Study Affirms Ethanol's
Ability to Meet California Oxygenate Demand
A new analysis completed by Downstream Alternatives, Inc., The
Use of Ethanol in California Clean Burning Gasoline: Ethanol Supply/Demand and Logistics,
concludes that adequate supplies of competitively priced ethanol could be supplied to the
California market almost immediately.
The reluctance to substitute the use ethanol for MTBE in
California appears to be founded in the misunderstanding that there is insufficient
ethanol to satisfy the necessary demand for oxygenates in the state's Clean Burning
Gasoline program. As demonstrated in the study, however, in the event that regulatory or
marketplace barriers ever eliminate the use of MTBE in California, the capacity for
ethanol production is more than double the amount needed to meet California's demand, and
ethanol could be made available to the state almost immediately.
Key findings of the report include:
- Under a high demand scenario (including some ethanol used in
non-required areas), approximately 628 million gallons of ethanol would be needed to meet
oxygenate demand in California.
- With new plants on line, ethanol production capacity for 1999 will
reach more than 1.838 billion gallons. Actual production for 1998 was approximately 1.394
billion gallons. With production from Caribbean Basin Initiative countries, total ethanol
availability for California exceeds 494.4 million gallons without impacting existing
ethanol markets. The remaining demand for ethanol would be met by redirecting product from
lower-valued octane markets in Midwestern states.
- Product would be delivered by a combination of marine cargo and
rail shipments. Transit time would run from two weeks to three weeks by rail and
approximately 34 days by water.
- Of the terminals providing definitive answers, 32 (62.75%)
indicated they could offer ethanol storage in six months or less. However, this too may
understate the ability to distribute ethanol because it is generally the larger, high
volume terminals which indicated they either have ethanol distribution capabilities or
could have in a short time frame.
- It is not necessary to have ethanol in all gasoline terminals to
achieve 100% market penetration.
