This is an excerpt from EERE Network News, a weekly electronic newsletter.

July 17, 2002

ExxonMobil Commits to Early MTBE Phase-Out in California

ExxonMobil announced on July 11th that it will join BP and Shell Oil Products in beating the current California deadline for phasing out its use of the gasoline additive MTBE. By early 2003, ExxonMobil will use ethanol in all the gasoline it sells in California. Since Philips Petroleum already uses ethanol in more than 80 percent of the gasoline it sells in California, the ExxonMobil commitment will leave ChevronTexaco as the only major refiner still selling significant amounts of MTBE-blended gasoline by mid-2003. According to the Renewable Fuels Association (RFA), more than 60 percent of California's gasoline sales are represented by Philips Petroleum, BP, Shell Oil, and ChevronTexaco. The deadline for phasing out MTBE use in California is the end of 2003.

The RFA notes that the ethanol industry continues to grow, with record production levels in May, the first ethanol fuel plant in Wisconsin now operating, and two new ethanol fuel plants under construction in Nebraska. See the RFA press releases.

Ethanol critics, however, are worried about new consolidation in the industry. Leading ethanol producer Archer Daniels Midland Company (ADM) signed a merger agreement with Minnesota Corn Processors, LLC (MCP) on July 11th. According to the RFA, ADM currently owns about 39 percent of U.S. ethanol fuel production capacity. MCP is the second largest domestic producer of ethanol fuel, owning nearly 6 percent of the U.S. production capacity. But to be fair, 47 other companies own the remaining 62 percent of capacity, and 24 of those are farmer-owned. And 14 companies - 11 of which are farmer-owned - are entering the market with plants now under construction. Those new plants will lower the joint ADM-MCP share of the market to about 38 percent. See the RFA's summary of ethanol production capacity.

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