California Officials Don't Get It

July 13, 2001

Some California officials have their facts wrong about ethanol, according to the National Corn Growers Association. "California officials seem to be manufacturing so-called facts about ethanol availability, transportation and pricing," said John McClelland, NCGA director of energy and analysis.

A story in the July 12 Wall Street Journal cited concerns by some California officials that ethanol supplies would be tight. The story also questioned transportation costs and claimed that the Environmental Protection Agency's ruling denying California's request for a waiver to the oxygen requirement of the Clean Air Act will drive up the cost of gasoline for California drivers.

"Ethanol is only three cents per gallon higher in Los Angeles than it is in Omaha," noted McClelland. He cited prices of ethanol at distribution terminals listed in the July 9 edition of the Oxyfuel News. Those numbers showed ethanol at $1.39 in Omaha and $1.42 in Los Angeles.

As for availability, McClelland said there is plenty of ethanol available. He noted that of the 2 billion gallons of ethanol produced in the United States, only 600 million gallons have been used in the cities and areas of the country requiring RFG gasoline. "That means the remaining 1.4 billion gallons is being used in the normal gasoline markets, not because of Clean Air Standards, but because it is economical," he said.

Furthermore, McClelland noted that ethanol provides twice the oxygen of MTBE. Replying to claims of potential transportation problems with ethanol, McClelland noted that MTBE, the oxygenate made from petroleum, must be shipped to California the same way ethanol will be shipped: by truck, rail or barge. "There is no dedicated pipeline for gasoline, MTBE or ethanol from anywhere to California," he emphasized. "And, frequently the transportation costs of a product are not passed on.

"Filings required by California state laws indicate that nearly every refinery in Southern California is ready to use ethanol. There's going to be plenty of storage available at the fuel terminals in tanks that once held MTBE," said McClelland.