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Ethanol Market Could Double By 2012

posted on June 6, 2003

In 1982 only about 2 percent of the nation's annual corn crop was converted to ethanol for use as fuel. In 2002 nine percent of the U.S. corn crop found its way into the tanks of cars and trucks. The growth is attributable to persistent marketing efforts by farm and commodity groups, considerable investment in new processing facilities and a generous government subsidy. The fuel also got a boost from government mandates to discontinue the use of the petroleum derivative MTBE as a part of the blend to reduce air pollution.

And this week the U.S. Senate took some decisive steps that could dramatically expand the use of the fuel in gasoline blends.


Ethanol Market Could Double By 2012

The corn-based ethanol market could nearly double by 2012 if the Senate-passed renewable fuels standard becomes law. The measure, passed by a vote of 67 to 29, would require the use of five (B) billion gallons of ethanol annually in fuel.

Odd as it may sound, the measure received the approval of oil companies ... primarily because a compromise was struck. The legislation says refiners would be given more flexibility in the way they make gasoline … removing a requirement that the fuel contain a minimum amount of oxygenates.

The petroleum industry could probably also see the ammunition was piling up in favor of renewable fuels.

For example, this week, while the U.S. Senate debated energy policy a news conference was held to release a study of the economic benefits of renewable fuels. The study, commissioned by the National Corn Growers Association, said (among other things) using renewable fuels would reduce the retail price of gas by 5%... or 6.6 cents a gallon.

To help push the ethanol message to the press … were several of senators … many of whom have pushed for renewable fuels legislation on the hill for at least twenty years.

Senator Tom Harkin, D-Iowa: "Its strong bipartisan support and its national now. I think maybe it did start out in our area, Illinois, Iowa, the Midwest. Now its spread all over our country."

The renewable fuels standard previously passed the House and proponents are confident the agreement will reach the President's desk this year.


Tags: agriculture biofuels ethanol news renewable fuels