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WASHINGTON, DC, US, April 12, 2006 (Refocus
Weekly)
Federal support for ethanol in the United States
will reduce crude oil imports by 2 billion barrels and reduce the
financial outflow to foreign oil producers by US$64 billion,
according to the industry lobby group.
The national Renewable Fuels Standard created by the Energy
Policy Act of 2005 will establish a baseline for green fuel
consumption, starting with 4 billion gallons per year in 2006 and
expanding to 7.5 billion by 2012, says the Renewable Fuels
Association in its 2006 industry outlook, ‘From Niche to Nation.’
The majority of green fuels will be ethanol and will result in a
doubling of the domestic ethanol industry in the next six years.
The RFS will also create 234,840 new jobs by 2012, and increase
household income by $43 billion, it explains. It will add $200
billion to GDP and create $6 billion in new investment in renewable
fuel production facilities.
“Once serving just niche markets in the Midwest, ethanol is now a
ubiquitous component of the U.S. transportation fuels market, as
ethanol is now sold from coast to coast and is blended in 30% of the
nation's gasoline,” explains RFA president Bob Dinneen. “Passage of
the RFS has resulted in great enthusiasm for the contribution our
domestic ethanol industry can make to meeting consumer demands for
transportation energy.”
“The RFS should be viewed as a floor, not a ceiling, and we are
confident that consumers will demand and our growing appetite for
energy will require that we consume much more than that required
under the law,” he adds. “The months ahead promise a frenzy of
activity as federal regulators, industry and interest groups oversee
implementation of the rules governing the RFS and other biofuel
provisions of the Energy Policy Act.”
US companies have production capacity of 4.3 billion gallons of
ethanol, with another 2 billion gallons under construction. EPACT
expanded the cap for the small producer tax credit and created a
similar tax credit for agri-biodiesel producers. Iowa is the state
with the largest total, at 1,700 gallons, with Nebraska at 1,049 and
Illinois at 887 gallons.
US ethanol production broke monthly and annual production records
last year, when 95 refineries in 19 states produced a record 4
billion gallons, up 17% from 2004 and 126% since 2001. Fourteen new
refineries were completed in 2005 which, when combined with
expansions at existing facilities, resulted in record annual
capacity growth of 779 million gallons. At the end of last year, 29
refineries and nine expansions under construction had combined
annual capacity of 1.5 billion gallons.
“With increased demand for ethanol from coast to coast, the industry
witnessed several new projects beyond the traditional corn growing
states,” the report notes. Refineries also opened or expanded in
California, Colorado, Ohio, New Mexico and Texas, with plans for
ethanol refineries in New York, New Jersey, Pennsylvania, Maryland,
North Carolina, and Arizona.
“Using ethanol helps lower gasoline prices by expanding U.S.
gasoline supplies and reducing the need for imports of expensive
crude oil from often unstable parts of the world,” it explains. One
report estimates that using gasoline blended with 10% ethanol would
save consumers at least 8˘ a gallon.
“Ongoing violence in the Middle East, disruption of oil production
in the Gulf of Mexico due to an active hurricane season, and the
growing demand for oil from countries like China and India
contributed to oil prices soaring over $60 a barrel in 2005,” while
65% of the US crude oil supply was imported last year and is
expected to increase to 71% by 2025.
“The need for a robust domestic renewable fuels industry has never
been greater,” it continues. “America's farmers and renewable fuel
producers can help ease our dependence on foreign oil through the
production of renewable fuels such as ethanol and biodiesel,” and
the increased use of green fuels will reduce imported oil by 2
billion barrels over the life of the RFS.
Ethanol now is the third largest market for US corn, with 1.4
billion bushels (13% of national production) used to produce green
fuel.
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