U.S. ethanol production will surge 17.5 percent this year and leap again next year, a University of Missouri think tank said on Thursday, adding that production of the farm-grown fuel should far exceed levels mandated by the 2005 energy law.
U.S. ethanol plants will distill 4.589 billion gallons of the renewable motor fuel this year, the Food and Agricultural Policy Research Institute (FAPRI) said -- up 17.5 percent from the record 3.904 billion gallons of ethanol production last year recorded by the Renewable Fuels Association.
The FAPRI forecast output would hit 5.217 billion gallons in 2007 -- another double-digit percentage increase.
"If the current pace of plant construction continues, ethanol production could exceed the levels shown," it said.
Production would run far above the levels mandated by the 2005 energy law that guaranteed ethanol a share of the fuel market, FAPRI said. Interest in the fuel has blossomed with rising petroleum prices and with President George W. Bush's call for more use of domestic energy.
"The U.S. ethanol industry, with 2.1 billions of capacity currently under construction, will continue to expand to meet this soaring demand," said Bob Dinneen, president of the trade group. The new capacity would come from 34 plants and nine plant expansions under construction. There are 95 plants already in operation.
Fourteen percent of the U.S. corn (maize) crop, or 1.6 billion bushels, will be used to make ethanol this marketing year. The Agriculture Department says the figure will jump to 20 percent in the 2006/07 marketing year that opens on Sept. 1 but FAPRI pegged ethanol's share at 17 percent.
Strong growth was expected for years to come. Some 2.87 billion bushels of corn would be used for ethanol in 2015/16, FAPRI estimated.
Without output running well ahead of ethanol's guaranteed share of the market, ethanol will have to be price-competitive, said FAPRI analyst Pat Westhoff.
"Stronger ethanol demand means higher corn prices, more corn production and more co-products available as feeds," said FAPRI in a report on the U.S. agricultural sector.
FAPRI forecasts for ethanol output and usage in 2006 and 2007, with comparison to 2005.