The Magic of Ethanol

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Ethanol is a magic elixir. The corn-based gasoline additive is enjoying the record-setting prices. Those manufacturing ethanol are seeing booming sales and recording record profits as well, according to


Archer Daniels Midland Chief Executive, Patricia Woertz, has set her companies sights higher than current estimates that U.S. fuel consumption of ethanol may double its 2005 levels of four billion gallons. Woertz announced Archer Daniels’ record 2006 earnings and said that demand for ethanol could triple, according to “It looks like it has room to grow to 14 billion or 15 billion [gallons per year], which is a full 10% blend in the gasoline pool in the United States.”

In order to reach that goal, ethanol refiners would have to use the entire U.S. corn production that would satisfy just 12 percent of gasoline consumption currently. The implication of this would be that no corn would be available to feed livestock or humans. reports that this year’s dry weather in the Corn Belt has commodity traders worried, but the competition between food and fuel would be settled via corn prices.

The Renewable Fuels Standard (RFS) included in the Energy Policy Act of 2005, mandates that gasoline blenders must increase their use of ethanol to 7.5 billion gallons in 2012, from last year’s level of four billion gallons. Ethanol or biodiesel (soy-based) can be used to meet these mandated goals. All gasoline consumption is expected to increase to 155 billion gallons in 2012, as well. Total motor gasoline consumption in the U.S. was 140 billion gallons in 2005. The resulting math sees the RFS goal as representing about 5 percent of all gasoline production, according to

Corn is not the only source of ethanol. The New York-based company Xethanol has been operating two plants in Iowa that distill ethanol from stale candy and other materials. A special form of yeast is mixed with the raw materials in order to start fermentation to produce ethanol. Fortune Small Business reports that the company is also working on processes to make cornstalks, grass clippings and newspapers into ethanol.

U.S. Department of Agriculture scientist, according to Fortune Small Business, found the yeast used in their process in the intestines of a type of beetle. The sludge resulting from the production of paper milling will be a source of ethanol too. The east coast plants planned by Xethanol are expected to produce more than 100 million gallons a year.

Other companies are also in a building phase. Kansas City-based Alternative Energy Sources is planning to build a $225 million, 110-million gallon ethanol plant in Kankakee, Ill. It will buy methane from a nearby landfill to run the plant. This plant will employ between 45 to 55 workers, as does their existing Iowa plant.


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