Please look at www.poten.com for P&P_OP_092906.pdf. You will find there the attached graph and the comparison of the prices for gasoline and diesel.

The problem is that the US refineries are geared to produce more gasoline and less diesel. President Bush tries to advocate the use of ethanol and also a switch to increase the use of diesel engines. But decreasing the need of gasoline, and increasing the need of diesel, will help decrease the price of gasoline, and increase the price of diesel - this working against the incentive to make any change at all. Further, as the Europeans use more diesel and less gasoline, exporting diesel to the US, there will be no help from Europe for an increased consumption of diesel in the US. In short, we have here according to Poten & Partners a real dilemma, and the implication is thus that Washington did not think it through - really.

This reminds us of Brazil when they introduced ethanol cutting into their gasoline market, but did not start replacing diesel in parallel - so they ended up needing the operation of the petroleum refineries for their supply of diesel and exporting the gasoline surplus. This was fine with the Brazilian refiners of Petrobras who saw anyway in the “proalcool” program - a sugar industry program - rather then an energy program. What this teaches us is that one must address this as NATIONAL ENERGY POLICY and not as simple individual unrelated efforts that may not fit later neatly into a national policy.