Grain Ethanol as a Petroleum Substitute: A Perspective

摘要

Present tax exemptions for gasohol are more than sufficient to move ethanol into the gasoline market in a number of states. The principal near-term response to this profit opportunity, production of ethanol from feed grains, matches a limited biomass resource to an enormous market. This report estimates upper-bound prices for feed grains resulting from gasohol tax exemptions and concludes that grain price increases could be substantial. As shown else-where by Alston and Asbury, industrial uses constitute a more economical market for grain ethanol, one in which the product is now competitive with ethanol derived from petroleum and natural gas liquids. Without tax exemptions for gasohol, grain ethanol would now be displacing petroleum in the industrial market at a net economic gain, rather than in the fuel market at a net economic loss. The present analysis indicates that this industrial market for ethanol could grow significantly, principally by use of grain ethanol as an intermediate in production of chemicals now derived from petroleum and natural gas. (ERA citation 05:030402)