In Iowa, the nation's top ethanol producer, the price at the pump for ethanol blends has traditionally been lower than the price of unleaded gas. Recently, though, it has reached parity or even a monetary disadvantage as supplies get tighter.
Lucy Norton, Iowa Renewable Fuels Association: "So as fast as our ethanol industry is growing in Iowa, and through out the Midwest, our demand is growing as fast and so it's kind of an equal pace right now. And so the value of octane is very high today and we're all seeing gasoline are rising, oil prices are rising so the value of ethanol is going up at the same time.
Though ethanol burns cleaner than unleaded fuel, there is a decrease in overall gas mileage. Generally, consumers have ignored the loss and voted with their wallets. Norton does not see ethanol usage decreasing despite the slightly higher price.
Lucy Norton, Iowa Renewable Fuels Association: "With an E10 blend that's been available for 30 years, the difference is negligible and most people don't notice it. Their buying it because they've been using it for years and like the product. Their supporting agriculture, community, and, you know , typically ethanol does sell for less than regular unleaded gasoline except for this period of time that we're in today. And so, it's the best fuel out there and it's the best buy for consumers."
Maybe so, but even the U.S. Department of Energy has questioned the ethanol industry's ability to satisfy demand during peak summer driving months. Incentives already in place continue to push the industry to record production levels. In 2005, 4.5 billion gallons were produced and with several new plants coming on-line the industry is on track to make even more this year. Despite the increased production there will be a delay as ethanol producers play catch-up with market demands.
Lucy Norton, Iowa Renewable Fuels Association:"...it's gonna take some time for all of it to catch up but, you know, it could be six months, it could be eight months, it'll come back, it's a cycle and we've seen these cycles before where prices are just the opposite prices are extremely low and then they turn back around."