Here in 'ethenol' country, most of us will need to wean ourselves off the ethenol habit, and go back to 'regular' gas...or pay the full price for the cost of brewing that "green" gas that the environmentalist yahoos are in favor of. It was a nice government "freebie", but time for that industry to stand on there own, if they can. Maybe the industry will concentrate harder on the cellulosic recipe, rather than the corn menu?
Shocker: ND Ethanol Plant Closing After Expiration Of Subsidies
Rob Port • February 6, 2012
The Archer Daniels Midland ethanol plant in Walhalla, ND was always a marginal enterprise existing as it did far north of the nation’s traditional “corn belt.” So it’s not surprising that the plant would be shuttered as demand for ethanol plummets after Volumetric Ethanol Excise Tax Credit was allowed to expire by Congress.
Feb 6 (Reuters)
– Archer Daniels Midland on Monday said it will close its ethanol plant in Walhalla, North Dakota, marking the first such closure for the agribusiness giant that last month announced the elimination of 1,000 jobs.
The plant will permanently close in April, resulting in the loss of 61 jobs. ADM will supply its customers with ethanol and animal feed products from its six other ethanol plants in Iowa, Illinois, Nebraska and Minnesota, company spokeswoman Jessie McKinney said.
ADM claims that the closing had nothing to do with the expiration of the VEETC, but that’s a little hard to believe given the impact that has had on the ethanol industry as a whole:
The Volumetric Ethanol Excise Tax Credit, or VEETC, was a tax incentive providing 45 cents per gallon to blenders who mixed ethanol with gasoline. The credit expired at the end of 2011.
Ethanol futures slumped to the lowest levels in a year at the Chicago Board of Trade in the wake of the credit expiration, while ethanol inventories last week increased to 20.95 million barrels, a record high, the Energy Information Administration said.
About 40 percent of the U.S. corn crop is expected to be used this year in ethanol production, according to the U.S. Department of Agriculture.The ethanol industry was subsidized in every way an industry can be subsidized. Production of ethanol is subsidized. Consumption of ethanol is subsidized. And the whole domestic ethanol market is protected from competition from foreign ethanol producers by prohibitive trade tariffs.
Now two of those subsidies, the subsidy for consumption (the VEETC) and the trade barriers between the US markets and foreign ethanol, have expired. All that remains are subsidies for ethanol production, and as we can see from the article above those subsidies are flooding the market with a glut of ethanol in the absence of consumption subsidies and the new access to imported ethanol.
Of course, federal (and in some areas state) mandates for ethanol production remain in place, but the real solution for the ethanol markets is to end all subsidy and mandates and let consumers decide whether or not there is really a market for ethanol.
My guess is that there is no market for ethanol. Because the only market demand ethanol producers have ever serviced is one created by the government to satisfy green/agriculture lobbyists.