An updated report on the supply and logistics of using ethanol in California as a replacement for MTBE concludes there is adequate production capacity and transportation infrastructure for ethanol to quickly replace MTBE.

The report, by industry consultant Downstream Alternatives Inc., finds that using ethanol instead of MTBE would lower the blend price of gasoline by 3 cents, more than enough to offset any potential adjustments refiners will make to accommodate ethanol blending. In addition, the report states the existing ethanol supply is more than sufficient to meet demand for oxygenates in California reformulated gasoline, noting that a commitment to increased use of ethanol in the state would spur the development of in-state ethanol production facilities.

Finally, the report notes that pipelines are looking to move ethanol to California terminals, helping to lower transportation costs. "If ethanol is moved from its port of entry via pipeline this would lower deliveries of ethanol by truck and result in lower distribution costs," the report states.