Posted on 03/13/2008 11:12:18 PM PDT by TigerLikesRooster
Ethanol industry losing its momentum
By Michael Hooper | MORRIS NEWS SERVICE
Tuesday, March 11, 2008
Story last updated at 3/11/2008 - 2:42 am
TOPEKA, Kan. - Tough times have struck the ethanol industry as profit margins have declined while corn prices have soared.
Last month, Cargill suspended development of an ethanol plant near Topeka. An ethanol plant that opened last fall in Pratt, Kan., already has stopped producing ethanol. A new biofuels plant in Mead, Neb., shut down last fall. Another ethanol plant in Canton, Ill., is in bankruptcy.
The industry was skyrocketing five years ago when the price of corn was around $2.40 per bushel, but corn is $5 per bushel and could go higher. That's a significant boost in a critical raw material for most ethanol plants.
Critics say too much capacity is contributing to the losses. Investors got too greedy too fast and now the industry is losing momentum.
"It's been a fast cash cow," said Richard Johnson, a rural Topeka resident who opposed Cargill's proposed ethanol plant. "People jumped on it. It's always been on the fast track, but a very select few get money off this, and others don't. When these plants shut down, who is going to clean up these sites?"
Others say the industry is just going through some growing pains and has a viable future, with subsidies from the federal government intended to increase ethanol production and reduce dependence on foreign oil.
Ethanol plants constructed a few years ago that have strong cash positions and reasonable debt levels will make it, experts said. But a downturn like this requires deep pockets. Some small players aren't going to make it, and consolidation and mergers are expected.
John Neufeld, chief risk officer of White Energy, of Dallas, which owns ethanol plants Hereford, Plainview and Russell, Kan., said the industry had to ramp up to meet government production targets.
"It's possible we overachieved it a bit," Neufeld said. He said plants that were already constructed and are managed well should be fine.
"The margins aren't huge, but they are enough to compensate for the higher grain prices and higher energy prices," Neufeld said.
Ping!
Another cluster**** promoted by our politicians.
Another thing that vanishes with Ethanol is fuel economy.
Kansas, Texas - I wonder if the availability and cost of water a element in these closures. I understand ethanol production utilizes a lot of water.
Anybody not seeing this coming down the pike has been hitting that ol opium pipe a bit too much!
But E85 was such a great idea. 25% more to produce, 25% more to purchase, to get 25% less fuel economy.
How much would you say, is too much?
At least the generation of the late 1940s weren't so stupid that they poured Hadacol in the gas tank.
.. and the claims made for Ethanol aren't all that different than those made for Hadacol. To wit, a Hadacol ad featured a distinguished woman declaring, "Three months ago I couldn't read or write, but after only a few bottles of Hadacol, I am now teaching school."
“Ethanol plants constructed a few years ago that have strong cash positions and reasonable debt levels will make it’
Why would they if the cost of feed stock makes their product unprofitable?
If the price of gas ever comes down they wont be able to give this stuff away.
When things get tough a lot of this kind of silliness will just go away.
Ah yes, the glorious five-year plan. Remind me what country I'm living in?
If, as I fear we are headed for $4 and $5 a gallon gasoline, these plants should do OK. Also, if they can ever get cellulosic ethanol going that will make a big difference. I saw an interesting piece about butanol as a possible fuel, but have not seen anything recent about how that is progressing. According to the article a better, more energy efficient product than ethanol.
Furthermore, I am afraid that oil which hit $111 is unlikely to go down any time soon as the new USO oil ETF is driving the price higher than it should be (about 20%more). These Exchange Traded Funds (ETF) are mechanisms for large institutional investors to put their money into oil. They have to buy in lots of $4 million or more, and in the past year or two their investment in oil has jumped from $9 billion to more than 1/4 trillion dollars. This is really unnerving.
They got their CO2 reduction all right... from however many millions starve due to their smarmy, murderous, self righteousness.
Oh no, this is terrible; the pols must do something - maybe rush a federal program in place to subsidize (further) those unfortunate people.
I’m kinda tired of the US , subsidizing the poor.
The poor should ask OPEC for a handout, not the US.
Translation: A non-competitive industry.
LOL! Sorry to take so long to answer your question, but I had to call the local opium den for a truthful response... The guy that I talked to, had a really strong Asian accent, but I think he said: "So solly! Dat is most honolable family seclet" and then hung up on me!!!
Hey! I tried!
In the mean time, speculative buying of oil futures has been driving inflation on a global scale.
The next bubble will bust by the end of the year.
Don’t you wonder how so many mental handicapped people got elected to office.
Regular folks KNEW that this fuel would 1) raise the price of most food products 2) would be too expensive to produce
But ya know they will keep beating this dead horse instead of drilling in Alaska
...He said plants that were already constructed and are managed well should be fine.
Isn't that true about anything?
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