Octane Overconfidence

FROM THE JULY ISSUE: American Coalition for Ethanol Senior Vice President Ron Lamberty lays out why oil refiners wouldn't use ethanol as a source of octane, under a high-octane fuel standard, without an RFS or RINs.
By Ron Lamberty | June 26, 2018

I was commiserating with a colleague about the continually shifting political sands beneath the ethanol industry when he said, “You know, sometimes I wonder if we would be better off if the RFS just went away. We wouldn’t have to deal with all this political crap and people complaining about government mandates, and ethanol is still the best and cheapest source of octane, so the oil companies are going to buy it anyway.”

“Yeah,” I replied. “Unless they don’t.” The quizzical look on my friend’s face told me it was time for a long and seemingly unrelated story—which I’ll share with you now.

I tried out for little league baseball for the first time when I was 8 years old. I was a year too young for the league, and was the youngest kid trying out for the team, but I was good at baseball, and wanted to give it a shot. There was a week of tryouts, and kids were cut every day, but I survived until the last day. (For those of you from the participation ribbon era, there was a time in America when sports teams kept the players they thought were the best, and cut the others, giving them extra time to prep for next season’s tryouts, or find a sport they didn’t suck at). I don’t remember how many kids the coach said he was keeping on the team, but I do remember it was one fewer than the number of players who were there on the last tryout day.

That made me feel good about my chances, because I thought I was better than most of the guys on the team, but I knew I was better than one kid who was just awful. He was like one of those little kids you see with a big cock-eyed hat on, who just kind of drops the bat off his shoulder and spins around when he’s failing to hit a ball, and the ball just sprays out wherever when he tries to throw it. He was a 9-year-old with cute toddler skills, but none of the cuteness.

But the coach cut me and kept the scrub—because the scrub was his son.

Ethanol is the best and cheapest source of octane today, just as it was when automakers needed octane almost 100 years ago (in the 1920s) and identified ethanol as the best choice. Then oil companies chose tetraethyl lead (TEL). Not because it was cheaper or better than ethanol—they used TEL because it was theirs. Ethanol was the better and less harmful choice as an oxygenate when the oxygen standard was the law of the land, but oil companies used methyl tert-butyl ether (MTBE) instead. Not because it was cheaper or better than ethanol—they used MTBE because it was theirs.

Before they found a willing accomplice at EPA to let them weasel their way out of RFS requirements, some oil refiners were paying a dollar or more for RINs, which essentially allowed them to not buy an octane booster for 50 cents less than the gas they make. They don’t want to buy ethanol because they don’t make it. As far as oil companies are concerned, the entire fuel market should be theirs. If there were a high-octane standard with no RFS and no RINs, what makes anyone think refiners would use ethanol octane instead of their octane?

In case you’re wondering, I made a different team the following year and was pitching when we played the team that discarded me. Striking out the coach’s kid would have been poetic revenge But I plunked him instead.

Author: Ron Lamberty
Senior Vice President
American Coalition for Ethanol