Ethanol Grows Here

The 2005 annual global production of approximately 12 billion gallons of ethanol displaced less than 1 percent of global oil production.

In the US and globally, there is still room for considerable growth in ethanol production – as well as for the crops needed to produce ethanol and the fertilizer required to grow those crops.

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With American consumers re-thinking their reliance on foreign oil, ethanol is gaining ground.

America’s love of the automobile can be measured in its need for fuel. The United States is the largest oil-consuming nation, using roughly 25 percent of the 30 billion barrels (1.3 trillion gallons or 4.1 billion tonnes) of the world’s annual production. Almost half of that US consumption is used in the form of gasoline.

This consumption long ago outpaced domestic production, leaving the US to import more than 60 percent of its oil supply. With questions surrounding the future of fuel prices and the security of supply, the public and governments are increasingly embracing alternative fuel sources.

By 2005, ethanol consumption had grown to 3.9 billion gallons. This still represents less than 3 percent of the 140 billion gallons of gasoline required in the US, suggesting considerable room for growth.

The amount of corn used in the US for ethanol doubled in the past four years and another 34-percent increase is forecast for the 2006/07 crop year. In 2005/06, roughly 1.6 billion bushels of corn were used for ethanol and by 2007/08 this number is expected to be more than 3 billion bushels, roughly 25 percent of the US corn crop.

In 2006, US farmers planted 79.4 million acres to corn. Keith Collins, Chief Economist for the USDA, has projected a need for 90 million acres by 2010 and has advised that the economics for ethanol are very solid. In a statement to Congress, he indicated that a dry-mill ethanol plant can cover its operating costs with corn prices as high as $5 per bushel and ethanol prices as low as $2.25 per gallon.

This opportunity has not escaped the attention of farmers. The Illinois Corn Growers Association told its members in September 2006 that it, together with its counterparts in other states, had “ground proofed” proposed ethanol plants throughout the US to assess project schedules and viability. As a result, it estimated that the annual ethanol capacity in the US will reach 7.6 billion gallons in 2007, 10.2 billion gallons in 2008 and 14.4 billion gallons in 2009.

Although this would reduce US reliance on foreign oil, the potential demand for alternative fuels is far from being satisfied. Conversion of the entire US corn crop into ethanol would replace less than one-quarter of America’s total gasoline requirement.