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Ethanol At Turning Point
By Mr Ethanol | May 31, 2008
Corn prices are soaring and the quest for alternatives to foreign oil is gaining momentum, but ethanol refiners are finding their network of investors reacting harshly as margins shrink amid a global.
Chicago Tribune:
When Mark Marquis started building his $180 million ethanol plant along the Illinois River, turning corn into fuel seemed like a license to print money. Ethanol enjoyed the unflinching support of the federal government, making it the preferred alternative to foreign oil.
But as Marquis Energy recently loaded its first batch of fuel onto a barge, ethanol refiners found themselves facing a vicious backlash.
Corn climbed past $6 a bushel in the past year, threatening to expose plants to losses as ethanol failed to match that increase. Rising food prices led Congress to consider halting its aggressive promotion of ethanol. And Wall Street is brutally punishing the few publicly traded players, as investments in new refineries begin to slow.
“We have a modest margin at this point, enough to stay in business,” Marquis said. “But there’s not enough margin to encourage the construction of any new ethanol plants. The investors want a significant margin, not a modest one.”
Ethanol has arrived at a crossroads, one that will decide which fuels keep the American economy running. Unless ethanol start-ups generate significant returns, the industry could struggle to continue developing a network of refineries and filling stations to effectively challenge a century-old petroleum culture. If there is one common element required for ethanol, hydrogen or electricity to replace oil, it is profitability. Carry on reading.
Topics: Agriculture, Ethanol |
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