(1) U.S. Gasoline Supply. 1998 data based on Energy Information Administration/Petroleum Supply Annual 1998, Table S4 Finished Motor Gasoline Product Supplied. 2001-2009 data based on 1998 Actual Product Supplied plus average annual increase of 1.96% based on the actual average annual increase in Product Supplied from 1994-1998.

(2) Renewable Content Standard. Annual percentages contained in draft legislation being considered for introduction by Senator Daschle.

(3) Ethanol Demand (000s Barrels Per Day). 1998 data based on Energy Information Administration Monthly Oxygenate Report EIA- 819M. 2001-2009 data based on fixed percentage of U.S. Gasoline Supply under Renewable Content Standard.

(4) Ethanol Demand (000s Gallons Per Year). Ethanol Demand (000s Barrels Per Day) X 42 gallons per barrel X 365 days per year.

(5) Increase in Gasoline Costs. Ethanol Demand (000s Gallons Per Year) X 10% ethanol gasoline blends X average increased cost of $0.03 per gallon, based on American Petroleum Institute’s “The Costs and Benefits of State-Level Oxygenate Mandates to Expand Ethanol Production,” January 1999, and State of Minnesota, Office of Legislative Auditor’s “Ethanol Programs: A Program Evaluation Report,” February 1997. [NOTE: An increase of $0.03 per gallon for 10% ethanol gasoline blends is a conservative figure subject to increase based on transportation costs for ethanol outside the Midwest states, the potential for added competition for ethanol fuels in markets in the Western and Northeastern States, and the vagaries of corn feedstock prices.]

(6) Cost of Excise Tax Subsidy. Ethanol Demand (000s Gallons Per Year) X $0.54 Federal Excise Tax Subsidy for 1998. Under the “Transportation Efficiency Act of the 21^st Century” the ethanol tax subsidy is reduced to $0.53 for 2001-2002, to $0.52 for 2002-2004, and $0.51 for 2005-2007. This analysis assumes that the ethanol tax subsidy will continue through 2009 at the $0.51 level. [NOTE: Assumes use of 10% ethanol gasoline blends used to fully benefit from federal tax incentives.]

(7) Cost of Small Producer Tax Subsidy. Ethanol Demand (000s Gallons Per Year) X $0.10 Federal Tax Subsidy for Small Producers (less than 15 million gallons per year) X 13% of total ethanol capacity produced by qualifying small producers, based on Renewable Fuels Association’s “1999 Ethanol Industry Outlook” U.S. Ethanol Production Capacity Table. [Note: Its likely that the share of ethanol produced by small producers would increase significantly in a growing ethanol market.]

(8) Total Cost. Increase in Gasoline Costs + Cost of Excise Tax Subsidy + Cost of Small Producer Tax Subsidy.