California, which is often forward-thinking on energy issues, challenged itself to use cleaner-burning fuels in the 1980s. Alexis Madrigal, writing for gas2.0, gets into the history of that, but what you need to know for now is that the challenge resulted in innovation, trial and error, and a lot of scrambling to shift major gears in a complex energy market.
The current solution in California is to have a particular amount of ethanol content in gas. Of course, California's not a huge ethanol-producing state.
So we get to one of the easier-to-understand, harder-to-figure-out issues of ethanol: how does it get from point A to point B? Madrigal explains in depth:
So, through the last half-decade, ethanol, by default, has become a necessary part of transportation fuel in the state. In so doing, the state and its oil industry created a perfect test case for the rapid adoption of an alternative fuel in a gasoline market about the size of China's.
But California had and has very little in-state ethanol production. Companies stretching all the way to Illinois had to figure out how to get corn grown and refined in the Midwest to the west coast. Given the speed of the ramp-up, an ad hoc system developed to keep up with the demand. Remember: keeping up with the demand isn't merely academic; you can't sell gasoline if you don't have enough ethanol.
The real action in a shift like this doesn't occur at what oil companies call the upstream, where a fuel is produced; or downstream, where consumers pay for petrol at energy distribution outlets we call gas stations. What had to change was the midstream, the set of interlocking logistics, transport, and storage facilities that push energy in liquid form around the world.
Then ask the next questions.