GOLDFIELD, IOWA, May 21, 2006: The pungent liquid called ethanol, made from corn, has Iowa farmers giddy. Inspired by high oil prices and changing sentiment in Washington, thousands of investors are pouring tens of millions of dollars into new facilities, such as the US$90 million plant here. Ethanol prices are surging across the country as legislators add incentives to spur usage and fleet owners rearrange their fuel orders to cope with $3-a-gallon gasoline. The boom has meant profits for early investors, corn farmers, truckers and suppliers, even as financial analysts and government officials hurry to assess the fuel’s staying power and its impact on such matters as farm subsidies and national security. With national capacity more than doubling in the past three years and set to grow an additional 50 percent by the end of 2007, the wave is moving fast–from New York, where construction of the state’s first ethanol plant is set to begin, to California, where Microsoft Chairman Bill Gates recently invested $84 million in Pacific Ethanol Inc. Iowa, the top corn-producing state, is the nation’s ethanol leader, generating 25 percent of the U.S. ethanol. In addition to 22 ethanol refineries in operation, the state has seven under construction and at least 20 are being planned. The boom here has largely been a grass-roots phenomenon, fueled by clusters of growers, bankers and small-town professionals. Aspiring biofuel plant owners have been barnstorming the state, delivering investment pitches in firehouses, schools and community centers.
The state legislature this year passed incentives designed to increase the percentage of ethanol and biodiesel in Iowa fuel sales to 25 percent by the end of 2019. Three of every four gallons of gas sold in the state contain at least 10 percent ethanol, although most of the state’s production is shipped elsewhere. Ethanol is the fuel Henry Ford originally envisioned for his mass-produced Model T automobile. It is blended into three of every 10 gallons of gas sold in the United States, although its percentage of the overall national fuel supply remains tiny (approximately 3-4 percent of the country’s liquid fuel). The clear liquid burns more cleanly than gasoline and, unlike that of crude oil, the potential supply is virtually unlimited and close to home. Illinois-based agribusiness giant Archer Daniels Midland Co. recently announced a large expansion, while car makers are increasing their commitment. General Motors Corp. says it will manufacture 400,000 more flex-fuel vehicles, which will join more than 5 million on the road. To read the article in its entirety, click on “source” above.