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Bush’s Energy Obstacle: Ethanol

Brian Wingfield, Forbes
…Ethanol consumption cuts into gasoline consumption, and if production doesn’t keep up, this would spell higher prices for the alternative fuel. And oil companies, which purchase the overwhelming majority of this renewable fuel type, are especially attuned that this would eat away at their profits. Although the industry is careful not to oppose the president’s plan, it has cast doubt on whether Bush’s goals are even feasible because the technology to produce such vast amounts of ethanol is not currently available.

Red Cavaney, president and chief executive officer of the American Petroleum Institute (API), the industry group that represents companies like ConocoPhillips, ExxonMobil, and Anadarko Petroleum , believes that the “flaw, or the twist, with the president’s plan” is that it is too reliant on cellulosic ethanol production after 2012. And right now, the technology to produce this fuel type on a widespread scale simply does not exist.

“To get the big numbers, you’re going to have to bring on cellulosic ethanol,” he says. This type of ethanol refers to fuel made from waste, wood, plants and other products, as opposed to the now widely produced corn ethanol. “There is no one in the world who has a commercial plant up to producing cellulosic ethanol.”
(21 Feb 2007)

Corn Growers’ Ron Litterer talks high corn prices, Bush admin’s farm bill proposal

Monica Trauzzi, E&E TV
As President Bush makes a push for increased use of biofuels and alternatives, industry is responding by increasing production of corn and forging ahead with research and development of cellulosic technology. But will high corn prices turn Americans off to the president’s alternative energy agenda? During today’s episode of OnPoint, Ron Litterer, first vice president of the National Corn Growers Association and an Iowa corn grower, discusses the issue of corn prices and talks about ethanol subsidies and the ethanol import tariff. Litterer addresses whether or not the administration’s farm bill is adequate in order to meet the aggressive targets set for alternative energy use.

Ron Litterer: … the price structure has changed dramatically in the last six months for commodities. And part of that is really coming from ethanol and the demand for corn. And really, what that is doing is driving up the prices of all commodities, crop commodities.

…we think the incentives that are in place today are pretty adequate. The Blender’s Credit which encourages blenders to utilize ethanol in their gasoline, we think, is important and we want that to continue. We also believe that in the future more research is going to have to be done for cellulosic. And we think corn has a role in that also because we do have corn stover and we have the fiber part of the kernel that we’re not utilizing today which we think can greatly increase the efficiency of ethanol production from corn.

…Monica Trauzzi: You mentioned the high price of corn earlier. Why is it so high and when will it come down?

Ron Litterer: Well, first of all, I think you need to look back. Six months ago — we’ve had two dollar corn. And two dollar corn relative to history is really not very high, it’s low. In fact, we’ve had much higher prices in the past. But we’ve had excellent production in the last few years and so we’ve had actually a surplus of corn driving down the market price. Now when the ethanol demand has come on scene like it has, in a very dramatic fashion, with high oil prices really driving a lot of that, then the corn price is responding. And so even though they have come up dramatically, relative to history, you know, maybe they’re not as high as what people are really thinking they are relative to history. So we think that the corn price will moderate to a point. It’s going to be at a higher level or threshold than maybe it’s been in the past, but maybe not as high as it currently is.
(21 Feb 2007)

Latin America prepares for prosperity, sparked by biofuel boom

Julie Watson, The Scotsman
INTERNATIONAL maize prices, driven up by the burgeoning US ethanol biofuel industry, have soared to their highest in a decade, making farmers in Mexico, Brazil and Argentina feel as if they have just won the jackpot.

Maize [corn] languished at about £1 a bushel for years, before the ethanol boom sent the price rocketing to £2.26 this month.

…Brazil and Argentina, the western hemisphere’s biggest maize exporters after the US, are expecting near-record harvests in 2007.

Meanwhile, Mexico is also in the top ten. Farmer Rogelio Zacaula grows his newly valuable crop in the shadow of the Orizaba volcano, and he’s a man in a good mood.

“I have never seen prices like this,” said Mr Zacaula, 66, who has been growing maize since he was ten. “We suffered for so many years, years in which no-one even wanted to buy our crop – until now.”

Since 1994, Mexico’s rural sector has lost an estimated 1.6 million jobs, prompting many farmers to seek work in the US. But Mr Zacaula says many of his fellow maize farmers are sticking around now while the money is good.