Oil Crosses Over Into The Ethanol Biz
The Associated Press:
If federal renewable fuel mandates require ethanol to be mixed into gasoline, the nation’s largest independent oil refiner figures it might as well just do it itself.
The ethanol industry is under duress partly due to overcapacity and biorefineries can now be had for pennies on the dollar.
Valero Energy Corp. became the first conventional energy company to test the waters last week, bidding $280 million for five ethanol plants owned by VeraSun Energy Corp., which is now under bankruptcy protection.
It would be the largest ethanol buyout in U.S. history in terms of production capacity, according to Raymond James & Associates.
Cory Garcia, a senior research associate with Raymond James, said it was only a matter of time before the petroleum industry got into ethanol, much like agribusiness giant Archer Daniels Midland Co. did years ago.
“This is the first time we’ve seen a refiner get out there and do this,” Garcia said. “If they’re bullish long-term on the blending ability of ethanol, you can’t beat this price.”
The nation’s renewable fuel standard ensures demand for ethanol by calling for 11.1 billion gallons of renewable fuel to be blended into gasoline this year, with that number climbing to 36 billion gallons by 2022. Read full article.
Photo: Mark Dalzell.
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