The United States ethanol policies are fuelled by the continued high prices commanded by oil around the world. When the EP ACT 2005 was passed, it promoted growth of agriculture-based ethanol and bio diesel as an alternative source of fuel for the transport sector. According to the U.S Energy Information Administration (2007) there are bottlenecks to the growth and achievement of the market potential of this fuel source however and that is resolution of important challenges that affect the supply and demand of bio fuels. Due to the high prices commanded by this commodity and the upheaval witnessed in the Middle East, President Obama recommended a cut by a third of oil imports by the year 2020. He outlined a plan that aims to achieve this goal through development of different domestic energy sources, including augmenting the production of oil and natural gas powered fleet vehicles and the increased production of bio fuels (Schock, 2012).
In 2008 however, there was an increase of 0.5-0.8% in food prices due to Federal ethanol-fuel policies that drove up the price of corn (Dinan, 2009). A report published in 2009 by the National Commission on Energy Policy on bio fuels recommended a more robust infrastructure and increasingly hard-line policies in order to ensure that the mandates for ethanol and other alternative fuels were met. The report urges the nation to increase the percentage of ethanol that is blended into gasoline and ease the process of getting permits from the government for bio fuel plants and pipelines. The transportation of ethanol should also be made easier. According to the renewable fuels standard, 36 billion gallons of bio fuel should be used up by 2022, as compared to the current 9 billion. This means that there is a requirement to have more flex-fuel cars on the road that can use fuel containing 85% ethanol in addition to having gasoline stations offering the same. The report also recommends that a higher blend of ethanol be utilised in regular cars and not the 10% currently in use (Galbraith, 2009).
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In June 2012, sale of fuel mix 15% ethanol: 85% gasoline became official when the Environmental Protection Agency approved the first application. The mix is known as E15 and its availability at the pump may not be immediate. The fuel is meant for cars first manufactured in 2001 and beyond. There are critics however, who feel that this fuel is dangerous and may cause damage to machines (Blanco, 2012).
It has also been cited by King (2012) that drought is another major reason why a higher ethanol-blend requirement may not be a wise policy decision. Farmers and their advocates who are directly affected by the policy have asked the Environmental Protection Agency to relax the ethanol requirements in the fuel mix used in the U.S due to the drought that has resulted in higher corn prices. This is affecting producers of livestock who also use corn to feed their livestock. The requirement exacerbates the already high prices, producing a spike of as much as 60% in August.
In conclusion, it is obvious from the above that the EPA-approved E15 policy has some major challenges to implementation standing in its way. On the positive side however, implementation of this policy is slated to reduce pollution and also reduce the country’s dependence on foreign sources of fuel. Taking a little more time to test the efficacy of the fuel in vehicles and iron out issues of availability and the tendency to drive up the price of food might be in order. This will ensure a smoother, less contentious, more beneficial transition which means a higher probability of reaping successful benefits from the policy.