The Ethanol Gold Rush? – ethanol

The recent State of the Union address by Pres. Bush has sparked much debate about the production and use of ethanol in the US to help in the effort to reduce our foreign oil importation. It would seem thought that many analysts think there is no way we can produce the amounts of biofuel that the President calls for in his speech.

Specifically, the President’s call to increase the supply of alternative fuels to 35 billion gallons by 2017, has drawn the most reaction.

‘We heard a huge number from the President, and the first reaction is no way is that possible,’ at least under current circumstances, said Jacob Golbitz of HighQuest Partners in a recent UPI report. He added that even in a best-case scenario the U.S. would only be able to produce 16 billion gallons of biofuel per year by 2015, assuming that most of the biofuel would be corn-based ethanol.

A recent Bloomberg report said Exxon Mobil Corp. considers ethanol “irrelevant” as a solution to an addiction that forces the U.S. to import two-thirds of its oil. No “viable, meaningful business proposition” exists for Exxon in ethanol, according to Stuart McGill, Exxon’s senior vice president.

There is strong indication that the bloom is off on ethanol plant production and that even for plants that are on the board and ready to be built there will not be profitability in them and thus the market will suffer. Last year the feeling was that anyone could make money producing ethanol but no so now.

The supply and price of corn may play a prominent role in the future of U.S. ethanol production. U.S. Undersecretary of Agriculture Thomas Dorr said at a clean fuels finance conference in London reported by Bloomberg, “There’s clearly a terrific demand on corn right now. There is no question that the next couple of years are going to be painful.”

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Source: Ethanol