Both houses of the US Congress voted on Friday to extend the 54-cent-per-gallon tariff on imported ethanol through January 1, 2009. The ethanol tariff was scheduled to expire in October 2007. The legislation now goes to President Bush for his signature.
South Dakota Senator John Thune (R), who has championed the tariff, says that it promotes domestic ethanol production and guarantees a greater market to corn growers.
Last year Congress passed a Renewable Fuels Standard as part of the Energy package requiring the use of 7.5 billion gallons of renewable fuels by 2012. Currently, there are 109 ethanol facilities nationwide that produce 5.2 billion gallons of ethanol with 53 additional plants under construction and seven that are expanding.
Earlier in the week, the Federal Trade Commission (FTC) reported that the concentration of providers in the US ethanol market has decreased from last year’s low levels due to the growing number of firms entering the ethanol market.
According to the FTC, 90 different firms were operating ethanol biorefineries by mid-October 2006. That is an increase of 15 firms from a year ago. The FTC goes on to estimate that 110 firms will be operating facilities by the end of 2007.
The report also notes that ethanol production is exceeding minimum mandated levels, and likely competes with other blending components (i.e. iso-octane, alkylate) at those production levels.
The highly competitive nature of the US ethanol market is evident by the growing number of new producers joining the industry. Ethanol production in the US is offering Americans from all walks of life the opportunity to invest in our energy future. To meet the growing demand for ethanol, the continued expansion of the industry, with the entry of new producers in new areas of the country into the market, will be essential.—Renewable Fuels Association President Bob Dinneen