Ethanol producers have been enjoying profits since mid-2009, but as the industry approaches the "blend wall," prices are beginning to drop. The blend wall is the theoretical limit of the total amount of ethanol that can be mixed with gasoline. Most gasoline can contain no more than 10 percent ethanol. Dan Piller of The Des Moines Register reports that ethanol production is running at about 1 billion gallons per month nationally and the industry has almost reached the saturation point for the 130 billion gallons of gasoline that U.S. motorists will buy this year. The saturation point has dropped ethanol prices about 30 to 40 cents per gallon over the last month in Iowa, the country's No. 1 producer.
Ethanol prices usually increase in tandem with crude oil and gasoline, Piller reports. But as the wholesale price for gasoline reached an 18-month high at $2.32 per gallon last week, ethanol prices continued to drop. "You tell me what's happening," said Monte Shaw, executive director of the Iowa Renewable Fuels Association. "The blenders should be buying more. But demand is off." The return of several ethanol plants to full production after being idled last year and the addition of two more 100 million-gallon plants has pushed production to 98 percent capacity, which is driving down prices.
Industry officials want the government to make the blend wall recede by allowing gasoline to contain 15 percent ethanol. In November the Environmental Protection Agency delayed its decision until mid-2010 for more study of the increase's likely effect on automobiles and small engines. Even with a 15 percent limit, some fear the industry won't see an immediate rebound in demand. "The E15 is simply an allowable limit," Shaw told Piller. "It isn't a mandate." (Read more)
No comments:
Post a Comment