With the recent passage of the Energy Bill, the high price of gasoline and the capacity constraints of refineries, there is increased demand for ethanol as a fuel extender and clean air additive.  Blenders and retailers have started to introduce it in increasing numbers, as mandated by federal and state legislation

The Clean Air Act of 1990 mandated standards for clean-burning fuels nationwide.

• Mandates the need for oxygenates in fuel, which are MTBE and ethanol
• MTBE has been deemed to be carcinogenic and is currently banned in 25 states with five more considering a similar move

Four states (Hawaii, Minnesota, Montana and Washington) have passed laws requiring minimum levels of the states' gasoline and diesel consumption to be ethanol and biodiesel.

The recently passed Energy Bill includes a Renewable Fuels Standard (RFS) that mandates domestic production reach 7.5 billion gallons per year by 2012 and provides a tax credit to refiners who blend ethanol into gasoline.

• Supply grew in 2004 by nearly 600 million gallons and is estimated to reach over 4 billion gallons by the end of 2005
• Numerous states also have their own usage requirements

Demand from refineries as part of gasoline supply.

• No new refineries built in more than 25 years (many have closed); will take many years for new refineries to come on-line
• Recent weather events have highlighted fragility of existing refining infrastructure
• Building new facilities and increasing capacity is difficult politically and environmentally and is extremely expensive
• The use of ethanol in the production of gasoline offers significant benefits as a cost-effective extender and enhancer
• Adds octane to end product