There have been many changes in the ethanol industry since the days when Henry Ford designed him Model T to be able to run on grain alcohol produced by farmers for their own use. Since that time the oil industry was reluctant to embrace ethanol as an alternative fuel source and for many years the industry languished.
As oil shortages and high gas prices began to be more frequent, the public clamor over reduced oil prices and better availability, there has been a renewed interest in ethanol industry. When word began to spread about the availability of a new alternative fuel, people were willing to use ethanol-blended gasoline, but were unable to find a supplier except in the Midwest where corn was plentiful.
During that time the ethanol industry may have consisted of a half dozen or so refineries turning corn into alcohol for automotive fuel and they began to re-think the needs of increasing capacity. The federal Environmental Protection Agency gave them the initiative to do just that when the government passed the Energy Policy Act of 1992 followed by directions in 2005 to have 7.5 billion gallons of ethanol available for use as vehicle fuel by 2012.
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With the newer mandates coming down in 2005, the ethanol industry had the incentive to expand their facilities and with just over 100 refineries in operation in early 2006, another 56 refineries are under construction. Additionally, the EPA has directed several cities outside of California, to reduce emissions and switching to Flexible Fuel Vehicles (FFAs) is one of the alternatives to meeting the mandates.
The ethanol industry has also helped other industries with their increased production, such as corn, which represents about 55 percent of the cost of producing ethanol. By products of ethanol refinement by the ethanol industry is also being made available to producers of products such as nail polish remover and paint thinners. Although there are few areas in the country that are friendly to growing cane sugar, it is also being considered by the ethanol industry for the biomass production of ethanol.
One element that tends to hamper the ethanol industry is the constant price fluctuations of corn. Before oil prices exploded in 2005, the cost of ethanol fluctuated nearly the same as gasoline. However, the corn prices go up and down, the fluctuations are more often and more noticible.