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The main problem for the oil companies is that the ethanol business requires many relatively small plants in strategically placed areas where the corn is available. A successful ethanol facility will require local support, which will be easier to secure with local ownership than an oil company trying to develop. Until recently the oil companies relied on MTBE, a product that they or subsidiaries produced from fossil fuels. In addition, oil companies have experienced difficulties in the past few years and many are being consolidated. Each oil company has its own issues to deal with. The total fuel consumed in the U.S. is over 300 billion gallons. Ethanol makes up a little over 1% of the total U.S. market. The oil companies already have 99% market share and view ethanol as strictly an additive or octane enhancer.
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If ethanol is needed for reformulated gasoline then why arent the oil companies building ethanol plants?
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