United States ethanol refiners are expanding capacities as its use as a motor vehicle fuel increases and more mandates are put in place by the federal government. With the current push for less reliance on foreign oil, as well as less dependency on non-renewable fuel sources, ethanol expansion as an additive in gasoline and diesel fuel has seen tremendous manufacturing growth in recent years.
With just over 100 ethanol refineries in production in 2006, there are 56 more refineries under construction to help meet the government s mandate to push the amount of ethanol used as a fuel to 7.5 billion gallons as soon as 2012. The current speed of ethanol expansion should be able to exceed that demand. The cost of ethanol hinges on the rise and fall of corn prices, and after years of closely following the prices of gasoline, the wholesale cost as now falling behind that of oil-based gasoline.
Initially, refiners were reluctant to pursue ethanol expansion as the demand was low and there were not many facilities selling ethanol-blended gasoline to the public. As more and more people realize the economic and environmental advantages, ethanol expansion plans were quickly put into place.
Corn Production Must Also Rise
With the demands in place for more refining facilities, ethanol expansion will depend largely on an increase in corn production. The government s Renewable Fuel Standard has virtually guaranteed a 7.5 billion gallon market for ethanol by 2012, but there are no provisions in the standard for the increase in corn production. The refining capacity may be able to hit the goal with ease, but without enough of the basic ingredient, production will have to stand idle.
The industry is also sharing its results with other industries by siphoning the byproducts of ethanol such as that used as a nail polish remover. Distilled vinegar, usually used in pickling in the food industry, is another byproduct of ethanol production and could have the prices affected by the ethanol expansion program. A rise in sugar prices has been blames on ethanol production is Brazil which uses sugar instead of corn.
California, the state with the strictest air-quality regulations, currently uses a blend of just over five percent ethanol and is pushing for that level to rise to 7.7 percent ethanol content in the near future. Other cites under fire by Environmental Protection Agency to reduce emissions are also looking the ethanol expansion to have additional supplies available to use as a vehicle fuel.