Farmer Tom Westerman is looking for $3 corn again. He hopes he can find it in gasohol.
Within the green and maize rows of corn on Westerman's 15,000 acres lie the nuggets that he says may mean success if they can be converted into the glistening liquid gold called gasohol.
But for the near future, Westerman and many Midwestern farmers aren't depending on gasohol, which could convert his 200,000-bushel crop into ethanol alcohol for the 10-percent-alcohol, 90-percent-gasoline fuel and raise the price of corn from $2.35 a bushel,
Because little research has been done on the fuel, it will be years before these farmers feel any impact. In fact, in Nebraska -- the state that claims credit for coining the name gasohol, setting the gasohol gears in motion and establishing a gasohol department in 1971 -- there are no plants producing the alcohol for gasohol. Advocates say the industry is too new.
Although there was some use of gasohol in the 1930s, it recently again became a regional issue, a farmers issue,aremedy for low crop prices. It then came to the attention of gas-starved motorists.
"I hope it affects the market so I can sell more corn" for alcohol production, Westerman said. "Gasohol is making an impact, if nothing else, in the publicity. But it's not making an impact on my pocketbook."
Everywhere gasohol has been marketed, there has been great demand by motorists. But increased production has been stymied in part by the high cost of constructing a plant, the lack of real knowledge about the fuel, its slightly higher cost than regular gasoline, the indication that most of the major oil companies may not distribute it and the usual politics surrounding an issue that could mean so much to so many.
But in the Midwest where corn is king, talk is prevalent about how gasohol production could mean the return of $3-a-bushel corn for farmers while arresting the appearance of $2-a-gallon gasoline for motorists; Gasohol gurus admit that the mixture could supply only about 10 percent of the nation's motor fuel needs at most.
"It will make a small impact nationally," said Todd Sneller, head of Nebraska's gasohol department. "Locally it will make a significant impact. There is no No. 1 thing that will solve the energy problem."
Down the road from Westerman is the Archer Daniels Midland Inc. plant, the country's largest manufacturer of alcohol for gasohol. Company executives recently approved $100 million in upgrading, part of which will go to doubling ethanol alcohol production to 150,000 gallons a day by the end of the year. Although the company doesn't foresee a profit by then it does expect to add revenues of $85 million to a total of about $2 billion in sales from its other units that process corn, milo and soybeans. The ADM plant is one of four alcohol-for-gasohol plants currently producing a total of about 60 million gallons of alcohol a year. That's enough to produce about 600 million gallons of gasohol.
The Department of Energy predicts that alcohol fuels will make a rather modest contribution nationally through 1985, "perhaps displacing as many as 40,000 barrels of oil per day . . . " Present federal financial incentives could increase the current yearly gasohol output of 60 million gallons, which is equivalent to 4,000 barrels of oil a day, to about 300 million gallons of gasohol, or 20,000 barrels of oil a day, by 1982. That is about 3 percent of present gasoline consumption, the DOE said.
ADM began alcohol for gasohol production in 1977, but first used its facilities to make vodka and gin until the gasohol craze heightened, according to company Vice President Richard Burket.
"We did it in 1977 because we felt this energy problem was coming up," said Burket as he scooped up a handfull of hard corn kernels near the plant, which reeks of the bubbling, swirling vats of the beer-like substance that will become ethanol. "We were in the business that lent itself to it. We wouldn't just build an alcohol plant, but we did since it's linked to our other corn products."
"We expect gasohol to be around for a while," Burket continued."If not, we'll go back to making alcohols. The market is such you can do more volume with gasohol. You'll drive a lot more than you'll drink."
"The demand started with the cooperatives," small towns stores with fuel pumps, Burket explained. "With all this talk of surplus corn, the government wanted the farmers to cut production. The farmers went to the co-ops, and the co-ops came to us.
"The co-ops would buy the alcohol from us and mix and sell it. Then independent service staions came next,and then biggies like Amoco," which is test-marketing gasohol in the Midwest.
Burket and other gasohol advocates answer easily the charges by opponents that production of the fuel expends more energy than gasohol produces, that it doesn't perform well in some cars and that it is more expensive than gasoline. But then few persons will admit to being against gasohol. "I haven't heared anyone say no to gasohol," said Bruce Petersen, an economist with the American Petroleum Institute. "It's a real mother-and-apple-pie issue."
President Carter, cruising down the Mississippi River on his riverboat vacation, said that he prefers gasohol to imported oil. Legislation aimed at encouraging production of gasohol such as mandating that oil companies produce 10 percent gasohol by 1990 is pending in Congress.'Let's all fuel around with gasohol" and "Pass Arabian gas, buy gasohol" bumper stickers abound here. Three major refiners, Amoco Oil, Phillips Petroleum and Derby, a Midwest brand, are test-marketing it.
Nevertheless, Mobil Oil, in an energy update, has called gasohol "probably energy deficient. That is, with current technology, it takes as much as two gallons of conventional fuel to grow, gather and process grain into only one gallon of alcohol which has less energy value than a gallon of gasoline. Thus, producing grain alcohol for fuel could actually reduce the U.S. energy supplies. However, if fermentation and distillation processes were fueled by sources other than petroleum, some reductions in petroleum imports may occur."
Burket insists that new technology in the production of alcohol, such as cutting fermentation time by using a faster-acting yeast, will make the process more economical. In addition, Burket says, arguments about fuel consumption during production were advanced when distillers only made alcohol for drinking. Alcohol used in gasohol doesn't have to undergo as extensive treatment.
"With improvements in technology and economies of scale, alcohol fuel costs can be reduced," the DOE said in a report. "Ethanol is currently selling for $1.20 a to $1.60 a gallon. Employing advanced available technology . . . ethanol could be readily produced for less than $1 a gallon and sold profitably for around $1 a gallon if produced in a plant with as much as a 50-million-gallon-per-year capacity."
New ethanol facilities also are more energy efficient than existing facilities and can yield a net gain in liquid fuel when ethanol is produced, the DOE said. The DOE also insists that gasohol raises the octane of regular gasoline, and that property alone can save roughly 2,400 barrels of oil a day by 1985.
Also, gasohol proponents say that byproducts of alcohol production include a distillers grain protein meal that is more nutritious as feed for livestock than corn. However, cattle herders say that the distillers grain protein supplement probably will cost more than regular corn feed.
In addition to that, a protein flour can be extracted from the process to be used as a human dietary supplement.
To emphasize the utility of gasohol production, Sneller said that cottage cheese whey, usually dumped in the Nebraska sewers, can be used to make 2 million gallons of alcohol a year for gasohol.
That same answer is used for the argument that using food for alcohol deprives people of food to eat. The DOE report adds that "abundant supplies of raw materials are available and far exceed the production capacity of alcohol plants expected to be operating by the mid-1980s."
Those who aren't proponents of the fuel say that they cannot generate enthusiasm because enough studies about it have not been conducted.
"We're not against it and we're not really for it," said Tom Denman, a spokesman here for Shell Oil Co. "People are saying it's a real good alternative to gasoline. We feel more energy is consumed in the production of alcohol than is yielded for motor fuel for motor vehicles."
Denman also said that separate distribution systems would be needed for gasohol and gasoline, and that a minority of cars have had problems with the new fuel, such as poorer gas mileage, misfiring and some stalling.
Here again, there is disagreement.
"Blended with gasoline, alcohols can supplement U.S. oil supplies as motor fuel extenders and octane improvers," said a recent Department of Energy report. "Indeed, in the near term (1979 to 1985), the contribution will come primarily from alcohol blends with gasoline, especially gasohol . . . Gasohol can be burned in present motor vehicles with at most, very minor materials or engine modifications. Adding the ethanol to unleaded gasoline not only extends gasoline supplies but also raises the octane."
In addition, ADM's Burket said that many engine problems with the first gasohol mixtures were caused by the use of a 192 proof alcohol which had water in it. Today, however, virtually all alcohol for gasohol is 200 proof and anhydrous.
Besides, the people seem to like it. According to the DOE, gasohol is now sold in more than 800 outlets in 28 states from California to South Carolina.
"We sell close to what we make every day," Burket said. "In May 1978, there were 100 stations selling it. Now its close to 1,000."
At the Corn Belt FS cooperative store in Decatur, "More want gasohol than gasoline," said Darrell Bond, petroleum manager. The demand for gasohol in March 1978, when the store became the second in the state to sell gasohol, "really went all out basically because the news media gave it so much attention. Sales quadrupled and then leveled off."
Bond said he sells 25,000 gallons of gasohol at the pumps every month compared to 15,000 of regular gasoline. Just in Iowa, another big gasohol state, sales of the mixture increased from none in mid-1978 to 5.3 million induring last February from 200 retail outlets, the DOE said.
Buying ethanol and mixing it with gasoline has stretched Bond's supply of gasoline 10 percent, he said. "In a month, it's 500 gallons of extra fuel saved and we make possibly $400 a month more gross. But then, there's also mixing time and getting it that have to be figured in."
"Five others in Decatur now sell it," Bond said.
The drive is not only with motorists, however. Farmers also are interested in gasohol because it presents an opportunity to use their surplus crops. Not only can corn be used to produce alcohol, but potatoes, sugar cane, sugar beets, wood chips and garbage and other products can be used. Much of the legislation in Congress concerning the fuel was introduced by representatives of highly agricultural states.
"Nebraska farmers have a three-year surplus" of corn, Sneller said. "Farmers here have problems of getting grain to a port. It simply sets in storage. Much of it goes bad. That's excellent feed stock for an alcohol plant."
"We're on the verge of another bumper crop," Sneller continued. "There's no place to store it and no rail service . . . The Russians were buying a lot a couple of weeks ago at $2.80 a bushel. By harvest time, it will be around $2."
"It's another way of getting rid of the corn, and using the alcohol is another way of saving the OPEC oil," Westerman agreed. "In about three years, we'll start noticing some economic advantage. If we could put 5 percent of corn (into alcohol production), that could work at putting off surpluses nationwide." There are 800 million to 1 billion bushels of surplus corn and emergency layover corn, Westerman said.
"Nationally, it would make it a stable market, and we'd have a higher price."
But would that mean higher food prices for consumers? The farmers say no, at least not very much. The rise in prices usually comes from middlemen, not from their price increases, they say. Also, if the price of corn rises, so will the price of gasohol. In Decatur, gasohol is selling for $1.02 a gallon compared with 90 cents for unleaded gasoline.
Still, the rush is not on to build alcohol production plants. So far, according to Holly Hodge, president of the National Gasohol Commission of Lincoln, Neb., there are four alcohol manufacturers in the country and two distributors. Six others are designing, manufacturing and/or building small alcohol plants, the commission said.
The commission said it is promoting federal loan guarantees for those interested in building alcohol plants, rapid amortization of plant incentives and an extension of the federal tax exemption on gasohol behind the 1984 cutoff. The federal tax exemption, plus similar exemptions in some states, allow gasohol to be more price-competitive with gasoline.
Other hurdles that Hodge enumerated are delays by the Treasury in processing applications for the plants and the high cost of making the alcohol unfit to drink by adding kerosene or some other toxic substance so it won't be taxed by the Treasury. Hodge said there also have been conflicts between the Environmental Protection Agency and the Treasury's Alcohol, Tobacco and Firearms division over the paperwork that is necessary to build a plant.
And, until last year when the price of gasoline rose tremendously, "gasohol's economics were bad. The higher the price of gasoline, the better sense it makes to use gasohol," Hodge said.
Many proponents see gasohol now as basically as a relatively fast interim measure until a more premanent oil-saving process can be implemented. A gasohol plant costs about $50 million. It takes about 18 to 24 months to build a large, 20-million-gallon-a-year facility.
However, money is still a problem. A return on investment is only about 7 percent, Nebraska's Sneller said. Most investors want to see a 14 percent or 15 percent return on investment, he said.
A more promising alcohol fuel, methanol, is farther off in the future.
"Methanol derived from biomass and from coal is expected to play a larger role in the long term as its use in turbines and other stationary equipment increases and as materials and engines are adapted to facilitate its extensive use in motor vehicles," the DOE reported."Technology to produce methanol from coal exists today and [plants] could be built on a commercial scale as soon as investors perceive the economic opportunity to be favorable.
"To be economically attractive, methanol production plants must be large -- each producing 20,000 to 50,000 barrels per day," the report continued. "Such plants cost from $500 million to over $1 billion each and require three to four years to build after several years of negotiating for sites and permits. Once such plants are built, methanol could be produced in much larger quantities than ethanol and should be less expensive. Until the late 1980s, when methanol could become widely available, ethanol will be the main fuel supplement available."