Plenty of ethanol available despite Midwest flooding - Trade Only Today

Plenty of ethanol available despite Midwest flooding

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Ethanol stocks are in good shape, despite problems associated with flooding, according to Bob Dinneen of the Renewable Fuel Association. In 2007, 139 ethanol plants in 21 states produced a record 6.5 billion gallons of ethanol — an increase of more than 130 percent since 2003.

Citing data from the Energy Information Administration, he says ethanol stocks totaled 11.4 million barrels at the end of March. This means nearly 500 million gallons of ethanol are in storage and available to gasoline blenders.

Dinneen estimates up to 400 million gallons of production capacity could be temporarily offline in Iowa.

“That means more than 95 percent of all ethanol production capacity is unaffected by flooding,” he says.
Scott Faber from the Grocery Manufacturers Association acknowledges there are many factors contributing to the sharp increase in U.S. and global food prices, but, he says, “the only factor affecting food and feed prices that is under the control of Congress is the food-to-fuel mandates and subsidies diverting food into fuel production.”

Ultimately, opponents of corn-based ethanol say there are other alternatives to meeting the country’s energy needs that don’t involve diverting corn from food supplies.

“We believe that Congress should accelerate the development of cellulosic ethanol derived from crop wastes, grasses and other materials that do not increase food prices, hold significantly greater promise to displace traditional sources of gasoline, and could have less impact on the environment,” Faber says.

The Department of Energy says ethanol produced from cellulose has the potential to cut life cycle greenhouse gas emissions by up to 86 percent relative to gasoline.

“Switchgrass might be a viable solution,” NMMA’s Thom Dammrich says.

“Rightly, we’re looking at alternative forms of energy, like solar and wind power,” Dammrich adds, “but we also need to look at more drilling to maximize our energy needs. There is no silver bullet to America’s energy problems. We need to pursue all these alternatives.”

Norm Schultz echoed those sentiments in his Trade Only blog. He advocates going after known oil and gas reserves, employing cost-effective horizontal drilling, and using new low-cost, environmentally friendly technologies for processing the large U.S. and Canadian oil sands reserves.

While some believe using cellulose to make ethanol will solve the problems of rising food prices and more pollution, Schultz says ethanol in any form will not be good for the marine industry.

With cellulose, he says, “almost anything grown can be chopped down and used to make ethanol, and therein lies the scare. I see the corn problems ending, but I don’t see, for the marine industry, the ethanol issue ending.”

Dammrich says marine engines can handle gasoline with as much as 10 percent ethanol. Also, the industry has been successful in getting a provision added to the Energy Independence and Security Act of 2007 that directs the EPA to conduct a rigorous review of ethanol and other biofuels if states request a waiver to increase the percentage of ethanol.

However, Schultz says this does not easy his mind on the issue.

“There will be a push from the corn side and the cellulose side to increase ethanol as a percent, and that means more problems for marine engines,” he says.

This article originally appeared in the August 2008 issue.

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