The ethanol industry is experiencing dynamic growth and expansion in both existing and emerging markets. Factors contributing to this growth include:

Concerns over imported crude oil supplies

Limited domestic refining capacities

Clean air legislation at the Federal and State levels

Phase out of methyl tertiary butyl ether (MTBE)

Global increase in consumer demand

Record oil and gasoline prices

These concerns have caused the United States to re-evaluate its dependence on fossil based fuels and spurred a renewed interest in aggressively pursuing a transition to alternative fuels (specifically ethanol) as an energy source.

Key Elements influencing the Transition to Ethanol
Energy Policy Act 2005 H.R. 6: It requires a measured quantity of alternative fuel (i.e. ethanol) to be blended with all gasoline sold in the United States. The mandated ethanol production goal is 7.5 billion gallons per year by 2012 (5). According to the RFA, this should be considered the floor not ceiling for the ethanol industry. In section 1345-1347 the federal government will provide $0.10 per gallon of ethanol up to 15,000,000 gallons per year for small producers.
US Oil Import Reduction Goal: In the January 2006 State of the Union Address, the president of the United States set forth a bold initiative for the U.S. to reduce oil imports 75% by the year 2025.
US Tariff on Import of Ethanol: To protect domestic development of the US Ethanol Industry, the US government has place a $0.54 tariff per gallon on imported Ethanol

Texas Biofuel Incentive Program: The State of Texas provides $0.20 per gallon for ethanol producers up to 18,000,000 gallons per year.

MTBE Phase Out: Methyl Tertiary Butyl Ether (MTBE) has been the additive of choice for reformulated gasoline blends. However, due to environmental concerns, MTBE use is being discontinued and will be phased out by 2008. Effective April 1, 2006, gasoline producers began the transition to ethanol as the replacement for MTBE in reformulated gasoline blends.

Global Demand: Continued growing demand for oil both domestically and internationally, have resulted in oil prices escalating to unprecedented new highs. In July 2006 prices as high as $78 per barrel were achieved before stabilizing at their current value of $50 to $60 dollars. In the long term, industry experts project oil prices to be sustained at these levels with potential increases that could establish even higher record prices.