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Effects of an Oxygen Requirement for Fuel in Midwest Ethanol Markets and Local Economies

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This article examines the effects of an oxygen content requirement for fuel in several midwestern states. Ethanol could dominate the midwestern oxygenate market with federal incentives for ethanol blending or a generalized ban on MTBE; otherwise, price incentives would shift between ethanol and MTBE. Several states would share in the ethanol output expansion, but the largest increases would likely occur in Iowa and Minnesota. A benefit-cost analysis of the oxygen requirement suggests that gains for consumers, producers, and local economies would more than offset lost federal tax revenues.
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Document Type: Research Article

Affiliations: 1: Economics Department, Iowa State University, 2: Animal Science Department, Iowa State University

Publication date: September 1, 2000

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