Ethanol is an alcohol that can be made from almost anything. In the United States more than 90 percent of the time it comes from corn. It can be mixed with gasoline and is usually around five percent of a gas mixture in the U.S. Some cars can run on blends that use up to 85 percent ethanol fuel.
Advocates say the mixture costs less than pure gasoline. Opponents say it is more harmful to the environment.
Last year, 3.4 billion gallons of the alternative fuel, were produced in the United States. But, a U.S. Senate panel says refiners and manufactures must use more of it -- 8 billion gallons by 2012 -- as part of a 2005 energy bill that has yet to be passed.
Monte Shaw, communications director of the Renewable Fuels Association, says the ethanol mandate is necessary, because oil companies will not put ethanol into gas on their own.
"If you look at the current marketplace today it's the perfect example of why we need this. You have ethanol, which is dramatically cheaper than gasoline on the wholesale markets. And yet refiners -- as the price of ethanol has been going down this year -- have been using less and less of it each month, at the same time we've been importing more and more finished gasoline each month according to government statistics."
The renewable fuel mandate could replace two billion barrels of imported crude oil between 2006 and 2012, according to Mr. Shaw.
The oil industry is strongly opposed to the new mandate. The American Petroleum Institute, or API, says diverting corn production into ethanol could raise food costs without significantly reducing U.S. dependence on fossil fuel. They support an energy bill that mandates that 5 billion gallons of ethanol be required, a standard passed by the U.S. House of Representatives in April.
Edward Murphy of API says that amount gives ethanol a foothold in the U.S. energy market. "Going beyond that provides no benefit, in fact, some detriment to our environmental goals, and makes the processing and distribution of gasoline in the United States more difficult, complex and thus more costly."
Mr. Shaw says many other countries around the world are increasing or thinking about increasing their use of ethanol, because of instability in the Middle East and higher fuel costs.
"Brazil leads the world,” says Mr. Shaw. “They made up their mind to get rid of their oil dependency back in the late ‘70s after the oil embargoes, and they blend everything with 24 percent ethanol or more."
Mr. Murphy says increased ethanol use in the United States does not make sense, because it takes too much energy to produce it.
"Ethanol from corn: obviously corn uses a great deal of fertilizer. You use a great deal of fuel actually planting and harvesting the corn. You use more fuel in transporting the corn to the ethanol distillation facility; you use a lot of energy in distilling and making the ethanol from the corn. You add that all together and you're using somewhere between 75 to about 100 percent -- almost all of the energy content, in actually producing the ethanol," according to Mr. Murphy.
Mr. Shaw says that math is incorrect. He says producing gasoline also involves a high use of energy.
Either way, it appears the next U.S. energy law will include an increase in the production of ethanol.