Is the ethanol industry tanking?
Ethanol's future as alternative fuel isn't looking so bright right now. Goldman Sachs has abandoned analysis of the industry and the largest publicly traded producer has filed for bankruptcy protection. Steve Henn has more.
A tank holding ethanol at a fuel tank farm in the Global Petroleum facility in Boston, Mass. (Joe Raedle/Getty Images)
More on The Economy, Agriculture, Oil, America's Financial Crisis
TEXT OF STORY
Kai Ryssdal: This next items's going to resonate a little bit, seeing as how oil closed below $64 today. It wasn't so long ago that ethanol was being touted as a possible solution to the energy crisis. And the government still does require states to add it to gasoline. But today, Goldman Sachs told clients that its analysts aren't going to cover the industry anymore. That comes on the heels of the largest publicly traded ethanol company in the country filing for bankruptcy. Of the handful of stand-alone ethanol companies that there are, shares of some of them are trading for as little as $1 a share.
From the Marketplace Sustainability Desk, Sarah Gardner reports now on why ethanol's in a pinch.
Sarah Gardner: Goldman analysts didn't return our calls by deadline but told clients today they believe the outlook for ethanol companies is "challenged." The worst is VeraSun, the company that filed for bankruptcy on Friday. VeraSun produces about 7 percent of all U.S. ethanol made from corn. The company bet wrong on corn prices this summer. Ag economist Chad Hart at Iowa State University
Chad Hart: They thought corn prices were going even higher, so they booked a lot of corn at that high price ahead of time. So they're still paying the prices we saw this summer, even though corn prices have dropped.
Prices dropped on better than expected harvests and falling energy costs. And falling oil prices have forced ethanol producers to cut their prices, as well. The credit crunch isn't helping either. Dan Basse, president of the research firm AgResource, says only the strongest will survive.
Dan Basse: You're going to find consolidation in the industry, more capital still coming in, but it's going to be the older capital -- the ADMs of the world, the Cargills and others that are going to be picking up these firms that are too small and poorly capitalized. The firms will continue, it's just with another name on the front door.
Analysts say don't count corn ethanol out. Despite controversy over its eco-benefits, the federal ethanol mandate still exists and requires an increasing amount of the biofuel be produced in coming years. Republican John McCain has opposed that mandate, but Democrat Barack Obama has told farmers he's all for it.
I'm Sarah Gardner for Marketplace.
Comments
Comment | Refresh
03/09/2009
This story reminds me of,some individuals concerned with,using corn as a fuel,to produce ethanol.They said it would take corn out of the food supply.Well,it turns out that,fermwented corn byproducts have a higher protein,and higher fat,content,than raw corn.Genetically modified corn,is much better as a cattle feed after it's fermented,which makes cattle gain weight faster,producing more food,of better quality.
Maybe not as, good as grass,but better than raw corn.
Not,only that,but small farmer's,and/or cattle rancher's,can use corn,for fuel,to run their operation's,as well as suppliment,animal feed.
This,is a win-win for the farmer/and or rancher,who can grow their own fuel,and animal feed and make money doing it.
Even,the animal waste,can be put into use in the production of methane gas,and used as fuel,to run a electric generator,and whatnot, food/fuel produced locally.
Fact,is most corn produced in the us is, not fit for human consumption. With all the genetic modification of our food.
With food and fuel,concentrated in only a few hands,we should farm on a smaller scale.Farms should be spred,so we can grow more of our food,and fuel locally.
look up "alcohol as a gas" "alcohol research permaculture"
Smaller is better!
Post a Comment: Please be civil, brief and relevant.
Email addresses are never displayed, but they are required to confirm your comments. All comments are moderated. Marketplace reserves the right to edit any comments on this site and to read them on the air if they are extra-interesting. Please read the Comment Guidelines before posting.
You must be 13 or over to submit information to American Public Media. The information entered into this form will not be used to send unsolicited email and will not be sold to a third party. For more information see Terms and Conditions and Privacy Policy.