Ethanol May Not Beat Gas

A new report on ethanol is questioning whether the energy efficiency and environmental impact of the alternative fuel will leave consumers any better off than they are with existing motor gasoline.

The report, titled "Ethanol: A Look Ahead," was written by Tiffany Groode at the Laboratory for Energy and the Environment at the Massachusetts Institute of Technology.

Groode says that corn ethanol is not more energy-efficient than motor gasoline. She also argues that the overall impact of producing and burning corn ethanol could be as harmful to global warming as is producing and burning gasoline.

Regardless of the enormous government subsidies and investment dollars flowing into ethanol projects, should the findings gather traction or be supported by additional research, some of the positive sentiment for ethanol might be dampened.

That could ultimately hurt producers such as VeraSun(VSE - Cramer's Take - Stockpickr), Aventine Renewable Energy(AVR - Cramer's Take - Stockpickr) and Pacific Ethanol (PEIX - Cramer's Take - Stockpickr).

To calculate the energy efficiency of various ethanol and gasoline mixtures, Groode computed their net energy values, that is, the amount of energy that a fuel generates minus the amount of energy that was required to produce the fuels.

For corn ethanol, the amount of energy required to produce the fuel is dependent on, among other things, the quality of the farmland that supplied the corn. Growing corn in efficient farming states requires less fertilizer and irrigation than in other states because they have better growing conditions. For her research, Groode used Iowa as an example of a good farm state and Georgia as an example of a less-efficient state.

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