What is the price range and availability of ethanol in the US Florida to be
exact?
- Original Message -
From: Keith Addison [EMAIL PROTECTED]
To: [EMAIL PROTECTED]
Sent: Tuesday, March 29, 2005 12:28 PM
Subject: [Biofuel] US Ethanol Price Shows 34% Decline In Last Five Months As
Supplies Surge
US Ethanol Price Shows 34% Decline In Last Five Months As Supplies Surge
BLOOMBERG NEWS: The price of ethanol, a grain-based fuel that began
trading on the Chicago Board of Trade Wednesday, is falling in the
U.S., as supplies rise faster than demand created by government
mandates, producers said.
Ethanol production will rise 22% this year, after doubling in the
previous five years, according to the Renewable Fuels Association, a
trade group in Washington. Expansions this year will add 750 million
gallons to U.S. production capacity of 3.644 million at the end of
2004, the association said.
The price of ethanol, which normally trades at a premium to wholesale
gasoline, has plunged 34 percent on average in the U.S. since
November 1, to $1.3169 a gallon, even as gasoline surged 20% over the
same period and reached a record high of $1.603 this week in New
York, data compiled by Bloomberg shows. The Chicago contract traded
at $1.21 a gallon on Wednesday.
There's a lot of competitive production, and we've got an adequate
supply to meet what the oil companies need, said G. Allen Andreas,
chief executive of Archer Daniels Midland Co., the largest U.S.
ethanol producer. Competitive elements in the market have caused
there to be a reduction in price, Andreas said in a March 17
interview in Washington.
Ethanol is a form of alcohol that is added to gasoline to increase
the oxygen content so the fuel burns more completely, reducing
tailpipe emissions. The fuel, made from corn in the U.S. and from
sugar in Brazil, also is used to stretch gasoline supplies when
crude-oil prices rise.
Farmers in the U.S., the world's largest producer of corn, have
invested in more ethanol plants to increase demand for their crops as
grain prices plunged, and the government stepped up production
subsidies and mandates for ethanol use in fuel. Ethanol sales in the
U.S. last year reached $5.5 billion.
Oil refiners can receive a government subsidy of as much as 51 cents
a gallon for ethanol, with total subsidies of about $1.85 billion
last year, the Renewable Fuels Association estimates. Congress is
considering a federal mandate for ethanol use, which would replace a
requirement that gasoline contain specified levels of oxygen-boosting
additives.
Ethanol demand rose to a record 3.57 billion gallons in the U.S. last
year, as California, New York and Connecticut joined 12 other states
in banning the use of methyl tertiary butyl ether, or MTBE, to meet
mandated levels of oxygenates in fuel.
The Board of Trade, the second-biggest U.S. futures market, moved up
the introduction of its ethanol contract to a week before a similar
contract begins trading at the rival Chicago Mercantile Exchange, the
biggest U.S. futures exchange. The new contract will add another
device for us from a financial perspective for our production and our
manufacturing plants, Andreas said. [ March 25, 2005 ]
COMMENTARY:
Predicting An Ethanol Tsunami
NICHOLAS E. HOLLIS, AGRIBUSINESS COUNCIL: Last December elders on
tiny Indian Ocean islands watched the strange phenomenon - a hissing
tide receding with a strange, deep sucking sound as the seas pulled
back --- minutes before the first terrifying monster waves churned
onshore.
For those who listened to their elders --- who remembered the ancient
stories and legends of a hungry ocean bent on taking their seaside
villages --- for those who rushed to higher ground, following the
animals --- fate would be kinder compared to the hapless tourists or
children who stood on the beach to marvel at the strange sight.
Today, in America's heartland, another kind of Tsunami is surely
building in the cornfields, and its undetected power is threatening
to drown the American agro-food system in an artificial sea of
ethanol. That hissing sound at the pump --- with soaring prices ---
is also linked to ethanol --- but it's a dirty little secret (like
lower mileage) that is routinely suppressed at Department of Energy.
As farmer-investors rush to organize themselves into secretive
limited liability companies --- quite different from normal,
non-profit (and transparent) farmer coops-- hucksters proclaim a new
Gold (Ethanol) Rush is underway. The aim is to increase the
distilling capacity for huge amounts of the nation's corn for
conversion into ethanol.
The heavily subsidized industry is counting on a massive market
expansion --- via legislation --- which will virtually force
motorists in faraway California and New England to use ethanol
blended gasoline. But as spring planting decisions near, sager
farmers are worried about the potential for an
