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

March 08, 2006

Ethanol Production Reaches Nearly 4 Billion Gallons in 2005

Photo of an industrial site featuring several distillation columns.

New ethanol fuel plants are cropping up in rural areas across the United States. Credit: Chris Standlee

The U.S. ethanol industry produced a record 3.9 billion gallons of fuel in 2005, according to the Renewable Fuels Association (RFA). In December 2005, ethanol fuel production reached 364.4 million gallons, but fell short of demand, which rocketed to 403.2 million gallons. The excess demand was partially met by imports of 32.2 million gallons of ethanol, while 233.6 million gallons of ethanol in storage provide about 20 days of reserve to help meet demand. Last week, a new ethanol plant began production in Iowa, adding another 60 million gallons of ethanol production capacity. According to the RFA, the U.S. ethanol industry now comprises 96 ethanol plants with the capacity to produce 4.4 billion gallons annually. There are 33 ethanol plants and 8 major expansions under construction, with a combined annual capacity of more than 2 billion gallons. See the RFA press releases on the production record and the new ethanol plant.

Demand for ethanol is expected to grow sharply this year. A recent analysis from DOE's Energy Information Administration (EIA) notes that many petroleum companies plan to stop using MTBE before the summer driving season. MTBE is an oxygenating fuel additive, similar in function to ethanol. The EIA report "Eliminating MTBE in Gasoline in 2006," notes that most companies will switch to ethanol instead, a move that could put strains on ethanol supplies. According to the EIA, the complexity of the transition may cause local supply shortages, which could cause some price spikes. See the EIA report.