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Not even $4-per-gallon-gas has been able to
resuscitate the nation’s corn-ethanol industry, which slumped in 2007
as the price of corn, the country’s main feedstock, rose to record
levels. “These ethanol plants are making money, but
they’re not making a lot, not as much as they were one or two years
ago,” says Rodney Weinzierl, executive director of the
Bloomington-based Illinois Corn Growers Association.
Although consumer demand and processing capacity at
biorefineries have held steady, the price of corn, which recently topped $6
per bushel — rising from just under $4 in January — has
depressed once-hefty profits from ethanol production. Weinzierl says the ethanol market would be doing
better if ethanol prices could keep up with gas prices, which have climbed
33 percent in the past four months, from about $3 per gallon on average in
February to $3.93 today. Compare that, he says, to ethanol, which has seen
growth of 6 percent since February, from $2.35 per gallon in February to
the current price of around $2.50 per gallon. Weinzierl also says ethanol has been unable to
penetrate certain regions of the U.S. that have been closed off to ethanol
markets because of limited infrastructure and refining capacity in these
areas. Other industry observers cite growing hostility
toward biofuels, ethanol in particular — which many believe have
driven up food costs and created food shortages in some parts of the world
— as the real cause for ethanol’s slump. At home, critics have long argued that ethanol was
too heavily subsidized by U.S. taxpayers. The most recent Farm Bill, which
Congress passed in May over President George W. Bush’s veto, may
signal that even Washington lawmakers have soured on ethanol. The bill provides nearly $800 million to encourage
the development of cellulosic ethanol and for other areas of biofuels
research, such as expanding production of biofuels from animal manure,
livestock and food-processing waste, as well as agricultural and forestry
crops waste materials. As far as corn-based ethanol goes, the Farm Bill
contained only a small appropriation to help existing refineries reduce
their use of fossil fuels.
This isn’t exactly good news for the some 50
companies that have applied to the Illinois Environmental Protection Agency
to build ethanol facilities here and hoped to cash in on sizable profits
enjoyed during the initial ethanol gold rush of 2006. In addition, banks are reluctant to finance new
endeavors, and some ethanol producers may begin to consolidate some
operations this year, says Walker Filbert, president of Heartland Ethanol
LLC.
He adds that although well-managed plants will likely
maintain profitability, it’s unlikely that many new ones will come
online this year. This includes Heartland’s proposed $300 million
biorefinery in Waverly, which is being held up in a court challenge by
local residents. “Nothing is going to happen with the Waverly
plant before 2009,” he says.
Contact R.L. Nave at rnave@illinoistimes.com.
This article appears in May 29 – Jun 4, 2008.
