Agriculture Secretary in Talks to Raise Ethanol Blend

Posted on February 8, 2009. Filed under: Advanced Biofuel, Blender's Tax Credit, Field-to-Pump | Tags: , , , , |

Agriculture Secretary in Talks to Raise Ethanol Blend

Bloomberg Press

February 6, 2009

By Tina Seeley

The Agriculture Department is in discussions with the Environmental Protection Agency about raising the amount of ethanol blended into the U.S. gasoline supply, U.S. Agriculture Secretary Tom Vilsack said.

About 21 percent of the U.S. capacity for ethanol production is idle, according to ethanol-maker Archer Daniels Midland Co. VeraSun Energy Corp., the second-largest U.S. ethanol maker, filed for Chapter 11 bankruptcy protection in October as an industrywide expansion of production facilities outpaced demand.

“I do think it’s important for us to look for strategies to make sure the infrastructure of the ethanol industry is preserved, because it is a key component to this new energy future the president’s laid out,” Vilsack, a former Democratic governor of Iowa, said today in an interview with Bloomberg News in Washington.

Ethanol demand has fallen as gasoline use dropped since last summer. By increasing the blend, demand for ethanol will be boosted even as gasoline use falls. The U.S. recession exacerbated an ethanol supply glut as demand for transportation fuels dropped.

Ethanol futures prices in Chicago touched a five-week low this week. Denatured ethanol for March delivery rose 4.5 cents, or 2.9 percent, yesterday to $1.597 a gallon on the Chicago Board of Trade. Futures have fallen 23 percent in the past year.

“We have been talking to folks at EPA, as they look at the blend-rate issue,” Vilsack said. “That may be one way in the short term to create new opportunities.”

The EPA in November said it would require gasoline to contain a 10.2 percent blend of biofuels this year.

Vilsack said the discussions so far haven’t included “specific numbers. We’ve just begun the conversation.”

High Priority

“This is a very high priority for the ethanol industry so it would be a welcome development if they could secure a higher blend rate,” Mark McMinimy, an analyst with Stanford Group Co. in Washington, said in a telephone interview.

“I’m not sure how much difference it could make to profits margins in the short term,” he said.

Ethanol producers have faced declining margins from a competitive market, coupled with low oil prices and relatively high prices for corn, used to make ethanol, said McMinimy.

“That dynamic has to be changed,” he said.

Gasoline futures prices have dropped 43 percent in the last year on the New York Mercantile Exchange. Gasoline demand during the past four weeks was 2.4 percent below the same period last year.

Poet LLC, the largest ethanol producer, said yesterday it may buy shuttered distilleries owned by VeraSun.

No Change

Vilsack also dismissed the idea of changing the congressionally mandated renewable fuels standard, which requires 11.1 billion gallons of biofuels such as ethanol to be used in the U.S. this year.

“I don’t think we should be changing anything until we absolutely have to,” Vilsack. “We’ve laid the markers down there and I think we have to work hard to meet it.”

To contact the reporter on this story: Tina Seeley in Washington at tseeley@bloomberg.net.

About Renergie

Renergie was formed by Ms. Meaghan M. Donovan on March 22, 2006 for the purpose of raising capital to develop, construct, own and operate a network of ten ethanol plants in the parishes of the State of Louisiana which were devastated by hurricanes Katrina and Rita.  Each ethanol plant will have a production capacity of five million gallons per year (5 MGY) of fuel-grade ethanol.  Renergie’s “field-to-pump” strategy is to produce non-corn ethanol locally and directly market non-corn ethanol locally. On February 26, 2008, Renergie was one of 8 recipients, selected from 139 grant applicants, to share $12.5 million from the Florida Department of Environmental Protection’s Renewable Energy Technologies Grants Program.  Renergie received $1,500,483 (partial funding) in grant money to design and build Florida’s first ethanol plant capable of producing fuel-grade ethanol solely from sweet sorghum juice. On  April 2, 2008, Enterprise Florida, Inc., the state’s economic development organization, selected Renergie as one of Florida’s most innovative technology companies in the alternative energy sector.  On January 20, 2009, Florida Energy & Climate Commission amended RET Grant Agreement S0386 to increase Renergie’s funding from $1,500,483 to $2,500,000. By blending fuel-grade ethanol with gasoline at the gas station pump, Renergie will offer the consumer a fuel that is renewable, more economical, cleaner, and more efficient than unleaded gasoline.  Moreover, the Renergie project will mark the first time that Louisiana farmers will share in the profits realized from the sale of value-added products made from their crops.

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One Response to “Agriculture Secretary in Talks to Raise Ethanol Blend”

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We need to utilize everything in out power to reduce our dependence on foreign oil including using our own natural resources.OPEC will continue to cut production until they achieve their desired 80-100. per barrel. The high cost of fuel this past year seriously damaged our economy and society. Oil is finite. We are using oil globally at the rate of 2X faster than new oil is being discovered. We need to take some of these billions in bail out bucks and bail ourselves out of our dependence on foreign oil. Jeff Wilson has an eye opening new book out called The Manhattan Project of 2009 Energy Independence Now. He explores our uses of oil besides gasoline, our depletion, out reserves and stores as well as viable options to replace oil and the pros and cons of each. Oil is finite, it will run out in the not too distant future. WE need to take some of these billions in bail out bucks and bail America out of it’s dependence on foreign oil. The historic high price of gas this past year did serious damage to our economy and society. WE should never allow others to have that much power over our economy again. I wish every member of congress would read this book too. http://www.themanhattanprojectof2009.com There could be no better investment in America than to invest in America becoming energy independent. Create cheap clean energy, millions of badly needed new green collar jobs, and reduce our dependence on foreign oil all in one fell swoop! America needs to wake up and smell the coffee.


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    Renergie created “field-to-pump," a unique strategy to locally produce and market advanced biofuel (“non-corn fuel ethanol”) via a network of small advanced biofuel manufacturing facilities. The purpose of “field-to-pump” is to maximize rural development and job creation while minimizing feedstock supply risk and the burden on local water supplies.

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