Ethanol plants lose money as energy prices fall

Energy Matters0

After its meteoric rise as a major ag industry and world corn price lifter, US ethanol production is experiencing some tough times, according to Jim Jenkins, a cattleman, restaurateur and chairman of the Nebraska Ethanol Board.

While some US ethanol plants are experiencing economic hardships, many plants are still profitable, Mr Jenkins told a Nebraska Farmers Union members convention.

“Every industry, especially those that grow fast, faces some bumps,” he says

Citing a Merrill Lynch analyst, Mr Jenkins says, “Without ethanol in the motor fuels market, gasoline prices would have been about 15pc higher, for most of 2008.”

Nebraska has 22 ethanol plants with a capacity to produce about 1.6 billion gallons of ethanol, Mr Jenkins says.

Ethanol is already a $3-billion a year segment of the Nebraska ag industry, which places it third, behind cattle ($7 billion) and corn ($3-4 billion)

Another speaker, National Farmers Union President Tom Buis, said that ethanol’s detractors blamed corn alcohol for price rises in many products, even products such as beer and toothpaste which don’t contain any corn.

“It’s a public relations war,” he says.

When he was in Washington last summer, a local bagel shop made a big deal about having to raise the cost of a bagel 35 cents—even though there’s just 7 cents of wheat in a bagel.

Wheat prices are now much lower, but bagels stay at the new higher price

Now that energy prices are lower, Mr Buis worries that the fickle American public, and their elected leaders, will slack off on their call for greater energy independence.

Biofuels, solar, wind and geothermal energy need continued support, or the next energy crisis could be more painful than past difficulties

“Congress has failed the American people on energy,” says Rep. Adrian Smith of Gering.

“We need it all – bioenergy, wind, solar, hydro.

“I’m afraid $1.50 gas in the US will push energy aside.”

Mr Smith says the 2008 Farm Bill leaves a lot to be desired, but it took a lot of effort by pro-agriculture members of Congress to obtain for farmers as much protection as they did in the legislation.

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