The Problem of Too Much Success
The energy market in the U.S. is changing for the better, but it could spell trouble for ethanol. Here are some statistics that may be of interest:
• U.S. energy consumption will only increase at a rate of 0.3 percent per year between now and 2035
• Gasoline consumption will fall by 0.6 percent per year between now and 2035
• The adoption of new fuel efficiency standards would require cars to average 54.5 miles per gallon by 2025
• As a result of new oil finds, crude oil production in the U.S. is expected to increase by a million barrels per day by 2020
• Crude oil imports are projected to fall by 2 million barrels per day in the next decade
Using these projections, the competition from the oil industry to garner a larger share of a shrinking market will likely put more pressure on their lobbyists to redouble efforts to minimize ethanol use—more challenges to 15 percent blending, downward pressure on oil prices to squeeze the ethanol industry against high corn prices, and certainly, there will be strengthened efforts to eliminate the renewable fuels standard (RFS).
The ethanol industry, despite decades of push-back, has continued to grow and replace greater and greater amounts of imported oil and gasoline. It has saved America billions of dollars on imports and saved the consumer untold amounts at the pump. To say this industry has been a success would be a significant understatement.
Now, however, we may be faced with the problems that come with too much success. When you have replaced 10 percent of the gasoline sold in America and look to expand that to 15 percent and greater, that raises the ire of the oil industry. And as we all know, when pushed, they can be formidable adversaries.
So, what I’m saying is that we should not expect things to become easier, or for future successes to go unchallenged. In fact, I would suggest that the sledding is likely to get a whole lot tougher in the years ahead. But, having spent nearly 30 years in this industry, I know we are up to the challenge.
That’s the way I see it.
Author: Mike Bryan
Chairman, BBI International