Moving To MarketEthanol: Getting There Is None Of The Fun

Forbes.com
William Pentland 05.16.08, 6:00 AM ET

Of all the factors that drive our energy economy, supply is the most important. In the early days of the oil industry, a New England snowstorm or a washed-out Texas rail bed could lead to a spike in prices or even shortages for entire regions of the country. The market was so wild and unpredictable that producers routinely lost everything.

Massive capital investments by oil companies and entrepreneurs solved much of the problem. In time they buried some 380,000 miles of pipelines throughout the United States, which now handle 63 billion cubic feet of natural gas and 20 million barrels of crude a day, removing a crucial variable from the supply chain and stabilizing markets.

Now it's the aspiring ethanol industry's turn. The vast majority of ethanol is produced in five states--Iowa, Nebraska, Illinois, Minnesota and South Dakota--all roughly 1,500 miles away from the approximately 80% of the population who live on the coasts. Ethanol will live or die with its ability to bridge that gap.

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