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Alternative Fuels Coming on Strong

posted on November 5, 2004


Canadian farmers are welcoming the re-election of President Bush, mainly because it creates more optimism that the U.S. border may re-open to Canadian cattle. During his campaign, John Kerry had promised to review ALL U.S. trade agreements if he was elected.

Bush's re-election also may hold new promise for the ill-fated energy bill, which failed to pass Congress in 2004. The White House made the energy bill a priority as Congress reconvened last January. But partisan bickering repeatedly stalled the legislation.

The measure has interest in farm country for its ethanol provisions, which call for incentives that would double the output of the corn-based fuel. In the long run, the ethanol industry may not be waiting on Washington, as evidenced by the latest production numbers.

Alternative Fuels Coming on Strong As the price of a barrel of oil flirts with the $50 mark, ethanol and biodiesel are coming on strong. Though not at the same output levels as regular gas and diesel, the annual capacity is growing in leaps and bounds. Pundits have stated that if the US increased its focus on alternative fuels, independence from foreign oil could be achieved.

This year, the ethanol industry is on pace to produce a record 3.35 billion gallons, up 19 percent from last year and 60 percent since 2002. It is estimated that more than 10% of the 2003 corn crop went into the record production. There are now 81 plants producing ethanol with an additional 14 under construction.

Though not as prolific, the biodiesel industry estimates there is 150 million gallons of production capacity that can be produced by more than 20 plants across the United States. In fiscal 2004, the industry reported an output of 30 million gallons, an increase of 100% over fiscal 2002. And the industry stands ready to increase capacity with an additional 20 facilities if the right economic and tax incentives come through.

The question of price per gallon has become a chicken and egg argument. The cost for a gallon of biodiesel or E-85, a blend of 85% ethanol and 15% regular fuel, is still higher at the pump than conventional gasoline. Even so, it is believed more production would, potentially, reduce the price at the pump.


Tags: biofuels ethanol news oil renewable fuels