Ethanol: Zubiri’s folly, our burden

Those of us who own all types of motor vehicles should serve notice that we will not allow any politician to put our interest at risk. Punish Miguel Zubiri this May. Zubiri is the main author of the Biofuels Act of 2006 which mandates the inclusion of an increasing amount of ethanol into the gasoline sold in this country.

Supposedly in compliance with that law, the Department of Energy is about to issue an order increasing the amount of ethanol in the mix from five percent to 10 percent. The local producers of ethanol have been unable to produce the quantities needed for the five-percent blend, but the bureaucrats in the National Biofuels Board (NBB) – composed of the DOE, DTI, DOST, DA, DOF, DOLE, Philippine Coconut Authority, and the Sugar Regulatory Administration – want to not only increase the amount of ethanol in the mix but remove all exemptions as well.

This is absolutely stupid on many angles. The one that concerns me as a car owner has to do with the negative effect of the increased ethanol blend on my car engine. There are enough car experts like PhilStar columnist Cito Beltran who tell me there could be some problems. Pilipinas Shell’s Ed Chua, however, insists there are no problems. I wonder if Shell will cover my repair costs, if it comes to that.

I am familiar with the ethanol blend and its problems as I worked at Petron many years ago. My service adviser in the car dealership where my car is presently serviced is not too sure I should risk ethanol use. That’s why I am spending a few pesos more per liter to use Petron Blaze (pure gasoline) because the potential servicing problems of a 10- year old BMW from using an ethanol blend could cost a whole lot more.

The Economist  in an article just last week pointed out that “ethanol in such quantities can certainly damage engines that are not equipped to handle it—as few are. The problem is that, unlike the hydrocarbons of pure petrol, ethanol has a special affinity for water from the atmosphere. The entrapped moisture can corrode petrol tanks, pumps, fuel lines and injectors.”

Cito Beltran has a similar warning: when you leave an ethanol/gasoline mix in your gas tank for more than a week the ethanol will separate from the gasoline as it bonds or attracts any humidity, thereby becoming acidic. In other words your petroleum has now deteriorated… panis na gasolina.

Cito continues: The minute you run your engine the foul fuel will foul up your computerized fuel delivery system, contaminate your fuel lines and essentially have the same results as mixing water with your gasoline or worse. With today’s highly sophisticated fuel management systems, the tolerance for bad fuel is so small that foul fuel often destroys them and dents your wallet. Cito said he personally saw this happen in a brand new Jaguar and he witnessed the owner cry in fury.

The Economist also pointed out that “ethanol burned in an engine produces more than twice as much ozone as the equivalent amount of petrol. Ground-level ozone is a big cause of smog.” So there goes the environment-friendly claim for the ethanol blend.

The Economist furthermore pointed out that “while good at boosting a fuel’s octane rating, ethanol packs only two-thirds the energy per gallon of petrol. As a result, motorists get fewer miles per gallon using fuel blended with ethanol than with undiluted petrol.” So there goes the economy argument. That means we, the motorists, will pay more for fuel just because Mr. Zubiri wanted to make pa-pogi as Mr. Environment personified. Remember mileage drops as alcohol content rises.

Actually, the law also mandates the government to conduct studies to prove a 10-percent ethanol blend is compatible in vehicles under Philippine driving conditions. That has not been done. An environmental group, the Kaibigan ng Kaunlaran at Kalikasan (KKK) was reported to have asked the Department of Energy to present the results of any such government studies. Deadma from DOE.

 Such studies, if any were done, should have been the subject of extensive public consultations. Such consultations are prerequisites to mandating an increased ethanol blend in gasoline, the KKK contends.

KKK worries that “older vehicles, which constitute a large portion of vehicles on the road, are not compatible with E-10 and may damage the vehicles’ fuel lines, fuel pumps, and carburetors.  These engines include those found in motorcycles, and equipment used by farmers and fisherfolk,” KKK executive director Ed Alabastro said.

“Additionally, there is a lack of system in place to inform and assist the motoring public on the negative effects of E-10 gasoline. Will the National Biofuels Board or the oil companies handle motorist complaints if engines begin to break down? Who is accountable?” he asked.

Motoring columnist Aida Sevilla Mendoza wrote last week that “the damage done to engines by E10 was best summarized by Russell T. Spears of Laguna Niguel, California in a letter to the editor published by the Orange County Register on Jan. 18, 2013. 

Spears wrote that independent mechanics he talked to confirmed “that even 10-percent alcohol is causing much damage to automobile engines and fuel systems. The fuel pumps fail from corrosion and can stop a car on a busy freeway.  This is very dangerous.  Fuel pumps are inside the fuel tank on most cars now, and it is very expensive to have the tank removed and opened to take out the fuel pump. Alcohol makes the engines run hotter and it wears them out sooner.  Alcohol also damages the valves requiring more expensive repairs.”

The American Automobile Association (AAA), a federation of 51 independently operated motor clubs with 50 million members, called for the EPA to temporarily halt sales of E15 fuel to reevaluate its potential harm. AAA’s call followed the announcement of 12 carmakers (BMW, Chrysler, Nissan Motor Co., Toyota Motor Corp., Ford Motor Co., Honda Motor Co., Hyundai Motor Co., Kia Motors Corp., Mazda Motor Corp., Mercedes-Benz and Volvo) that using the new E15 blend may either void warranties or that warranties may not cover fuel-related claims.

Some years ago, then Energy undersecretary Jose Layug Jr. clarified that the plan to raise the blending of ethanol to 10 percent from the current five percent was not even mandatory. According to Layug, a number of issues should be threshed out during these consultations since there is still no adequate local ethanol supply.

“We also need to emphasize that although we advocate for cleaner fuel, we have to ensure that it would not push pump prices to increase as well. We cannot afford pushing for this [increase ethanol blend to 10 percent] and then it will increase local oil prices,” he explained.

The law mandates the oil companies to secure their supply from local sources before importing. But the local suppliers have not been able to keep up with the requirement. The oil companies will have to import their ethanol requirements to comply with the government mandate. That negates one of the objectives of the law which is supposed to increase our level of energy independence and save on foreign exchange.

Four local ethanol plants have a declared capacity of 150 million liters yearly, while current ethanol demand is around 400 million liters. In 2012, the four plants only produced 12 percent of demand, the rest were imported. The previous year (2011), local production only reached about 10 percent of total country demand.

Local ethanol price is much higher than imported ethanol. In 2012, local ethanol averaged about P47/li versus imported ethanol which only stood at P30/li. Local ethanol price is also much higher than the imported gasoline it is supposed to replace which averaged P33/li over the same period. This would indicate a glaring inefficiency among local ethanol producers who still can’t compete with imports despite having a captive market and a government mandate.

Once government mandates that all types of gasoline be blended with 10-percent ethanol, this shortfall will only grow bigger. So, why is government pushing for the 10-percent ethanol mandate?  Sino nanaman ang kikita dito?  Given the significant price differential between imported and local ethanol, this looks like pure and simple economic rent-seeking by local vested interests working through politicians like Mr. Zubiri whose family is also in the sugar business.

I hate it when politicians like Mr. Zubiri make us pay the costs of their grandstanding antics. Luckily, Mr. Zubiri is not among the top 12 in recent surveys. We have to make sure he stays out of it.

In the meantime… we consumers should be given a choice. After all, choice is the essence of a free market system and a democracy.

Terms of politicians

 Politicians disappoint us too much by protecting vested interests rather than the people. This is why politicians should serve two terms. One in office, one in prison.

Boo Chanco’s e-mail address is [email protected]. Follow him on Twitter @boochanco