ETHANOL FAQs Overview Ethanol ( ethyl alcohol, grain alcohol, ETOH ) is a clear, colorless liquid with a characteristic, agreeable odor. Ethanol is used as an automotive fuel by itself and can be mixed with gasoline to form what has been called "gasohol" - the most common blends contain 10% ethanol and 85% ethanol mixed with gasoline.


U.S. ethanol production is reaching unprecedented levels. In 2004, 3.4 billion gallons of ethanol were produced in the nation, up from 2.81 billion gallons the previous year. The dramatic growth continues because of consumer demand, the banning of methyl tertiary butyl ether (MTBE), and the number of production facilities set to begin operations.

Currently, there are 83 ethanol production facilities in the U.S., primarily centered throughout the Corn Belt. Today, nearly half of ethanol plants in the U.S. are farmer-owned cooperatives. Additionally, of the 16 new facilities under construction in 2004, nearly all are owned by farmer investors.

With few exceptions, corn is the primary feedstock for U.S. ethanol production. Ethanol can also be made from other products such as grain sorghum (milo), wheat, barley, sugar cane or beets, cheese whey, and potatoes. Cellulosic feedstocks such as municipal waste or recycled products, rice hulls, bagasse (fibrous residue from sugar cane), small diameter trees, wood chips, and switch grass may also be used to produce ethanol, but these products are not yet utilized on a commercial scale.

Economic Benefits

The economic activity attributable to the ethanol industry will generate $3.5 billion in additional income tax revenue over the next five years. The ethanol industry is responsible for more than 40,000 direct and indirect jobs, creating more than $ 1.3 billion in increased household income annually, and more than $12.6 billion over the next five years. The ethanol industry directly and indirectly adds more than $6 billion to the American economy each year. The demand for grain created by ethanol production increases net farm income more than $12 billion annually.

Agricultural Benefits The demand for corn created by the ethanol industry increases crop values - accounting for approximately $0.14 of the value of every bushel of corn sold, or $1.4 billion.
Energy Benefits

Domestic ethanol and ETBE production reduces demand for imported oil and imported MTBE which drain our economy - oil and MTBE imports now represent almost 80% of the U.S. trade deficit. Currently, imported oil accounts for about 53% of oil used, and imported MTBE is at a record 31% of domestic production. Ethanol can reduce the demand for gasoline and MTBE imports by 98,000 barrels or more per day. A 98,000 barrel / day replacement of imported MTBE would represent a $1.1 billion reduction to our annual trade deficit. Ethanol production is extremely energy efficient, with a positive energy balance of 125%, compared to 85% for gasoline.