Ethanol industry, facing more bankruptcies, wants automakers to produce more flexible-fuel vehicles

"Ethanol producers want to use a bailout of the auto industry to boost production of cars that can run on higher blends of the corn-based fuel," writes Philip Brasher of The Des Moines Register. The corn ethanol industry has been struggling due to fluctuations in corn prices following last summer's flooding in the Midwest.

Many in the industry see the best way to ensure continued growth is by increasing the number of flexible-fuel vehicles automakers produce. FFVs "are equipped to run on a wide range of blends of ethanol and gasoline," Brasher explains. "Under federal law, conventional vehicles can legally run on no more than 10 percent ethanol." Many advocates of the corn-ethanol industry insist that if automakers receive a bailout, it must include stipulations requiring automakers to make a firmer commitment to FFV production and alternative fuel use.

"General Motors, Ford and Chrysler are increasing their production of cars and trucks that can run on as much as 85 percent ethanol, or E85," writes Brasher. "But ethanol producers fear there won't be enough of those vehicles on the road to consume all of the biofuel that is going to be produced in coming years under the government's usage mandates."

Many in the ethanol industry say federal incentives are crucial if the industry is "to stay economically viable and to develop new forms of biofuels from nongrain feedstocks such as crop residue, wood and other sources of plant cellulose," adds Brasher. (Read more)

VeraSun, one of the country's largest ethanol producers, was forced to declare bankruptcy in October, a sign of looming trouble for the industry. "VeraSun's bankruptcy comes amid predictions of more bankruptcies and consolidations as the ethanol industry struggles with falling prices, lower demand and volatile markets," reports Dan Pillar of the Register. "Omaha investment banker Mark Lakers predicted Monday at an agricultural bankers convention in Des Moines that as many as 40 ethanol plants might be in bankruptcy by early next year." (Read more)