Ethanol output faces sharp cuts

Financial Times ^ | 061508 | Sheila McNulty

[Fred]

Large numbers of small to mid-size ethanol producers could shut down over the coming months after flooding across the US midwest caused irreparable damage to the year’s corn crop and pushed corn prices up sharply, says a report by Citigroup.

At least five small to mid-size ethanol plants had shut down in recent days, said David Driscoll, Citigroup’s US food manufacturing analyst, in an equity research report.

The widespread flooding, on a scale the region has seen only twice in the last 25 years, had forced down ethanol margins over the past 10 days, leaving small and mid-sized ethanol producers running at substantial losses against cash costs, Mr Driscoll said.

“As a result of the rapid margin deterioration, we believe that many, if not all, of the small to mid-size producers will be forced to shut down over the next few months.” This could result in as much as 2bn-5bn gallons of ethanol going off-line in the next few months, he said.

Mr Driscoll said corn – now selling at more than $7 a bushel, compared with about $4 a year ago – meant extreme tightness in the corn market, suggesting the increased potential for political intervention in ethanol markets.

The intervention would be aimed at cutting ethanol output and bringing corn to the food market. Corn prices have risen by $1 in the last 10 days.

“Just the spectre of political intervention will likely cause the market to question the magnitude of future biofuel growth, adding further pressure on valuations across the ethanol industry,“ Mr Driscoll said.

This has led Citigroup to reduce its earnings-per-share estimates for ethanol companies and drop ratings to “sell” on those that are strictly into ethanol production, including VeraSun Energy and BioFuel Energy.

[steve86]

Notice the bill has the date of 2006. It had a two year delay before taking effect. We are there now.

[az_gila]

....The widespread flooding, on a scale the region has seen only twice in the last 25 years,....

---

Didn't the DBM media just tell us this was a once in a lifetime flood caused by Globul Warming?

[Fred]

The sugar ethanol is also harming the environment far more than helping

Ethanol Escapade: Brazil Sugar Producers, Criticized, Seek Sweeter PR - WSJ

Amid mounting criticism that Brazil’s ethanol industry is felling forests to grow sugar for fuel, the industry is fighting back to save its reputation.

Last week, Unica, Brazil’s ethanol lobby, organized a trip intended to improve its image with reporters, mostly Europeans but including yours truly too.

Brazil wants Europe to become a major importer of Brazilian ethanol. But Stavros Dimas, the European Union’s environment commissioner, wants guarantees from Brazil that the ethanol it sells to the EU isn’t hurting the Amazon or Brazilian workers.

Unica’s counterattacks began in January, after Bloomberg TV ran “Deadly Brew - The Human Toll of Ethanol,” which showcased the miserable conditions many cane cutters work under. Unica president Marcos Jank said the report was based on “isolated cases.”

The Amazon is the hotter issue. Having ratified the Kyoto Protocol and taken up biofuels, Europeans don’t want to see the world’s largest rainforest disappear because of energy crops.

Just a few days before European reporters arrived, government satellite imagery showed that 1,123 square kilometers (the size of Rio de Janeiro city) were carved out of the Amazon in April alone. Private sugarcane milling companies were fined $4.8 million for burning sugarcane leaves at the wrong time of day, polluting the air. And on Thursday, auditors for Brazil’s labor ministray found 52 migrant workers living without beds or bathrooms in Sao Paulo.

Unica flew with reporters to the privately held Santelisa Vale sugarcane company. Santelisa Vale intends to modernize its production, which means mechanizing production. Asked by his visitors what will happen to all those cane cutters, Santelisa CEO Anselmo Rodrigues explained that while some will be trained to drive harvest combines, most will be laid off.

That will help the company in two ways. Cutting cane by hand requires burning it, and burning it pollutes, so mechanization will help the environment, Mr. Rodrigues said. And getting rid of most of the cane-cutters will get rid of most of the company’s labor-rights critics. That will leave just one main PR battle for Unica: convincing Europe it’s not destroying the rainforest to make green fuel.

[TexasGunLover]

I was speaking about E85 being more expensive than Regular Unleaded. All gas in Texas also has 10% ethanol. I was saying I can’t imagine why anyone would buy E85...

[headstamp 2]

Yep, I’m using Startron as a preventive. Works well so far but waht a PIA for older fiberglass gas tanks this alcohol crap is.

http://mystarbrite.com/startron/

[thackney]

We forget that we get most of oil from Canada and Mexico

We get most of our imported oil from OPEC. Canada is the largest single supplier, but Saudi Arabia is second. Mexico production and exports have been falling for some time.

http://tonto.eia.doe.gov/dnav/pet/pet_move_impcus_a2_nus_epc0_im0_mbblpd_m.htm

[headstamp 2]

“What’s interesting about this is that Katrina although beat the snot out of the Gulf, with the resultant of some offshore platforms shut down, but there was less appreciable effect to our country’s gasoline supply than what floods in the Mid-West will have in disrupting Gorthenol production.”

Another thing I read also was that there was virtually no oil spillage during or after the storm out in the Gulf. That should put the lie to the greenies about the environmental hazards of drilling offshore.

[driftdiver]

You’re sorta right. I looked it up

http://www.eia.doe.gov/pub/oil_gas/petroleum/data_publications/company_level_imports/current/import.html

Crude Oil Imports (Top 15 Countries)

CANADA
SAUDI ARABIA
MEXICO
NIGERIA
VENEZUELA
IRAQ
ANGOLA
ALGERIA
BRAZIL
KUWAIT
ECUADOR
COLOMBIA
CHAD
RUSSIA
LIBYA

[thackney]

9 of the 15 top importers belong to OPEC. They account for 60% of the oil imported into the US 2008 year to date for this list.

If you go to the link I provided from the same source (EIA) it lists all importers, not just the top 15. OPEC still supplies more, 57% of the total crude oil imported. But your list includes most of it.

[USFRIENDINVICTORIA]

“The right to file lawsuits on behalf of a supposed injured party is a recipe for gridlock and economic stagnation. Yet, I have not heard anyone even approach the 3rd party litigation issue.”

That's an excellent point! The financial incentives for filing lawsuits are huge — especially for the lawyers in a class action.

[steve86]

You never know what to believe on these additive claims. This one, for example, from PRI (somewhat a Star Tron competitor) claims Star Tron is just mineral spirits. PRI has a good reputation but who knows.

http://www.priproducts.com/tests.htm

[steve86]

"The third example is of a fuel discovered in storage on a mining site near Green River, Wyoming. Records confirmed the fuel was in storage 32-years. This fuel was treated with PRI-D, and successfully used instead of being discarded as waste fuel."

I hope this is true. I had been worrying about my 5 or 6 year old diesel.

[SunkenCiv]

Thanks L for that mail message.

EU protests U.S. aid for fuel producers
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http://www.freerepublic.com/focus/f-news/2015711/posts

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http://www.freerepublic.com/focus/f-news/2031775/posts

[Kevin J waldroup]

Coskata Inc
http://www.coskata.com/
Anaerobic Organisms Key to Coskata’s Rapid Rise
Not many people were familiar with Coskata Inc. when General Motors Corp. announced its partnership with the Chicago-based ethanol technology company in January. Since then, Coskata’s business has accelerated at a rapid pace, making thermochemical ethanol production from biomass a near-term reality.
By Jessica Sobolik
http://www.ethanolproducer.com/article.jsp?article_id=4268

A Column of Support
What started as a student research project at Augsburg College may become a major change in the biodiesel industry. A team of scientists and engineers have turned a tool for purifying and separating chemicals into a six-second process for turning the poorest quality vegetable oil into biodiesel. The first commercial-scale plant using the process should come on line this year.
By Jerry W. Kram

Augsburg College, tucked away in downtown Minneapolis, probably isn’t the first institution that comes to mind in a discussion of cutting-edge scientific research. However, the school has a stellar reputation as a leading undergraduate educational institution. It counts among its alumni a Nobel Prize winner in chemistry—Peter Agre, class of 1970, Nobel Laureate, 2003—something many larger institutions cannot brag about. This level of excellence in the sciences has led to an innovation which may change the face of the biodiesel industry.
http://www.biodieselmagazine.com/article.jsp?article_id=2381

FOR MORE INFORMATION:

Please contact Dave Wendorf for more information regarding this exciting new technology. McNeff Research Consultants, LLC is the exclusive intellectual property licensing company for the Mcgyan biodiesel production process. Ever Cat Fuels, LLC is building a 3 million gallon per year demonstration plant incorporating the Mcgyan biodiesel production process. SarTec Corporation is the developer of the Mcgyan biodiesel production process.
http://www.mcgyan.com/