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The rapidly expanding biofuel industry has changed the fundamentals of U.S. agricultural commodity markets. Increasing ethanol and biodiesel production has generated a fast-growing demand for corn and soybean products, which competes with the well-established domestic livestock industry and foreign buyers. Meanwhile, the co-products of biofuel production are replacing or displacing coarse grains and oilseed meal in feed rations for livestock.

This article investigates ethanol and its integration into the petroleum supply chain. Recent state and federal mandates require varying levels of ethanol in reformulated gasoline (RFG) and, consequently, new complexities are being introduced into what has to this point been a streamlined petroleum supply chain.

Supply chain management involves all of the activities in industrial organizations from raw material procurement to final product delivery to customers. The main aim in supply chain management is to satisfy production requirements, while optimizing the economic objectives. In traditional fossil fuel supply chains, huge amounts of fossil fuels are transported via pipelines or tankers with very small costs. These fuels can be transformed into other sources of energy or transportation fuels at their destination points.

The increase in oil prices has caused a concern on the dependence for fossil fuels. Different alternative fuels are being analyzed to determine whether they are feasible. Many avenues need to be searched for each alternative fuel before deciding whether the benefits outweigh the costs. One such problem that needs to be addressed is whether the transportation sector can handle such a change. A synopsis of the transportation costs are examined in this report for different types of commodities which can be used for alternative fuels.

A method is presented, which estimates the potential for power production from agriculture residues. A GIS decision support system (DSS) has been developed, which implements the method and provides the tools to identify the geographic distribution of the economically exploited biomass potential. The procedure introduces a four level analysis to determine the
theoretical, available, technological and economically exploitable potential. The DSS handles all possible restrictions and

Enhanced environmental quality, fuel security, and economic development along with reduced prices of ethanol-gasoline blends are often used as justifications for the U.S. federal excise tax exemption on ethanol fuels. However, the possible effect of increased overall consumption of fuel in response to lower total price, mitigating the environmental and fuel security benefits, are generally not considered. Taking this price response into account, the optimal U.S. ethanol subsidy is derived.