Posted on 09/30/2007 4:23:54 AM PDT by vietvet67
NEVADA, Iowa: The ethanol boom of recent years — which spurred a frenzy of distillery construction, record corn prices, rising food prices and hopes of a new future for rural America — may be fading.
Only last year, farmers here spoke of a biofuel gold rush, and they rejoiced as prices for ethanol and the corn used to produce it set records.
But companies and farm cooperatives have built so many distilleries so quickly that the ethanol market is suddenly plagued by a glut, in part because the means to distribute it have not kept pace. The average national ethanol price on the spot market has plunged 30 percent since May, with the decline escalating sharply in the last few weeks.
"The end of the ethanol boom is possibly in sight and may already be here," said Neil E. Harl, an economics professor emeritus at Iowa State University who lectures on ethanol and is a consultant for producers. "This is a dangerous time for people who are making investments."
While generous government support is expected to keep the output of ethanol fuel growing, the poorly planned overexpansion of the industry raises questions about its ability to fulfill the hopes of President George W. Bush and other policy makers to serve as a serious antidote to the nation's heavy reliance on foreign oil.
And if the bust becomes worse, candidates for president could be put on the spot to pledge even more federal support for the industry, particularly here in Iowa, whose caucus in January is the first contest in the presidential nominating process.
Many industry experts say the worst problems are temporary and have been intensified by transportation bottlenecks in getting ethanol from the heartland to the coasts, where it is needed most.
(Excerpt) Read more at iht.com ...
Dang - that pesky supply and demand thing.
Ya’ think it works? :-)
Ethanol ping
if any of this story was true,
the price of E85 near a distillery would go down.
The decline is a good thing. The reduced price of the ethanol in a gasoline blend might just compensate the buyer for the decreased milage.
Yeh...but corn prices were up!!
Chuck Grassley will keep those prices up!
The US spot market ethanol average on Sept. 27 was $1.97+.
The huge majority of ethanol is sold on contract, making the spot price irrelevant in the short term.
If there wasn’t some risk, ethanol plant investors wouldn’t be getting a 20% return on investment.
Only if the E85 was sold near there and not transported to another area.
The ecolibidots threw lots of money at ethanol, but the "right person wasn't in charge" to run the expansion properly.
The ethanol bubble is popping. I have nothing against farmers using it in their machinery, but please keep that garbage out of cars and trucks.
It works really well if you keep the gubmint out of the way.....
“In the Spot Market” ~ very important words ~ that does not have much to do with the aggregate market, or existing contracts.
/sarcasm.
Surprisingly a 1988 Mustang I had ran better using ethanol. Any other car where I’ve tried using it sucked.
To finish the quote: "The government is not going to guarantee a profit or subsidize any losses, so it's almost like a free market out there." Very scary to somebody on a government payroll.
I thought the politicians had repealed the laws of supply and demand.
Good news. Ethanol sucks. It uses way too much energy per gallon to manufacture, uses millions of gallons of water in production, and gives your vehicle crappy gas mileage.
Cars manufactured today do not take advantage of this because petroleum is still the way to go.
What the hippies don’t seem to get is that alternative fuels are already here. It just makes more economic sense to use fossil fuels while they’re still in the ground.
When we start to run out of fossil, it will make economic sense to use alternatives and those will take over.
Ahh, the free market at work.
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