US ethanol poised to break out of 10% blend - RFA

26 February 2008 15:33  [Source: ICIS news]

ORLANDO, Florida (ICIS news)--Ethanol is poised to break out of its core US market as a 10% gasoline additive in 2008, but it faces a tough battle against critics who blame it for rising food prices, Renewable Fuels Association (RFA) president Bob Dinneen said on Tuesday.

"Oil's stranglehold on our economy remains, but we can now at least see the light at the end of the pipeline," Dinneen told the National Ethanol Conference in Orlando, Florida. 

Ethanol is overcoming the infrastructure constraints that have kept the focus of its US consumption in the country's agricultural heartland, with unit train terminals set up in high demand centres such as New York, the mid-Atlantic, the southeast and California.

More than 50% of gasoline sold in the US contains ethanol, but mainly in a 10% blend.

Dinneen said the 85% blend known as E-85 is poised to take off with the help of US automakers and the legal protections now in place for the fuel, such as a new law making it illegal for gasoline distributors to discourage retailers from selling E-85.

"We believe the planets are aligning to encourage a very rapid growth in E-85," Dinneen said.

The expansion in ethanol production capacity is outpacing the growth in US gasoline consumption and offsetting the constraints on US oil refining capacity, he said.

With no new petroleum refineries having been built in the US for more than 30 years, the ethanol industry has added the equivalent of three oil refineries in the last few years and will add another in 2008, Dinneen said.

The RFA official blasted critics who have created a fuel versus food debate around biofuels, saying the "chattering class of naysayers" is ignoring the role of petroleum in soaring prices for corn and other grains.

"In their zeal to vilify biofuels, some seem to ignore the impact of energy prices," Dinneen said.

Ethanol accounted for only a 5% impact in overall food inflation, he said.

Additionally, dire forecasts about the global consumption of agricultural produce by the biofuels industry do not take account of the potential and the reality of improvements in crop yields as technology advances, Dinneen said.

The conference opened on Tuesday and runs through Wednesday.

By: Stephen Burns
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