What is Ethanol Fuel?

A lot of people have been looking for information on investing in ethanol fuel lately, so I thought I would write a post that covers the basics of what ethanol is.
It has been in the news quite a bit lately, with Americans hoping ethanol will be the answer to an addiction to Arab oil. While George W Bush has been stating that America is addicted to oil, the alternative fuel industry has been getting a lot of media attention.
Although Ethanol fuel is still not the final solution to solving the world's problem of fossil fuel dependence, it is the alternative energy that is getting all the love from investors and the media recently. Other alternative fuels include hydrogen, propane, natural gas, electricity, and biodiesel.
Ethanol fuel is produced from renewable sources like corn. It is a high-octane, clean burning fuel that is mostly mixed with unleaded fuel. Which means the technology is still far from completely eliminating the use of traditional fossil fuels, but simply reducing the amount needed.
Ethanol is alcohol based, made from a process of fermentation and distillation of starch based crops that have been converted into sugars. Although corn seems to be the favored crop to produce ethanol, barley and wheat can also be used.
Currently Ethanol is not used as a straight fuel by itself, but mixed with regular gasoline. Common fuel blends include..

• E10 Ethanol blend - Is a mixture of 10% ethanol fuel and 90% unleaded fuel. Most cars on the road are able to use the E10 blend of fuel, but it does not pass the EPAct regulations to be classed as an alternative fuel.
• E85 Ethanol blend - Is a mixture of 85% ethanol fuel and 15% unleaded fuel. To use this blend or higher, you need to have a flexible fuel vehicle or FFV. Vehicle manufacturers are releasing more FFVs every year.

The ethanol industry is still developing and is far from the only player on the alternative fuels street, but as investor dollars and government incentives encourage the technology to develop, ethanol fuel may become more of a viable alternative to regular gasoline. The energy required to produce corn has been an issue discussed recently.
# Ethanol Investing