The head of the Iowa Renewable Fuels Association says the state’s ethanol industry is having "tough times" and federal officials should take steps to expand demand for ethanol. Monte Shaw says federal officials should increase the amount of ethanol that can be used in regular cars, above the current 10 percent ethanol blend.
"We know the auto industry has data from when they approved E-10 that showed it can be higher than E-10. We’d like to see it E-15 or even E-20," Shaw says. "But even if there’s some interim step that we can do immediately President Bush should do that before he leaves office or maybe on the first day President-Elect Obama would like to do that. That’d be nice."
According to Shaw, automakers are asking for "quite a bit" from the federal government and it’s time for autos to be run on higher blends of ethanol. "Some of the numbers don’t always seem that important, but if you can increase the amount of ethanol you can sell within say trucking the ethanol from your plant as opposed to putting it on a train even by 20 or 30 percent, that has a huge impact on your bottom line," Shaw says.
The past year has been an "amazing" ride for ethanol producers, according to Shaw. "With the whiplash in the commodity markets that we’ve had to endure — you know we had a real speculative bubble this summer after the floods and that put a tremendous amount of pressure on ethanol and biodiesel producers, on farmers, basically on all segments of our industry and…it’s a very tough time in the industry right now," Shaw says. "It’s a very tough time."
VeraSun, which has operated five ethanol plants in Iowa, filed for bankruptcy earlier this month and reported losses of $464 million in the third quarter. Shaw, though, suggests the state’s ethanol industry will survive the crunch.
"The good news for Iowa is, you know, we’re probably as well-situated as anybody for our plants to ride this out," Shaw says. "We have a lot of corn. We’re in a low-cost area. A lot of our plants were around long enough that they’ve paid down some of their debt…I can’t sit here and tell you , but I can tell you that we’re probably in pretty good shape." Iowa has 31 ethanol plants operating today.
