Home / News / Business news / More expensive ethanol?

More expensive ethanol?

DANIEL LOOKER 08/23/2011 @ 6:05pm Business Editor

Some in the ethanol industry have been saying they can survive without the federal 45 cent-a-gallon tax credit that expires this year. The Renewable Fuel Standard 2 still requires the blenders to use about 13 billion gallons of starch-based ethanol this year.

But in recent years the industry has expanded slightly ahead of the RFS2 mandate and still found markets because the tax credit and fuel markets made ethanol cheaper than gasoline.

But the loss of the credit, known as the volumetric ethanol excise tax credit (VEETC) could be challenging, Ron Lamberty, Senior Vice President for the American Coalition for Ethanol said at the group’s annual meeting in Des Moines, Iowa, Tuesday.

Lamberty showed a slide comparing recent spot prices in one market for unleaded gasoline and  for blends of ethanol. The total product cost (including state and federal taxes) was $3.2315 per gallon for unleaded and $3.1902 for 10% ethanol (E10).  Take away the 4 ½ cent savings from VEETC in E10, and the price of E10 is slightly higher at $3.2352 per gallon.

“I’m positive life is going to become very interesting without VEETC under these conditions,” Lamberty said.

The value of ethanol as an octane enhancer for fuels could become more important, he said.

And marketing the coproduct of distillers grains for livestock feed and other uses may become more significant.

“Maybe the day will come when we all make livestock feed products and sell the ethanol as a co-product, I don’t know,” Lamberty said.

Right now, ethanol exports are an escape valve for an oversupply of U.S. ethanol, according to another speaker, Chad Martin, CEO of Eco-Energy, Inc., a Tennessee-based marketer of biofuels.

The U.S. is on track to export 900 million gallons of ethanol this year, he said; Production this year is expected to reach 13.9 billion gallons and “900 million gallons would have had to find a home in the U.S,” he said. The top five importers of U.S. ethanol are Brazil, Canada, the Netherlands, the United Arab Emirates and the United Kingdom.

CancelPost Comment

The consumer will pay? 08/24/2011 @ 2:35pm We can't afford to lose one gallon huh? Based on the article, we could have lost 900 million this year and had plety for domestic supply.....

Report Abuse Reply

The consumer will pay. 08/24/2011 @ 1:51pm You can be assured that the consumer will pay for the loss of the subsidy in higher gasoline prices. We have embedded ethanol into our liquid fuel supply to the extent that we cannot afford to lose one gallon of that supply.

Report Abuse Reply
MORE FROM DANIEL LOOKER more +

Senate Committee Takes on Rail Delays By: 09/17/2014 @ 6:06pm The Senate Commerce Committee passed a bipartisan bill Wednesday that gives the Surface…

Find That FSA Letter Soon By: 09/11/2014 @ 1:23pm Remember that letter you got from your local Farm Service Agency office in late July or early…

Planning for Winter’s Farm Program Sign-up By: 09/10/2014 @ 6:13pm With cash prices already well below some triggers for payments under the 2014 Farm Bill, sign-up…

MEDIA CENTERmore +
This container should display a .swf file. If not, you may need to upgrade your Flash player.
Soil Health at Farm Science Review