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The Law that Prevents Cheap Fuel for America

100 million acres of American farmland is used to grow corn, of which a third is then turned into approximately 14 billion gallons of cellulosic ethanol. Yes it helps to slightly reduce the carbon emissions of US exhausts, but as a huge cost.

Steven Sterin is the president of Celanese, a chemicals company from Dallas, and claims that his company has “the best gas-to-liquids and coal-to-liquids technology in the world.” Celanese makes its ethanol by tearing apart and recombining the hydrocarbons found in plentiful natural gas or coal.

If it works it could be revolutionary for the fuel industry. That “if” does not depend upon science or technology, but politics.

In 2007 Washington created the Renewable Fuel Standard law which mandated petrol refineries to blend a certain amount of renewable ethanol with the petroleum. This prevents Celanese and other producers of fossil fuel based ethanol from working in the US ethanol market. Currently the RFS requires that 15 billion gallons are blended each year, but that will increase to 36 billion gallons by 2020.

In 2006 George Bush declared that cellulosic ethanol made from wood chips would be “practical and competitive within six years,” but that hasn’t happened, despite himself and Obama investing $1.5 billion into grants and loan guarantees. In fact most of the companies benefitting from the government investment, such as Range Fuels, Cello Energy and E3 BioFuels, went bankrupt, and the survivors only produce about 6 million gallons per year.

The decision to allow fossil fuel based ethanol to contribute to the RFS targets is a difficult conflict for the corn dominated ethanol lobby. They don’t want the competition from ethanol produced by cheap gas, but they do want to help cut national oil imports.

By. James Burgess of Oilprice.com


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