More Ammunition for Ethanol in California

September 21

A study commissioned by the National Corn Growers Association (NCGA) has concluded that refiners in California are on schedule to replace the state's supply of MTBE with ethanol, and that the state's motorists will have adequate supplies of ethanol-blended gasoline when MTBE is banned on Jan. 1, 2003.

In recent months, corn growers and other ethanol supporters have responded repeatedly to opponents' remarks that they say distorted the truth on issues such as how ethanol will affect gas prices and the adequacy of ethanol supplies. This study, based on plans submitted by California refiners in compliance with California Environmental Quality Act (CEQA), refutes them all.

NCGA President Lee Klein, in a letter to California Gov. Gray Davis, pointed out that "the investments necessary to accommodate ethanol in California have largely been made and that there will be no significant infrastructure costs associated with using ethanol."

The NCGA study concludes that refiners will need 675 million gallons of ethanol annually to fulfill the oxygen requirement for California's gasoline. That's the amount of ethanol produced from 270 million bushels of corn. The study also finds that sufficient quantities of ethanol exist in Midwest markets to supply the needs of California in 2003.

"Certain state officials in California have made outrageous statements that are completely without factual substance," noted NCGA consultant Michael Graboski, a co-author of the study and a faculty member at the Colorado School of Mines. "For example, the issue of shortage caused by the use of ethanol is totally unsubstantiated. Refiners who serve southern California have already filed environmental impact plans that describe refinery and terminal modifications needed to comply with the law banning MTBE by the first day of 2003. All plans indicate that modifications will be completed before the phase out deadline," which means that ethanol-containing gas will be available in the market by the time MTBE is removed from all gasoline.

Graboski concluded: "The NCGA study shows the California refining industry has had enough time to plan to remove MTBE and appears to have acted responsibly to eliminate its presence and replace it in an orderly fashion with ethanol in the state's gasoline. Ethanol supplies appear adequate so the California market can be satisfied without disrupting the Midwest."

The Renewable Fuels Association (RFA) joined the NCGA in promoting the report to California officials. "The report demonstrates that the investments necessary to accommodate ethanol in California have largely been made and that there will be no significant infrastructure costs associated with using ethanol in CBG3," said Bob Dinneen, president of the RFA. "California's refining industry appears to have acted responsibly to eliminate MTBE from CBG3 and replace it in an orderly fashion with ethanol. Clearly, it is entirely possible and beneficial to continue the MTBE phase-out timeline in concert with the other, more difficult and costly, CBG3 requirements."