Some States began to pass bans on MTBE use in motor gasoline because traces were showing up in drinking water sources, presumably from leaking gasoline storage tanks. These bans increase the need for ethanol.
The ethanol tax exemption was extended through 2007 with a gradual reduction from 54 cents per gallon to 51 cents per gallon in 2005.
Major U.S. auto manufacturers began mass production of flexible-fueled vehicles capable of operating on E85, gasoline, or both. Despite their ability to use E85, most of these vehicles used gasoline because of the scarcity of E85 stations.
The EPA began requiring the use of reformulated gasoline, year-round, in metropolitan areas with the most smog, opening new markets for ethanol as an additive to help clean the air.
The excise tax exemption and income tax credits were extended to ethanol blenders that produced ETBE.
Annual U.S. ethanol production surpasses one billion gallons.
The Energy Policy Act of 1992 provided for two additional gasoline blends (7.7% and 5.7% ethanol). The Act defined ethanol blends with at least 85% ethanol (E85) as alternative transportation fuels. It also required specified car fleets to begin purchasing alternative fuel vehicles, such as vehicles capable of operating on E85. The Act also provided tax deductions for purchasing (or converting) a vehicle capable of running on alternative fuel, such as E85, and for installing equipment to dispense alternative fuels.
As a result of the Clean Air Act Amendments adopted two years earlier, the use of oxygenated fuels begins in 39 major carbon monoxide nonattainment areas.
MTBE was still the primary oxygenate used in the United States.
The Omnibus Budget Reconciliation Act of 1990 decreased the ethanol subsidy to 54 cents per gallon of ethanol.
Ethanol plants began switching from coal to natural gas for power generation and adopting other cost-reducing technologies.
An expanding ethanol market and higher values for high fructose corn syrup encouraged expansion of wet mill plants that produce the syrup as a by-product of the ethanol production process.
Congress adopted Clean Air Act Amendments, establishing a nationwide clean-burning fuels program that would rely on reformulated gasoline and increased use of oxygenates, like ethanol, to reduce ground-level ozone and smog.
Ethanol was first used as an oxygenate in gasoline. Denver, Colorado, mandated oxygenated fuels (i.e., fuels containing oxygen) for winter use to control carbon monoxide emissions.
Other oxygenates added to gasoline included MTBE and ETBE. MTBE dominated the oxygenate market.
Many ethanol producers went out of business despite the availability of tax incentives, as an oil glut developed and gasoline prices plunged.
Only 74 of the 163 commercial ethanol plants (45%) remained operating by the end of 1985, producing 595 million gallons of ethanol for the year.
The number of ethanol plants in the United States rose to 163, with most of producing 2-4 million gallons, or less, per year.
The Tax Reform Act of 1984 increased the ethanol tax incentive to 60 cents per gallon.
The Surface Transportation Assistance Act of 1982 (signed in early 1983) increased the ethanol tax incentive to 50 cents per gallon.
The first U.S. survey of ethanol production was conducted. The survey found fewer than 10 ethanol facilities existed, producing about 50 million gallons of ethanol per year. This was a major increase from the late 1950s until the late 1970s, when virtually no fuel ethanol was commercially available.
Congress enacted a series of tax benefits to ethanol producers and blenders. These benefits encouraged the growth of ethanol production.
The Energy Security Act of 1980 offered insured loans for small ethanol producers (less than 1 million gallons per year), up to $1 million in loan guarantees for each project that could cover up to 90% of construction costs on an ethanol plant; price guarantees for biomass energy projects; and purchase agreements for biomass energy used by Federal agencies.
The handful of commercial ethanol producers operating in the United States banded together to form the Renewable Fuels Association to ensure the fledgling industry had a powerful voice in Washington, D.C., and across the nation. After a push from ethanol producers, Congress established an import fee (tariff) on foreign-produced ethanol to offset the blender’s tax exemption. Previously, foreign producers, such as Brazil, were able to ship less expensive ethanol into the United States.
The Gasohol Competition Act of 1980 banned retaliation against ethanol resellers.
The Crude Windfall Tax Act of 1980 extended the ethanol blenders tax credit.
Amoco Oil Company began marketing commercial alcohol-blended fuels, followed by Ashland, Chevron, Beacon, and Texaco. Comedian and actor Bob Hope could be seen in TV and magazine ads promoting the ability of ethanol to “stretch our available supply of gasoline.”
Following years of oil embargoes leading to calls for energy security, EPA allows 10% ethanol blend in gasoline.
The term gasohol was defined, for the first time, in the Energy Tax Act of 1978. Gasohol was defined as a blend of gasoline with at least 10 percent alcohol by volume, excluding alcohol made from petroleum, natural gas, or coal. Ethanol was exempted from the federal gasoline excise tax, which at the time was 4 cents per gallon. This amounted to a 40-cents-per-gallon exemption for ethanol from federal motor fuel taxes.
The United States begins to phase out lead in gasoline, based on regulations adopted by the Environmental Protection Agency (EPA) two years earlier. Ethanol becomes more attractive as a possible octane booster for gasoline in place of lead. By 1986 no lead was allowed in motor gasoline.
The first of many legislative actions to promote ethanol as a fuel, the Solar Energy Research, Development, and Demonstration Act of 1974 led to research and development of the conversion of cellulose and other organic materials (including wastes) into useful energy or fuels.
Once World War II ended, with reduced need for war materials and with the low price of fuel, ethanol use as a fuel was drastically reduced. From the late 1940s until the late 1970s, virtually no commercial fuel ethanol was available anywhere in the United States.
Ethanol production for fuel use increased, owing to a massive wartime increase in demand for fuel, but most of the increased demand for ethanol was for non-fuel wartime uses.
Fuel ethanol gained a market in the Midwest. Over 2,000 gasoline stations in the Midwest sold gasohol, which was gasoline blended with 6% to 12% ethanol.
Gasoline became the motor fuel of choice. Standard Oil began adding ethanol to gasoline to increase octane and to reduce engine knocking.
During World War I, the need for fuel drove up ethanol demand to 50—60 million gallons per year.
Henry Ford produced the Model T. As a flexible fuel vehicle, it could run on ethanol, gasoline, or a combination of the two.
Over 50 years after imposing a tax on ethanol, a major illuminating oil, to help pay for the Civil War, Congress removed it, making ethanol an alternative to gasoline as a motor fuel.
