petroleum distribution company based in California, from which we derive most of our income. We also have minority interests in two ethanol plants, one in CA and one is KS. I continue to be astounded by the extreme negative bias against ethanol as shown on your Opinion pages. The Jan 6 piece by Merrill Matthews (The Corn Fed Albatross Called Ethanol) is typical and contains a wealth of misinformation.

Walt Dwelle, Flyers Energy

He says ethanol increases the cost of driving - by $83 billion since 2007, citing lower gas mileage and a report from Institute for Energy Research (which I found is an oil industry lobbying group founded by Charles Koch). This counters his assertion that ethanol supply is partly responsible for the reduction in oil prices. Because ethanol is very high octane (a fact he omits) it has nearly always been the cheapest way for refiners to get the octane numbers they need to make quality gasoline. Maybe he wants to return to lead or MTBE to generate octane.

He says increasing blends above 10% "could harm millions of car engines". EPA says something like 80% of vehicles on the road can handle E15 and even if E15 use became widespread certainly not all pumps would contain 15%. There would still be a large market for E10 and would easily be satisfied by fuel marketers, such as ourselves. I would be in favor of converting one tank in each of our stations to E15.

He goes on to say that farmers have plowed up grasslands in the midwest to plant corn, releasing carbon stored in the soil. However most of the increased corn production has come from better yields. The highest acreage in the US devoted to corn was in 1933 at 113 million, compared to the current year’s plantings of 88 million. EPA also disagrees that ethanol puts more CO2 in the air, even considering the energy used in planting, harvesting and transporting corn. EPA even tacks on a CO2 penalty to ethanol of over 30% to cover Indirect Land Use Change (ILUC). This is primarily to take account of conversion of native properties to ethanol production, mostly in South America.

He nearly gets a number right when he contends that ethanol used 40% of the corn planted in the US. The actual number is 38.13% but he fails to acknowledge that 33% of that goes back to cattle feed in the form of distillers grains. These DDGs replace corn that was previously going to cattle feed at a greater than one to one ratio due to the high protein content. So the net usage of corn for ethanol is around 25.5%.

Finally Mr. Matthews says that converting the ethanol used in the country back to gasoline would reduce the country's oil glut and raise crude oil prices high enough to keep American oil producers operating. This comment may get to the heart of his motivation and indicates that ethanol use has helped cause the oversupply of oil and has contributed to low oil prices. The only anti-ethanol argument he didn’t make is that it takes more energy to produce a gallon of ethanol than that gallon contains. This has been disproven many times but I suspect he still believes it. I’m also pleased that he didn’t talk about massive ethanol subsidies – because there are NONE!

He is correct that the addition of ethanol to gasoline has significantly increased the gasoline supply and has helped the downward pressure on prices. The consumer is much better off and the environment is better to boot.

Walter Dwelle
Managing Partner
Flyers Energy LLC