In his state of the union address, President Bush outlined plans to boost use of renewable and alternate fuels to 35 billions gallons by 2017, a replacement for 15% of estimated gasoline consumption in the same time-frame. With a current demand of 10 billion gallons for blending purposes, the current 5 billion gallons of production capacity plus the 6.1 billion gallons of capacity in development would push supply well past demand without the measure.

To add insult to injury, ethanol production is at least momentarily reliant on federal subsidies that contribute an estimated 51 cents for every gallon of ethanol, an important incentive as ethanol trends downward in price with gasoline.

Under consideration is a measure to boost ethanol production to 60 billion gallons by 2030.

Currently, according to Forbes, “Net of the tax subsidy, the price of ethanol is $2.04 a gallon, which is 70 cents more than the $1.34 wholesale price of gasoline. And the energy content of ethanol is only two-thirds that of gasoline.”