Ethanol could be limited by logistics capacity
Future of biofuel could be in question if logistics capacity isn't available
By Dave Hannon -- Purchasing, 6/11/2007 4:19:00 PM
The amount of ethanol distributed in the U.S. could be limited in years to come by the rail industry’s inability to increase capacity.
According to a new report from the Government Accountability Office, the amount of corn grown and used for ethanol could have its troubles. For one, there could be environmental impact if be if land set aside for water conservation or wildlife habitat is used to grow more corn for ethanol.
Another limitation could be the rail industry, according to the GAO’s report.
“Existing biofuel distribution infrastructure has limited capacity to transport the fuels and deliver them to consumers. Biofuels are transported largely by rail, and the ability of that industry to meet growing demand is uncertain,” the report says.
Reuters reports that the GAO also said that "Using more corn for energy production will likely exert additional upward pressure on corn prices, potentially influencing livestock feed markets and meat prices."
In a related report, U.S. refiner Alon USA’s CEO Jeff Morris recently told the ReutersGlobal Energy Summit that distribution of ethanol via pipeline will create major snags. “The first headwind that ethanol has is that it is 25% less fuel-efficient than gasoline," said Morris.
"Then you have the logistical issues. You can't put it in an existing pipeline, so you have to build a special pipeline so it has the right gaskets. You have to spend $30,000 per retail station to build a separate tank and a separate pump for the ethanol for E85...Who's going to pay for that?"
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