Ethanol Distribution

Ethanol producers face unique distribution challenges. Most ethanol plants are concentrated in the Midwest United States, but gasoline consumption is highest along the East and West Coasts. The volume of ethanol currently used in transportation is relatively small compared with the gasoline market. The ethanol produced generally can be absorbed in local or regional markets as E10 or E85, providing benefits to those markets. However, as ethanol production increases nationwide, distribution will become a more critical issue.

Most ethanol plants distribute their fuel by truck and rail. Some larger plants are located near navigable waterways and can ship their ethanol by barge—a more economical option. See Percent of U.S. Ethanol-Related Materials Transported by Mode, 2005 (Excel 17 KB). The Energy Information Administration report Review of Transportation Issues and Comparison of Infrastructure Costs for a Renewable Fuels Standard discusses rail and water transport.

The least expensive ethanol distribution option would be by pipeline—the way most gasoline is shipped. However, there are issues preventing the use of pipeline transport. First, water has an affinity for ethanol, so much greater care would have to be taken to keep water out of the pipeline. Next, ethanol is a better solvent than gasoline, so initial shipments in a previously existing pipeline could pick up many impurities that had accumulated in the pipeline. In addition, ethanol's corrosiveness could shorten a pipeline's lifetime.

Pipeline location is also a challenge. In general, gasoline pipelines start in the South, near petroleum refineries. Because most ethanol is produced in the Midwest, the current pipeline system is not conducive to transporting the alternative fuel. For more information on ethanol pipeline issues, see Ethanol and Pipeline Transportation Policy Paper (PDF 13 KB) and Stress Corrosion Cracking: Roadmap to Reduce the Cost and Increase the Effectiveness of Tools for Managing Internal and External Stress Corrosion Cracking (PDF 22 KB) from the Association of Oil Pipe Lines. Download Adobe Reader.

Because ethanol is not yet shipped via pipeline, it is generally blended at the local wholesale terminal for use as E10 or E85. Use of E10 or other low-level blends is generally based on local air-quality regulations or federal and state renewable fuel standards. E85 is typically purchased by fuel station owners who have chosen to sell it to consumers, or by federal, state, and private fleets that are using E85 in their flexible-fuel vehicles.

To learn more about the larger agricultural distribution system, see Ethanol Feedstock Logistics.