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Ethanol as a Part of Public Policy

19. How much of our ethanol is imported?

There is currently a limit of about 7% of our total ethanol supply that is allowed to come into this country duty-free. The actual amount imported is much less than 7%. We have actually been a net exporter of ethanol over the past 4 years. By contrast, we currently import over 50% of our oil and petroleum products.

20. How much of our oil is imported?

The U.S. Department of Energy calculates that 54% of our oil was imported in 1994 and that imports will likely rise to over 65% by the year 2000. Because ethanol can replace the higher octane components of gasoline that are more difficult to refine, one gallon of ethanol can actually replace nearly two gallons of crude oil used for gasoline produc- tion.

21. I have heard that ethanol subsidies deplete the highway trust fund. How can that be justified?

Ethanol blends are exempt from 5.4 of the 18.4 federal gasoline tax. This does reduce the amount of tax collected, but does not reduce the amount that is allocated for the building and maintenance of roads. Congress has realized the benefits of ethanol to agriculture, the environ- ment, and to our energy security, and determined that a tax exemption for ethanol blends is the simplest and most effective way to ensure the continued development of a domestic ethanol industry.

22. Why does the national media seem to refer to methanol more often than ethanol?

That certainly does seem to be true, even though methanol, because of its corrosive nature, will need a specially designed engine for applica- tion as a motor fuel. Some reasons for this imbalance may be that methanol has been used as a racing fuel for years, and the methanol industry is much larger, older and more well-known than the ethanol industry, which gives it the experience, the political clout, and the budget to generate more news items. In addition, methanol has not been subject to the misinformation campaign which masked ethanol's many benefits.

23. Have there been efforts to mandate the use of ethanol?

In addition to the Clean Air Act Amendments of 1990, Denver, Phoenix, Albuquerque, and Las Vegas are cities that have successfully mandated the use of oxygenated fuel to help solve their carbon monox- ide problems. Some of that market has been filled by ethanol, which when blended, contains 3.4% oxygen. To date, congressional and legislative efforts to mandate ethanol have been unsuccessful. The Defense Reauthorization Act of 1991, and an executive order by Gover- nor Carlson in March of 1992 require the use of ethanol blends in all federal and state vehicles respectively.

24. Do some states encourage the development of an ethanol industry?

Many states have individual state tax exemptions for ethanol blends or financial incentives for the ethanol industry, or a combination of both. Minnesota offers a 2 per gallon exemption from state gasoline taxes for ethanol blends, and a payment of 20 per gallon to those who produce ethanol from Minnesota agricultural products. This is an excellent program that has helped to build an ethanol processing industry in the state. Nebraska, South Dakota, and Missouri have followed Minnestoa's lead, and passed similar legislation. Governor Carlson has also ordered all state agencies to cooperate with potential plant developers with permitting, financing and informational assistance.

2006 Gilles Desormeaux