Rhode Island Getting Ready for Ethanol

A Worcester Business Journal story on the expansion of the Providence & Worcester Railroad (including P&W receiving new automobiles "for the first time [in] the company's history" for transport to New England dealerships via the port at Davisville) hides the news with the most potential long-range impact at the bottom of the page…

P&W is also working on an agreement with "a major fuel provider" that [company president P. Scott Conti] would not name, to bring ethanol into an underused Providence yard the company rehabilitated to bring in the corn-based fuel additive.

"We all drive our vehicles, and we pump gas into them," Conti said, and in Massachusetts, Connecticut and Rhode Island, that gas contains ethanol.

Ethanol is also thought to have potential as an alternative to fossil fuels.

"You look at ways to grow. These opportunities don't come along each and every day, but when you see one, you try to capitalize on it," Conti said.

I hope I’m not revealing anything that is supposed to be secret about the unnamed partner, but a company called Aventine Renewable Energy announced last year that it was working with the Providence & Worcester rail line to develop an improved ethanol delivery network for the Northeast…

Aventine Renewable Energy Holdings, Inc. (NYSE:AVR), a leading producer, marketer and end to end supplier of ethanol, today announced additions to its existing terminal network footprint....

Aventine has also recently contracted for significant rail and waterborne terminalling capacity in Providence, RI. The terminal facility in Providence will be provided by Motiva, a joint venture between Royal Dutch Shell and Saudi Aramco, and will be served by CSX Transportation via an interchange with the Providence and Worchester Railroad Company. This terminal will provide streamlined logistical infrastructure for ethanol supply for the emerging Rhode Island and nearby Boston area markets.

This is a story to keep an eye on, because as the price of gas climbs towards $4.00 a gallon, more and more businesses are going to decide that investing in the permanent infrastructure needed to provide ethanol as a fuel is a good risk to take. And once an ethanol distribution network is built that parallels our nation's petroleum distribution network, and bunches of flex-fuel vehicles capable of using both primarily-ethanol and parimarily-gasoline fuels come into use, foreign oil suppliers will have to compete directly with ethanol producers when setting prices.

This will be an unprecedented upheaval in the economics of transportation fuel that will change the politics of energy -- and oil in particular -- in ways that will never be reversed.