subsidies, and the federal subsidy is scheduled to be eliminated by 2007. In addition, the price of grain is unrelated to the price of crude oil, and a price squeeze on grain could force some ethanol manufacturers to shut down their manufacturing plants.
Even though ethanol alone has a relatively low vapor pressure, when used as a gasoline blend agent its effective vapor pressure is quite high. The Reid vapor pressure for ethanol-gasoline blends is about 18 psi for 10 percent ethanol content. This high vapor pressure is a disadvantage for ethanol-gasoline blends. When ethanol is added to a properly formulated gasoline blend stock, as it is with refinery blending, low boiling hydrocarbon components, such as butanes and even pentanes, must be reduced to meet gasoline vapor pressure specifications. The removal of these low boiling hydrocarbons is expensive because gasoline is their highest value use. Blending of ethanol at the terminal can result in a blend that exceeds vapor pressure specification, especially during the summer, when a 1-psi waiver is currently granted for ethanol blends (except in reformulated gasoline).
Lower gasoline vapor pressure reduces evaporative emissions during tank filling and fuel storage. Because of this environmental benefit, the summer vapor pressure specification for gasoline has been, and is expected to continue to be, lowered over time. For a vapor pressure specification of less than about 7.6 psi, there is no room for butane in a 10 percent ethanol-gasoline blend. To meet specifications, therefore, pentane must be removed. This so-called "pentane backout" causes a step increase in the cost of gasoline because the amount of pentane required to offset the addition of ethanol is about five times the amount of butane, and the alternative value of pentane is much lower than for butane. In general, companies consider it to be impractical to meet summer vapor pressure specifications below about 7.6 psi with 10 percent ethanol blends.
The vapor pressure of ethanol blends can be reduced by using special coblending agents, such as higher alcohols, or by blending to higher ethanol concentrations. However, either of these approaches to reducing vapor pressure also reduces the value of ethanol as a gasoline blend agent.